VIEWPOINT

Competent board members provide necessary oversight and guidance
By Don Copenhaver

Any business, whether investor-owned or cooperative, needs an involved, qualified board of directors. At MFA Incorporated, our corporate board performs an invaluable function. The employees of MFA (as well as the member/owners) owe a debt of gratitude to those who run and those who serve as board members. After all, those individuals provide guidance for the complex business interests of your cooperative. Because of MFA’s reliance on a competent and involved board of directors, I want to devote this column as well as next month’s column to topics pertaining to our board of directors and their many responsibilities. It’s also an invitation to those of you willing to serve.

MFA’s corporate board consists of 14 individuals, one from each of MFA’s voting districts. From the beginning, MFA has relied heavily upon its corporate board for advice, strategy and vision. Our board size has varied over the years, reflecting the shrinking numbers of farmers in our trade territory as well as the changing landscape of agriculture.

Because of consolidation in agriculture, fewer and fewer qualified people have the time to serve as corporate board members. I understand and empathize with those who are so busy running their own operations that they have no time for corporate board responsibilities. Others are hesitant to assume the job requirements of a corporate board member who must oversee a multi-state business in today’s regulated world.

As I said, 14 individuals sit on MFA’s corporate board of directors. Counting the elections this past February, over the course of a two-year period, nine of those positions will turn over. This is an important time for MFA. We will lose the benefit of many individuals with long service, extensive knowledge and well-earned experience. Make no mistake; the loss of experience leaves a void. That is not criticism of the new directors who fill these roles. During this past election, the membership selected three outstanding candidates. They will make important contributions in the future. These individuals bring new perspective and experience. That’s a good and necessary addition.

Still, we will experience this high turnover because of term limits. I have said before and still maintain that term limits are unnecessary and counterproductive in a business setting. Our directors are not politicians who amass campaign debts, owe favors and leverage their positions to remain in office. Our directors are intelligent, successful business operators who understand agriculture and the environment in which we operate. Still, a large portion of a director’s first term is devoted to getting up to speed. It takes significant time, given the steep learning curve, the extensive training involved and the complexities of MFA’s operations.

As far as term limits, our members have an excellent means with which to limit a director’s term. Every three years, the membership decides on whether or not they retain that director. Right now, MFA’s directors operate under a bylaw-mandated system of term limits: four three-year terms. Twelve years may seem too long to some people, but as most of you well know, competent individuals with 12 years of experience under their belt are proficient and capable. I have more than 30 years of experience at MFA. It makes no sense to me to discard experienced individuals. If we had a company policy of rotating employees out after 12 years of experience, we would bankrupt the business by robbing it of some of our most productive and talented people. I hope we can eliminate term limits through membership vote.

In terms of the board, it is the responsibility of the MFA board of directors to select the chief executive officer of the cooperative. They are in charge not only of hiring and firing the CEO, but evaluating the individual in the performance of that position. In addition, the board must help develop a succession plan, a compensation program and a process to recruit competent new directors. I’ll go into responsibilities in more detail next month.

Our directors must thoroughly understand and approve MFA’s strategic direction. Our directors help management develop and operate within the basic beliefs and values of the cooperative. They also provide invaluable guidance in helping us live up to our purpose of providing economic benefits to our members. With MFA’s operations as extensive as they are, that requirement places a large burden on board members.

To accomplish the above, they must understand the business environment in which MFA operates. They must also master the intricacies of the business. They must understand our balance sheet. They must know our strengths and weaknesses inside and out before developing policies that affect our strategic direction. The board oversees our capital expenditures budget, our annual operating budget, our human resources budget and our auditing functions.

In short, to be effective, corporate board members at MFA Incorporated must be sharp business people who understand financial statements and the interrelation of departments, divisions and subsidiaries. We have those individuals currently, and with your help, we’ll continue to have good candidates who can successfully direct the strategic direction of your cooperative.