(This history is also available as a poem. No kidding).
The history of the 2016 SGM was published on the Owner’s Group website in the fall of 2016. It is reproduced here, as I am the author. It represents the work performed by tireless volunteers, throughout the first half of 2016. I was just one of many.
On November 25, 2015, Club Intrawest announced that DRI would likely become the manager and declarant of the club (through the purchase of Intrawest’s points, etc…), and pointed members to DRI’s press release.
The Club’s President, Trevor Bruno, explained that although DRI could purchase Intrawest assets at their leisure (as Intrawest is a separate entity from Club Intrawest, not an owner of the club), the Board would have to approve the transfer of the management agreement. And because three of the five board members were in conflict of interest (as employees of Intrawest), they would remove themselves from the decision. Trevor Bruno, Robert Reyes and Jane Zsigmond therefore stated that they would not participate in the decision to transfer the agreement.
The Board therefore created a Special Committee consisting of Mr. James Orr (Board Director, not independent) and Kenneth Smith (Board Director, independent but in conflict of interest as his firm does the club’s taxes). These two directors were provided with the financials means to perform their due diligence, as noted in the unpublished (but obtained by a member) club resolution.
In response to the announcement, a group of concerned members organized to study the impact of the change in manager/declarant (from Intrawest to DRI) on Club Intrawest. After studying the Club Instruments, the group sent a letter to the Board on January 6th, 2016, requesting that the board send their letter to members by electronic means (especially since the CEO of DRI has been given the same opportunity by Mr. Bruno). The purpose of the letter was to explain to members that the transfer of the management agreement to DRI should be discussed by the entire membership, not just the Board, and to ask that members request a Special General Meeting.
When the Board received the request, they confirmed that they were in receipt but that they had to create a special committee to review the request, to include legal counsel. On January 18, 2016, the Board denied the request saying that the letter to members did not meet the criteria of “advancing a legitimate business concern” (as the decision to transfer the management agreement was soley a Board decision). They also noted that any letter would have to be sent by post at a cost of $36,000 (with $20,000 payable up front), comparing these costs to that of an election and other official business, which is actually done by email (not post). The group of members challenged the Board, saying that Mr. Bruno himself has allowed the DRI CEO to communicate directly with members, through an email, during the Due Diligence process. The Board ignored this argument.
Notably, while the above email exchanges took place, the Smith-Orr decision had already been signed. The two directors, however, waited until January 11, 2016, to email their unanimous written consent that said “yes” to transfer the management agreement from Intrawest to DRI. In their report they stated that DRI was a reputable company that would bring value to the club and the membership. They also recommended that the number of directors of the club’s Board be increased from 5 to 7 members, and that the two additional members be independent (i.e. the declarant – DRI – would not be able to vote for them).
Upon reading the recommendation to increase the size of the Board, a group of over 200 members therefore emailed the Board asking for this recommendation to be implemented. The Board responded by saying that they decided not to pursue this recommendation as it would require a Special General Meeting that would be too costly. They replied, in return, that they would ask DRI permission (as declarant) to change a second position of the current five-member Board from a declarant-voting to non-declarant-voting position.
What does this mean? Currently (still) there are five members on the Board. The declarant (DRI) can vote for four of those positions (with their 15x voting power, at 48% in June 2016). The only position they cannot vote for, which is considered independent, is Ken Smith’s (as noted in the DRI Disclosure Statement of Jun 29, 2016).
Orr and Smith never followed up with a reply on the switch of the second position to be independent, so a group of volunteers persisted in requesting action from the Board, which the Board ignored.
And then, in February 2016, the Board asked members if they wanted a SGM, by email. Why? It is likely that the club’s lawyer felt that the board would be in conflict with the bylaws if they did not do this. However, the Board did not follow the bylaws properly as they did not explain why the SGM was originally requested. Instead, they asked if members wanted a SGM to discuss the “DRI acquisition” generally-speaking, and strongly suggested that a SGM was a waste of money, quoting a cost of $75,000 (having never quoted costs before to members in the entire history of the club). No background was provided to members, so when some members inquired with Member Services, they were simply told that “a group of members” asked for it and (in some cases) actually gave out the name and email information of one member, suggesting that this person be contacted (against all privacy laws and the club instruments).
Because more than 5% of members actually agreed to the SGM, the Board was forced to hold one. Although the Board, in an email to members, once again suggested that the SGM was not required (“Notwithstanding that approximately 2/3 of the Resort Points voted by Members did not wish to have a meeting…”) they called the meeting for Jun 18, 2016, at the Sheraton Wall Center Hotel, in Vancouver. However, once again, the Board did not follow the bylaws, and created an agenda that did not reflect the original request for the meeting (i.e. To change the board composition as per the Smith-Orr recommendation).
