CHARLES CITY, Iowa Iowa state regulators on Tuesday notified disgruntled members of Family Community CU that their vote at Saturday’s annual meeting to remove the board and suspend the credit union’s CEO was invalid, ruling that the rare board ouster vote was not conducted properly.
In a letter sent to the $19 million credit union, JoAnn Johnson, Superintendent of CUs, said Saturday’s board ouster and CEO suspension were not in compliance with the bylaws of the credit union, or with the Iowa CU Act. Johnson said the actions which were undertaken at the end of the meeting did not follow the proper process.
“A majority of members present at any meeting may vote to modify, amend, or reverse any act of the board of directors or instruct the board to take action not inconsistent with the articles, bylaws,” wrote Johnson. “However, a motion to dismiss the board of directors is not a motion to modify, amend, or reverse an act of the board of directors, nor is it a motion to instruct the board to take a particular action. Even if it were such a motion, the Code provides that in order to be binding upon the board of directors, the motion must be put to a vote of all eligible members, not just the members in attendance at a particular meeting.”
Saturday’s member revolt reportedly was aimed at new CEO Dawn Swaningson, who took over in January and has been the target of complaints by employees. But Johnson said the CEO’s employment is solely within the power of the board of directors and not subject to a member vote.
The state regulator also invalidated Saturday’s appointment of a new board. “Because the motion to dismiss the existing board was insufficient, there were no other vacancies to be filled,” wrote Johnson.
“In sum, because these attempted actions at the annual meeting were legally insufficient, CEO Dawn Swaningson remains as manager of Family Community Credit Union, and the previously elected board of directors, with the three members elected by ballot during the annual meeting, remains as the recognized board of directors at Family Community Credit Union,” according to Johnson.