To Amend Bylaws 1.5.1.2–1.5.2 to Clarify Service Expectations and Handling of Conflicts of Interest

Rationale Bylaw section 1.5 provides regulations applicable to all agencies of the Synod, including provisions dealing with ethical standards, conflicts of interest, and removal from office. These date, at least in their modern form, to a Commission on Structure project that culminated in 2007 Res. 7-07A, “To Revise Bylaw Section 1.5 and to Add Definitions to Handbook,” itself an outgrowth of the 2004 revision of the Handbook’s revision of agency-related language. The original statement of the conflict-of-interest policy dates to 1995 (Res. 4-05A, “To Replace Present Bylaws on Conflict of Interest”). (Bylaw1.5.1.3 ispart of the former “general regulations” and not properly part of the conflict-of-interest policy, but relevant to it.) The Secretary noted to the Commission on Handbook three aspects of the present language requiring attention: (1) While potential conflicts should be identified to the extent possible in advance, the determination of whether there is an “inappropriate interest” being acted upon (Bylaw1.5.2 [a][4]) depends on asituation arising in the work of the potentially conflicted individual (or the board or commission of which the individual is a part) to which the potential conflict is material. It is at that time the conflict would need to be processed by the board, but this timeline aspect is not evident in the present language, leading to confusion in practice. (2) The connection between thedeterminationofBylaw1.5.2 (a)(4)that “an inappropriate interest exists” and the practical impact of such determination is unclear. The only apparent consequences are 1.5.2 (b)(3)’s remote and less-than-general “no one shall vote…,” less- than-general because it deals only with the possibility of “direct or indirect financial gain.” It seems obvious that the member having an “inappropriate interest” would be expected to recuse himself with regard to certain matters (or perhaps, if the conflict is sufficiently general, resign), but this is not so plain. (3) Adding to the un clarity is that it is not so apparent how Bylaws 1.5.1.3 and 1.5.2 (b) and(b)(1–2) relate to the standards for removal from office for board or commission members, in Bylaw 1.5.7, or for officers, Bylaw 1.5.8, unless they fall generally under “breach of fiduciary responsibility.” The commission has proposed a revision which pulls Bylaw 1.5.1.3 into Bylaw 1.5.2, clarifying the relation of this standard to the rest of the provision, addressing the above issues, and further addressing the scope of the provision to clarify that conflicts are not strictly limited to matters of personal financial gain, but can involve other situations where an officer or board or commission member might have or appear to have competing loyalties. Therefore be it

Resolved, That Bylaws 1.5.1.2–1.5.2 be amended as follows: PRESENT/PROPOSED WORDING 1.5 Regulations for Corporate Synod and Agencies of the Synod General … 1.5.1.2 No one, either in the Synod or a district, or between the Synod and a district, shall hold more than one elective office; or hold more than two offices, although one or both be appoint ive; or ever hold two offices of which one is directly responsible for the work done by the other. A member of the Board of Directors of Synod may not hold any other elective or appoint ive office, except as otherwise provided by these Bylaws. (a) An office shall be regarded as elective only if it is an office filled through election by a national or a district convention, even though a vacancy in such an office may be filled by appointment. (b) Doubtful cases shall be decided by the President of the Synod. 1.5.1.3 Every board or commission member, officer, and all staff of corporate Synod and every agency of the Synod shall be sensitive in their activities to taking or giving offense, giving the appearance of impropriety, causing confusion in the Synod, or creating potential liability. Disclosure of Expectations and Conflicts of Interest 1.5.2 Every board or commission member, officer, and all staff of corporate Synod and every agency of the Synod shall carry out responsibilities and avoid, or properly address, conflicts of interest as described in this bylaw. (a) Corporate Synod and Every every agency shall implement the synodwide conflict-of-interest policy, and that policy shall be applicable to them and all staff operating under them. This policy shall include the following provisions: (1) Every board or commission member shall on an annual basis and as the need arises disclose to the chairman of the agency and all staff shall disclose to the chief executive or executive director of the agency any potential conflicts of interest. Each chairman or chief executive or executive director shall disclose personal potential conflicts of interest to the appropriate board or commission. (2) Such disclosures shall include board membership on, a substantial interest in, or employment of the individual or a relative by any organization doing business with corporate Synod or any of the agencies of the Synod. (3) Every board or commission member, officer, and all staff of corporate Synod and every agency of the Synod who receives honoraria or payments for any sales or services rendered to corporate Synod or any of the agencies of the Synod shall disclose such information. (4) All such disclosures shall be reported to the respective board or commission to determine, when a relevant situation arises, by a vote of its remaining impartial members whether an inappropriate interest a conflict exists, and such vote shall be recorded in its official minutes. In the case of officers of the Synod regarding non-board, non-commission work, all such disclosures shall be reported to the President of the Synod to determine whether an inappropriate interest a conflict exists. In the case of executive staff, the board of the agency, and in the case of other staff, relevant officers or executive staff shall make this determination. (5) Any conflict so identified shall be managed by the conflicted member abstaining from any vote or decision involving the matter. Should the responsible board, commission, officer, or executive staff determine that information regarding the matter cannot be shared with the member without detriment to the Synod, the member shall be asked to recuse him or herself from discussion of and receipt of documents concerning the matter; failure to recuse him or herself may be inconsistent with (b)(1–2) below. (6) Potential conflicts of interest required to be disclosed pursuant to this subsection (a) include situations where the individual or the individual’s relative or business: (i) stands to gain a financial benefit from an action the board, commission, agency, or corporate Synod takes or a transaction into which the board, commission, agency, or corporate Synod enters; or (ii) has a relationship or another interest that impairs, or could be seen to impair, the independence or objectivity of the individual in discharging his or her fiduciary duty to the board, commission, agency, or corporate Synod. (7) Potential conflicts of interest are not solely financial but may include situations in which the individual or that individual’s relative: (i) serves on the board of, participates in the management of,or is otherwise employed by or volunteers with any third party that the board, commission, agency, or corporate Synod deals with or is considering dealing with, or (ii) serves on a board, commission, agency, or corporate Synod, or a third party, that is competing with, or may be affected by a decision of, the board, commission, agency, or corporate Synod. (b) Responsibilities shall be carried out in a manner reflecting the highest degree of integrity and honesty consistent with the Scriptures, the Lutheran Confessions, the Constitution, Bylaws, and resolutions of the Synod, the policies of corporate Synod and the agencies of the Synod, and civil laws. (1) Activities shall not be entered into which may be detrimental to the interests of the Synod. Any such inappropriate activity shall cease or the position will be vacated may constitute a breach of fiduciary responsibility and a cause for removal under Bylaw 1.5.7 or 1.5.8. (2) Information acquired in the course of carrying out duties of the Synod shall not knowingly be used in any way that would be detrimental to the welfare of the Synod. (3) No one shall vote on any transaction in which the individual might receive a direct or indirect financial gain. (4) The Boardof Directors shall establish policy regarding the acceptance of gifts, entertainment, or favors from any individual or outside concern which does or is seeking to do business with corporate Synod or the agencies of the Synod. (c) Every board or commission member, officer, and all staff of corporate Synod and every agency of the Synod shall be sensitive in their activities to taking or giving offense, giving the appearance of impropriety, causing confusion in the Synod, or creating potential liability. (cd) Individuals, prior to accepting elected, appointed, or staff positions, shall initially and annually thereafter sign statements stating that they have received, understand, and agree to abide by this bylaw and the Synod’s conflict of interest policy.