A group of volunteers therefore returned to the bylaws to determine how to get the original resolutions on the agenda. The bylaws stated that resolutions could be added within 15 days of the announced SGM date. So the volunteers emailed a request to to board to have their original resolution, and two others, added to the agenda. The objective? To find a way to get a member on the Board, who would be unbiased, independent and focused solely on the concerns of the membership and the club.
The club’s counsel replied to the request at the close of business on the 15th day. Of the three resolutions submitted, only two of these resolutions were actually accepted, as the Orr resolution referenced the Disclosure Statement, which is owned by DRI, not the club. Although it would normally have been possible to edit the resolution, the last minute reply from club eliminated this possibility. The club therefore emailed members pointing to a revised agenda that placed the resolutions at towards the end, in a meeting that was restricted to two hours.
For the SGM to proceed, 15% of the weighted vote of members was required. The Board provided a proxy mechanism for those who could not attend, but unlike all other electronic voting held by the club (e.g. elections, SGM vote, name vote, etc…), the Board elected to make the proxy process highly cumbersome. Members were told to download, print, sign, scan, and email their proxy to Member Services. Not only was this process cumbersome, it was also impossible for members to know who they could give their proxy to, as members are blocked from communicating with each other. Interestingly, in an effort to plan, the Board asked members to RSVP, through an electronic survey process (after stating this would be too difficult and expensive for the proxy process).
With no member contact information (i.e. email, addresses or phone numbers), tens of volunteers cold-called homes throughout the globe, asking people if they were Club Intrawest members (using a list of names by country, state and province). Successful contact led to a discussion about the meeting, encouragement to sign over proxies and an invitation to join the Facebook group. Over 600 proxies were given to a handful of members.
The SGM was held on June 18, 2016. Although there were over 6% of members in attendance (in person or by proxy), the 15% quorum requirement was not met. Some members were turned away at 10 AM (start time), and there was signficant confusion at the start of the meeting on how to proceed. There was misinformation and accusations, and a parliamentarian that seemed somewhat surprised and confused.
While the Board and parliamentarian were trying to sort out the quorum issue, members began approaching the microphones to ask questions. Mr. Bruno reminded members that they were to follow the SGM rules and one member was removed by security for recording the audio. Members continued to ask questions, applying standard meeting protocol, which continued to create confusion as the meeting was not formally called. Some of the topics of the Q&A included a request for details on the GST appeal (who will pay, how much, etc…?) and the Board Resolution for the special committee. The Board did not provide information on the GST judgement saying that it was still in the courts, and stated that neither Smith nor Orr spent any of the $50,000 on the due diligence process (so who paid? DRI?).
Once Mr. Bruno officially announced the lack of quorum, he queried members to see if they wished to continue with questions or proceed with the presentations. After a somewhat confusing and extended voting process (which was actually quite funny), the members voted to listen to the presentations made by Mr. Reyes (on club satisfaction), and DRI management on topics such as the branding of our club (defined as a tight-knit group of members, even though the Board prevents us from emailing each other), the reservation system, inventory management, EE, etc…
Once the presentations were over, members returned to asking questions. It was apparent that many members were not clear on why the resolutions were added to the revised agenda, why the board wanted to dismiss Mr. Smith, etc… Which pointed to the notion that members had been either misinformed or inadequately informed about the history of what transpired. And this did not go unnoticed through the months of February to June, when numerous requests were sent to the Board asking for the ability to explain to members why the meeting had been requested in the first place.
At one point during the Q&A, a member asked the Board if the declarant (DRI) would have voted in favour of any of the resolutions. This was an important question, because even if the SGM had gone ahead, DRI’s ~ 48% voting power would have led the voting. Mr. Ron O’Gorman, a board director and also representing DRI (as declarant) clearly stated that he would have voted against all resolutions. So even if the SGM had gone ahead, DRI clearly would have blocked any and all changes to the composition of the board, solidifying their control over the club.
Although Mr. Bruno ran the meeting as President of the club, he often turned to others in the room (not always identifiable) for guidance, including requesting permission from an unknown individual to post the presentations. This behaviour calls into question the President’s priority: is it to the declarant/manager, his employer, Diamond Resorts International, or the membership? When asked this question directly, Mr. Bruno did not answer.
After the SGM, all members in attendance, along with the Board and DRI management, were invited to a post-SGM meeting at the YMCA (Vancouver). About 100 attended, although neither the board nor DRI execs participated. Videos of the session are available here.
The Board chose to communicate the result of the SGM, by email, only in terms of pointing to the DRI presentations. They did not tell members anything about quorum or what transpired. There is no official record of what took place. Since there was no SGM, it is not clear who will be expected to pay the bills (DRI or the club). But either way, members will likely never know, as the Board denies all requests for documentation beyond the annual financials and report. Their reason? The Board claims that not of this information is of concern to the membership.
Post SGM, a letter was sent to the Board reaffirming this group’s position on the current situation.