The Need for an Independent Board of Directors & Financial Accountability

The day before C.J. announced his leave of absence on July 6, Dave Harvey, Jeff Purswell and Joshua Harris told me the Sovereign Grace Board of Directors was going to be expanded. I saw this as an opportunity to provide them counsel that might result in the creation of a new board characterized by independent thinking.  A Board where each director could judge and decide for himself without fear of repercussions; a Board which was not influenced by self-interests or governed by the will of the “top” Directors; and a Board where the President could not act unilaterally or independently like C.J. did for so many years.  I made 16 recommendations.

From: Brent Detwiler
Sent: Wednesday, July 06, 2011 11:52 AM
To: Bo Lotinsky; Bob Kauflin; C. J. Mahaney; Dave Harvey; Gary Ricucci; Gene Emerson; Jeff Purswell; John Loftness; Ken Sande; Pat Ennis; Tommy Hill; Tony Reinke; Adam Malcolm; Ben Wikner; Braden Greer; Brian Chesemore; Corby Megorden; Dave Brewer; Don DeVries; Eric Sheffer; Eric Simmons; Grant Layman; Greg Somerville; Issac Hydoski; Jamie Leach; Joe Lee; Jon Smith; Joshua Harris; Kenneth Maresco; Mark Mitchell; Matt Maka; Mike Bradshaw; Robin Boisvert; Benny Phillips; Dan McIntosh; David Bendinelli; Keith Jacob; Paul Palmer
Subject: Additional Board Members

Dave, Jeff and Josh,

Last night you wrote me, “We are expanding our Board of Directors to provide greater diversity of views and counsel.”  You may benefit from “greater diversity” but that is not your greatest need.  You need men who are honest, brave and bright – they are not gullible.  Here are my recommendations.

You should add at least three new Board members (since you are embracing  a corporate model).
They must not be pastors or paid employees of SGM.
Each of these men must be financially independent and not beholden to SGM (or individuals on the current Board) in any fashion.
These men must be independent thinkers, incorruptible with a stellar reputation for integrity, and courageous.
They must be willing and able to speak up, ask hard questions, and address compromise of any sort – fiscal, personal, public.
They cannot in any sense be yes men, puppets or pawns.
They can respect the other Board members but they must not suffer from the fear of man in relation to any of the Board members.
They should read and study all of my documents.
They cannot be superficially involved in the governing of SGM.  They must be real directors!
They must be intimately aware for all issues not just fiscal or practical.
They must be intimately involved in the assessment of C.J.’s character and that of other Board members employed by SGM.
They should not receive fees or generous gifts from C.J./SGM for their service on the Board.

I think of men like Chip Grange, Kevin Woodward, and Nelson Cooney.

Brent

Ken Sande responded to all the men by expressing his support.  He said, “I think Brent’s list of qualifications for board members contains some wise and biblical concepts that would apply to any board…including the one I serve.” 

After Ken’s email, I thought of four more suggestions that I added and sent on to everyone.

The President moderates the Board but has no authority greater than any other Board member.  Acting independently of the Board is grounds for termination.
All Board members have equal authority in directing SGM.  Employed Board Members do not have more authority than the non-employed Board members.
Decisions should be implemented only when a majority exits among the entire Board of Directors.
The non-employed Board members must have the same authority as the employed Board members in matters pertaining to the hiring and firing of any SGM employee (including the President). 

The next day, Dave Harvey posted, “A note on C.J. Mahaney’s leave of absence” and said the following about the newly expanded Board.

 “In addition to our search for an independent panel, we have taken other steps in response to these circumstances.  In order to secure a broader source of accountability and benefit from a deeper pool of wisdom, we have expanded the board to lead SGM in this season.  The current regional leadership team members, all pastors in SGM churches, constitute the additional board members: Craig Cabaniss, Mickey Connolly, Rick Gamache, Pete Greasley, John Loftness, Aron Osborne, Mark Prater, and Steve Shank.  We are grateful for the wisdom and experience these men bring to this board and for their willingness to serve in this capacity.  To facilitate continuity in our day-to-day operations, the new board has appointed Dave Harvey to act as the interim president during C.J.’s leave of absence.”

