This document contains two proposed amendments and explanatory material for consideration by the members.

You may only vote on these bylaws changes by clicking on the link in the email you received from Intelliscan, or, if you received a paper ballot, by returning that before Nov. 9, 2018.
 

SECTION I – FIRST PROPOSED AMENDMENT

 
STATEMENT OF THE AMERICAN ACADEMY OF ACTUARIES ON PROPOSAL TO REVISE RULES GOVERNING AMENDMENT OF THE ACADEMY’S BYLAWS.
 
THE ACADEMY BOARD RECOMMENDS A “YES” VOTE ON THIS PROPOSAL.
 
The Academy’s Board of Directors approved for a member vote a proposal to bring greater clarity to the rules governing amendment of the Academy’s bylaws. While amendment of the bylaws needing member approval is a relatively infrequent event, it is important that the rules governing those amendments reflect the needs of the Academy: the national association for actuaries of all practice areas in the U.S., and one clothed with a significant self-regulatory role.
 
Shortcomings of the Existing Rules
As many of you are aware, a proposal to amend the bylaws for another purpose was recently submitted to the Academy (and is addressed in Section II). Entirely apart from the significant substantive issues that proposal presents, the experience with that proposal has demonstrated significant procedural shortcomings in the existing bylaw. It has become clear that the current bylaw’s defects in this regard are numerous. Among others are the following:

  • It does not prescribe the form and content of member proposals;
  • It does not establish a time frame during which the proposal must obtain the requisite member support to require a membership vote;
  • It permits an extremely small percentage of Academy membership to launch a divisive and distracting campaign of indefinite duration on matters that absorb substantial time and financial resources in verifying the validity of the proposal and the support of the requisite number of members;
  • It encourages proposals that may clutter the Academy’s bylaws with trivial provisions that are based solely on disagreements with decisions of the Board of Directors and that would freeze poorly conceived ideas into the governing structure of the organization; and
  • It uses imprecise terminology to describe those bylaws amendments that may be adopted by the Board and those that must be put to a membership vote, which impedes good governance by the Board and exposes the Academy occasionally to needless threats of litigation even when the Board clearly acts within its authority, as it recently did in amending the bylaw related to Selection Committee membership.

When the Academy was founded decades ago as a small organization for a small profession, it may have made sense to enable a very small number of a few hundred people to play a more direct governance role. But now, with the Academy’s growth to approximately 20,000 members and its substantial responsibilities for professionalism and self-regulation, the loose “referendum” model is obsolete. It is essential that the Academy be governed by individuals with fiduciary responsibilities to the Academy as a whole, rather than by factions or by individuals without those fiduciary obligations and promoting commercial or other parochial interests.

A Modern Approach for Good Governance
For all the above reasons, the Board has proposed to the membership a new approach that has greater clarity and brings the Academy’s bylaws into line with the mainstream of the law regarding the powers of boards of directors and their fiduciary obligations. It authorizes the Board to amend the bylaws by the vote of two-thirds of those present at a duly convened meeting. It does away with the vague and confusing limitation on the permitted subject matter of the amendment that encourages frivolous challenges to Board action but retains a provision for member-initiated amendments. That provision, however, improves on the existing rules by clarifying various requirements for a valid member proposal, limiting the time during which a member proposal would be valid after its submission, and raises the threshold for a membership vote on the proposal from 3 percent to a more realistic 15 percent of the Academy’s members. The proposed amendment also places certain membership rights beyond the Board’s power to amend without a membership vote.

We believe this approach strikes the right balance, by strengthening the Academy’s governance and focusing that governance on those individuals who have fiduciary obligations to the Academy, while still preserving the ability of the membership to amend the bylaws and adding clarity to the procedures to be used in such an event. We enthusiastically urge the members of the Academy to vote “YES” on this measure.

Proposed revised Article XV of the Bylaws:

SECTION 1. Except as set forth in Section 2 of this Article XV, amendments to the Bylaws may be made by a vote of two-thirds of the Directors present at a duly convened meeting of the Board. Any amendment approved by the Board under this Article XV, Section 1 shall be effective immediately.

SECTION 2. Any amendment of the Bylaws affecting:

  1. Membership entitlements set forth in Article I, Section 1 of the Bylaws;
  2. Resignation of members as set forth in Article VIII of the Bylaws;
  3. The right of a member to appear personally and by counsel before a Disciplinary Committee as set forth in Article IX, Section 3, paragraph C, or before an Appeal Panel as set forth in Article IX, Section 4, paragraph D;
  4. The confidentiality of a proceeding before a Disciplinary Committee or Appeal Panel as set forth in Article IX, Section 6;
  5. The rights of a member who is a subject actuary in a proceeding before the ABCD set forth in Article X, Section 5, paragraph F, subparagraph 1;
  6. The right of a member who is a subject actuary in a proceeding before the ABCD to be accompanied by counsel before the ABCD as set forth in Article X, Section 5, paragraph F, subparagraph 2; or
  7. The provisions of Article XV, Section 2 or Article XV, Section 3

may be made only by an affirmative vote of two-thirds of the Directors present at a duly convened meeting of the Board and upon the subsequent affirmative vote of two-thirds of the members voting upon the amendment.

