Not Intrinsically Evil

Habitat magazine

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The president of a small, self-managed Manhattan co-op had worked with the treasurer, whom we’ll call Clark, for more than a dozen years. Clark is what you might call indispensable in a small building like this. He is diligent, responsible, and absolutely nuts about details. When a project needs to be done, he is usually right on top of it, supervising the bidding process, working with the engineer and contractors. He also meets with the accountant, prepares a monthly management report, deals with the Department of Buildings and other governmental agencies, and takes on tasks that no one else wants to do or could do as well.

Yes, he seemed to be the answer to a small building’s prayers. But then the dilemma occurred. Clark wanted to be compensated.

In the grand scheme of things, he wasn’t asking for a lot. Just $500 (about a third) off his maintenance every month. The president talked to the co-op’s attorney, who said, “It’s not a good idea.” Generally speaking, he explained, board members are not supposed to be compensated, and in this case, the bylaws forbade it.

The president reported this to the board, and Clark took it gracefully. That seemed to be the end of it – until about six months later when Clark brought it up again. This time, he was fairly firm, saying he would like to be compensated despite what the attorney said. He didn’t want to step down and become the manager. He wanted to be kind of a Superman-style board director: he would make policies in his role as mild-mannered Clark Kent, and execute them as the irreplaceable Superboardmember. He said the $500 was just a token, an acknowledgment of the time he spent caring for the building.

So, what’s the big deal? Why was the co-op’s attorney opposed to it?

“It’s a bad idea,” says attorney Bruce Cholst, a partner at Anderson Kill, “because everyone has the mindset that board service is a volunteer, not a professional, thing. It also sets a precedent for compensating all board members. Are they doing this for mercenary reasons, or out of a volunteer spirit?”

To read the full article:  Not Intrinsically Evil

Related People

- Shareholder | Anderson Kill P.C.
New York

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