Here was my response.  I copied the old Board and CLC pastors but I addressed it to the new board members.  I included my recommendations.

Craig, Mickey, Rick, Pete, John, Aron, Mark, Steve,

Below are the recommendations I made for new additions to the Board of Directors.

I don’t think the direction C.J., Dave, Jeff and Josh have chosen is wise.  It won’t significantly increase people’s confidence in the Board.  In some cases, like with Steve and Mickey , it will undermine people’s confidence.  I am afraid a lot of people will see you as a bigger but not a better Board.  That is, it is still comprised of people with a lot of self-interest which undermines its independence.  As a result, folks won’t move away from the perspective that it is a puppet Board comprised of C.J.’s friends who worship him and failed to hold him accountable.    

Surprisingly, I never got a response.  Oops, sarcasm. 

This leads to another subject matter of importance.  The new Board of Directors needs to be completely open and honest about their compensation and benefits.  In the old days, we didn’t need a written policy to do this.  We simply agreed as an apostolic team to always reveal how much we made to anyone who asked us.  No hesitancy.  No cover up.  No fudging.  That’s what I did up to my resignation in 2007.

I planned to propose that C.J.’s salary be reduced to $80,000 during his leave of absence but first I wanted to get his current compensation so I contacted him.  In time, I came to realize none of men on the new Board felt he was unfit in any way for any kind of ministry.  So from their perspective such a proposal was absurd.  Nevertheless, here’s what I discovered in the process.

Brent - July 1

"What is your current salary?" 

C.J. - July 2

"Here is what I can say today.  Next week the board is meeting to consider and decide all matters related to me and my future.  I have withdrawn myself from the board and won’t be participating in this meeting.  And just so you’ll know, earlier this year I requested a second salary reduction [the first request was for 5k probably to help the SGM budget – I don’t know if it was enacted] and a number of weeks ago renewed that request, and it is my understanding that will be decided by the board next week as well."

Brent - July 2  

 “What is your salary now after it was reduced?  In other words, how much was it reduced?  Your combined income for 2011 will be around 250k not including many benefits like health insurance, retirement, etc.” [It turns out his income was around 218k and benefits around 34k for total compensation package of 252k.]

Brent - July 2 

"Dave, Joshua and Jeff should be happy to see you answer all these questions without any hesitation.  And also the ones about your salary and reduction.  We’ve always promised to reveal that kind of information if asked.  You don’t need their permission.  That is not their prerogative."

C.J. - July 2 

"As for my salary it’s no secret and I’m not hiding it.  You know me well enough to know I don’t pay attention to it except to protest and say I am excessively overpaid (and it is the generosity of you and the other men that have made it so).  I think my salary [that likely does not include honorarium, gifts, royalties, car allowance, home care allowance, etc.) is 150,000 but I am not sure.  I will find out from Tommy but he is out of town this weekend.  My plan has been to ask the SGM board to reduce it 5,000 each year for the remaining years I would serve."

Brent - July 2

"Do I have your permission to get information from Tommy regarding your income and benefits including your recent cut in pay?"

Brent - July 2

"So do I have your permission?  The board has absolutely no authority over you in this matter!  Are you going to break all our commitments to be open and honest about our salaries and benefits?  Has that changed?  Are we now covering up our income from the good people of SGM?  Please don’t make excuses by referencing a gag order from the board.  That would be other example of avoiding honesty."

 I never heard from C.J. so I contacted Tommy Hill, the interim executive director for SGM.

 Brent - July 5

"Hope you had a good time on vacation!

"Could you provide me some information on C.J.’s compensation package?  I want to use the information so I can make an informed suggestion to the Board for a salary reduction.  I’d also like to understand the reason for the reduction at the beginning of the year…

"C.J. told me on Saturday, “And just so you’ll know, earlier this year I requested a second salary reduction and a number of weeks ago renewed that request, and it is my understanding that will be decided by the board next week as well.”  Can you explain this to me?  When was the first request?  For how much (e.g. 5k)?  Why was the request made – to reduce expenses or as an expression of discipline?  The same about the second request which was not acted on – when, how much, why?

Thanks Tommy.  I know this is not pleasant."