SECTION 3. Members may propose amendments to the Bylaws that affect member rights upon written proposal of not less than 15 percent of the members. The member proposal must be submitted with verifiable documentation showing the identity of each Academy member supporting the member proposal.

The date used to calculate the number of members necessary to satisfy the 15 per cent requirement for a vote on a member proposal will be the date of the submission of the cumulative written requests that equal not less than 15 percent of the members. The submission must contain the language of the amendment the member proposes, and the verifiable documentation of membership support must show specifically what proposal is supported. If any supporting documentation is submitted electronically, that documentation must be verifiable by reference to information provided by Academy members in their respective member profiles. Any supporting documentation submitted with the member proposal will be valid only if it has been obtained within 3 months of the date of the submission of the member proposal. Upon the Academy’s determination that a member proposal has been submitted with valid verifiable documentation and is supported by the requisite number of members, the Board shall take a vote on the proposed amendment at the next regular meeting of the Board that is at least 30 days after such determination. Upon the approval of the proposed amendment by the affirmative vote of two-thirds of the members of the Board voting upon the proposed amendment, the proposed amendment shall be put to a vote of the members. The proposed amendment shall be adopted upon a vote of two-thirds of the members voting.

SECTION 4. For any proposed amendment of the Bylaws requiring a vote of the members, the Board shall specify a reasonable period of time within which the proposed amendment shall be transmitted by the Secretary-Treasurer to the members by mail, which includes electronic means, and the time for votes to be mailed by the members to the Secretary-Treasurer. Such proposed amendment shall be accompanied by an appropriate discussion of the issues. Any amendment approved by affirmative vote of the membership shall become effective 10 days following the certification of the vote.
 
There is no redline because the current version of Article XV, reproduced below, would be substantially revised by the proposed amendment above.

Current Article XV of the Bylaws:
 
Amendments

Administrative, editorial, and technical amendments to the Bylaws that do not involve questions of policy or affect the substantive rights of the Academy’s members may be made by a vote of two-thirds of the Directors present at a duly convened meeting of the Board.
 
Otherwise, amendments to the Bylaws may be proposed either by a vote of two-thirds of the Directors present at a duly convened meeting of the Board or by written request of not less than 3 percent of the members. The Board shall specify a reasonable period of time within which the proposed amendment shall be transmitted by the Secretary-Treasurer to the members by mail, which includes electronic means, and the time for votes to be mailed by the members to the Secretary-Treasurer. Such proposed amendment shall be accompanied by an appropriate discussion of the issues, and it shall become effective 10 days following the end of the voting period upon the affirmative vote of two-thirds of the members voting.
 
In sum, the Academy’s Board urges a “yes” vote because:
 
  • The existing rules are vague with respect to which types of amendments the Board is permitted to make, and also lack guidance on the form of submissions and the time frame for action. Clarity will benefit members proposing amendments as well as the Academy itself, and help prevent divisive disputes over procedure.
  • The existing rules permit an extremely small 3-percent minority of the membership to force a vote of the entire Academy, and the new rule would increase the percentage to a more realistic 15 percent.
  • Placing governance of the Academy primarily in the hands of its Directors, who owe a fiduciary duty to the organization, is in keeping with modern good governance practice.
  • A role for member-initiated bylaw amendments is retained.
  • Certain specified member rights may only be amended by a vote of the membership.

THE ACADEMY BOARD RECOMMENDS A “YES” VOTE ON THIS PROPOSAL.

SECTION II – SECOND PROPOSED AMENDMENT


The Academy received multiple submissions at different times and in varying formats from an attorney for a member that contained a proposed amendment to the Bylaws that would create a new Article XVI and amend the current Article XI (Actuarial Standards Board).

THE ACADEMY BOARD RECOMMENDS A “NO” VOTE ON THIS PROPOSAL.

The Academy opposes these proposed amendments because:

  • The Academy’s Board and Committee Meetings Policy has never been enshrined in the Bylaws. The Academy Board is the appropriate body to establish and revise policies for operation of the organization’s activities. The Board is the body with the responsibility to assure that all Academy policies serve the mission and purposes for which the Academy was established, and it is the body that has always adopted and revised Policies for all matters or activities affecting Academy operations, e.g. Committee Appointment Rules, Conflict of Interest Policy, Guidelines for Making Public Statements, Guidelines for Developing Practice Notes.
  • Bylaws serve as a governance framework, not as a vehicle for establishing or changing internal management policies.
  • The Academy is concerned that the impetus for this proposed amendment is rooted in a commercially based interest about the potential for an outcome in standard setting that a small group of members believe would adversely affect their financial interests.
  • A stated reason for the collection of members support for this proposed amendment was that the Academy changed its meeting policy to prohibit observers from attending meetings of the ASB. This is not true. The revised meeting policy merely provides committee chairs with the discretion to determine who should be permitted to observe meetings. Since the revised meeting policy was adopted, observers have continued to be present and observe ASB and other committee meetings.
  • The ASB process is thoroughly transparent and open and is subject to extensive and required notice and comment opportunities for any and all who are interested in proposed actuarial standards of practice. And, as noted, observers have in fact continued to attend ASB meetings since the revised policy was adopted earlier this year.
  • The Academy is concerned that the intention of the proposed amendments is to force the admission to these meetings of individuals with potentially adverse interests in order to affect outcomes of internal committee deliberations. Such aims threaten the independence and objectivity necessary to ensure standards are not adopted to benefit any particular practice or group of practitioners. Moreover, the presence of persons with such aims has tended to stifle debate and impede the frank and open discussion necessary to achieve the best result for the profession.
  • Those who would not be admitted under the existing Meeting Policy as observers are those who are understood to have a conflict of interest or may be seeking inside information, have a history of disruption or other misconduct (such as publishing notes from the meeting online), or in what we expect will be rare cases, may be suing or have threatened to sue the Academy.
  • Committee chairs, in consultation with counsel, must be the ones to decide whether the presence of specific individuals is helpful or could result in hindering the candid deliberations necessary to set appropriate standards and policy to fulfill its professionalism mission for the profession.
  • No decision-making body of the Academy discussed in the proposed Article I should be stripped of its ability to make decisions in executive session outside of the overly limited categories listed in proposed Article XVI, §2.

The proposed amendment, in the language submitted, is as follows.
The following Section 9. Shall be added to the end of Article XI.

Section 9. Open meetings. All meetings of the ASB and ASB committees, subcommittees, and task forces shall be open to the public as described in Article XVI of the Academy bylaws.
 
The following Article XVI shall be added after the end of Article XV.

Article XVI
Open Meetings

Section 1. Open Meetings. 
A. All meetings regarding the drafting, establishment, exposure or amendment of either qualifications standards for actuaries or actuarial standards of practice shall be open meetings as described in this Article. This Article shall apply to all meetings of the Actuarial Standards Board and the Committee on Qualifications. Additionally, this Article shall apply to the portion of any Academy Board of Directors meeting which deals with the establishment, exposure or amendment of any qualification standard or actuarial standard of practice. Lastly, this Article applies to any body within the Academy with responsibility for setting qualification standards or actuarial standards of practice.

B. This section shall not be construed as to apply to any meeting of the following: (a) the Actuarial Board for Counseling and Discipline under Article X of the Academy bylaws; (b) any Academy Disciplinary Committee under Article IX, section 3 of the Academy’s bylaws or any meeting of any Appeal Panel under Article IX, section 4 of the Academy’s bylaws;

Section 2. Executive Session. Portions of otherwise open meetings may be held in Executive Session only for the purposes of discussing legally privileged information, the qualifications and reputation of potential volunteers, and the performance of volunteers and Academy staff. No action or vote may be taken in Executive Session. The reasons for which a meeting may be held in Executive Session shall be construed narrowly.

Section 3. Advance Notice. Notice shall be provided to the public of an open meeting no less than twenty-one days in advance. Notice shall be prominently published on the Academy website and in Academy publications. Upon written request, members shall be provided a copy of the notice within 5 business days.

Section 4. Definitions
The following definitions will apply for this article.

A. Meeting – The term “meeting” shall include any gathering of a quorum of an Academy body, board, committee, subcommittee or task force when such gathering is not purely for social or training purposes. Meetings include in-person gatherings, conference calls, video conferences or any other similar technology. The term meeting shall be broadly construed.

B. Notice – The term “notice” shall include the time, date, location and agenda of a meeting.

C. Open – The term “open” means that members of the press, public, actuarial profession and Academy may attend the meeting and observe the meeting but may only participate in the meeting with the permission of the meeting chair. Disruptive observers may be removed from meetings. Observers shall be allowed to take notes and publish their accounts of the meeting, but the Academy shall not be responsible for the contents of such accounts.

THE ACADEMY BOARD RECOMMENDS A “NO” VOTE ON THIS PROPOSAL.