Brent -July 7

"Any hold up on the compensation figures for C.J.?  You can do that stuff in your sleep."

I waited two weeks before I wrote Tommy again.

Brent - July 19

"Can I get answers to my $ questions today?"

Tommy - July 20

"Brent, I am sorry for the delay.  Again, my priorities in serving administratively have not allowed me to drop into some of these details.  I sincerely regret to tell you that after discussion with the board that I cannot provide you with any more detail than I would anyone that asked about salaries at SGM.  Here are my guidelines in the midst of our current external evaluation by AoR.

I would be glad to discuss our salary setting policy, including our independent compensation committee involvement by phone.
If you still are interested in further detail, I can direct you to discuss with Dave (as president).
If an SGM church wants more detail on our salaries, I would again discuss our policy with them and then provide the information.

"But at the present, our plan is to direct those questions to AoR and will be asking their recommendations on how to address questions on salary, as well as Gammon & Grange.  Again, I would be glad to arrange a phone call to discuss our current salary setting policy.

"I am very sorry for the delay in getting back to you Brent.  It is a challenging time for all of us and I continue to pray for you and many others."

Given the pitiful response of the Board, I pressed the issue in the following email and copied Ted Kober and Ed Keinath from Ambassadors of Reconciliation.

From: Brent Detwiler
Sent: Thursday, July 21, 2011 3:59 PM
To: Tommy Hill; Aron Osborne; Craig Cabaniss; John Loftness; Mark Prater; Mickey Connolly; Pete Greasley; Rick Gamache; Steve Shank; C. J. Mahaney; Dave Harvey; Jeff Purswell; Joshua Harris; Adam Malcolm; Ben Wikner; Braden Greer; Brian Chesemore; Corby Megorden; Dave Brewer; Don DeVries; Eric Sheffer; Eric Simmons; Grant Layman; Greg Somerville; Issac Hydoski; Jamie Leach; Joe Lee; Jon Smith; Kenneth Maresco; Mark Mitchell; Matt Maka; Mike Bradshaw; Robin Boisvert; Ken Sande
Cc: Ted Kober; Edgar Keinath
Subject: C.J.'s Compensation & Benefits

Hi Tommy,

See the email trail below. 

I know you are between a rock and a hard place but would you send me the following.

The written policy and date adopted by SGM Board that covers the disclosure of compensation for Board Members by Board Members or the comptroller.  And also the current written policy for getting compensation figures for Board Members and especially the President of SGM by the public.
Please produce the written policy that allows the SGM Board to forbid an employee (i.e., C.J.) from telling someone his salary, etc. after promising to do so and stating, “As for my salary it’s no secret and I’m not hiding it….I will find out from Tommy.”  
Send me the section from the Evangelical Counsel of Financial Accountability that allows the Board to require the President to withhold all information regarding his compensations from an individual or the public in general?
When did the Board change our outstanding agreement to always disclose our salaries and benefits if ever asked?  It had to have happen after I left in Nov 2007.  Please send me the minutes that document this change.
Thanks for the offer to talk by phone but I don’t need to discuss the salary setting policy since I was the one who developed it.  That is unless it has changed.  If it has send me those changes.  They should be in writing.  If not, please put them in writing and send.

My question does not concern salary setting; it concerns the actual amount of C.J.’s total compensation.  For-profit companies do not withhold this information for Board Members.  How much more should non-profits happily reveal the compensation of Board Members.  They are accountable to donors who have a clear right to know exactly what each Board member is being paid.

C.J. promised to disclose this information to me.  The Board forbade him.  That is unethical and it may be illegal.  Please tell your bosses they need to be accountable and transparent regarding their compensation and benefits.  They should immediately publish their total compensation and benefits for review by the public.

I am not so concerned for how much C.J. is making.  I am concerned that compensation information being withheld.

Sincerely,

Brent

As you can imagine, I never heard back from Tommy or the Board.  This type of scenario has played out time and again with C.J. and the Directors.  Promises are made and then broken without explanation.  Policy is concealed or conveniently changed.  Questions requiring accountable answers are ignored or never answered.  All the polity changes in the world at SGM cannot make up for a lack of integrity and genuine transparency.