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After careful consideration of the findings of the preliminary audit, the response of SPAC to the preliminary audit and subsequent press releases and other communications and documents from SPAC relating to the preliminary audit or to issues resulting from the preliminary audit, OPRHP makes the following recommendations.
1. Increase the number of active Board of Directors members to the maximum of 36, as provided in the by-laws, with one-third or 12 members constituting a quorum. Included in this increased number would be two additional representatives of OPRHP, in addition to the two existing Saratoga-Capital Regional Park Commission members. The two new representatives would be designated by the Commissioner of Parks, Recreation and Historic Preservation. These two designees should be standing members on the executive, compensation, budget/finance, nominating and, when applicable, search committees. This would allow for better communication between OPRHP and SPAC as well as better coordination of construction projects, service requirements and relations with outside agencies.
2. Implement a plan of term limits for members of the Board with the Board retaining the authority to waive the applicable limit in cases of extraordinary circumstances, such as where the individual member can continue to contribute valuable services or is in the midst of a development campaign.
3. SPAC would amend its conflict of interest policy, contained in its by-laws, to prohibit the hiring of Board members as employees, to prohibit the hiring of immediate family members of Board members as upper level management employees, and to prohibit the election of Board members who are employed by a private entity which does, or is likely to do, substantial business with SPAC. This policy would further reassure the patrons and supporters that fiscal responsibility is paramount to SPAC.
4. SPAC would complete the process commenced last year of establishing an independent audit committee by amending its by-laws to include a charter for the audit committee which charter shall require that, at a minimum, it be composed of Board members who have financial experience and at least one of whom is a financial expert. In addition, the charter would require that the annual report and the adopted annual budget are publicly available, preferably on line. The annual report would be signed by each Board member.
5. SPAC would complete the process commenced last year of establishing a governance/nominating committee by amending its by-laws to include the previously adopted charter thereof and that charters for all committees be included in the by- laws.
6. In accord with its contractual right to inspect and audit the books and records of SPAC, OPRHP would also have the right to review and comment upon SPAC’s annual budget and the right to review and comment SPAC’s selection of its outside auditor(s). Monthly, quarterly, annual and other regular budgetary and financial reports prepared by SPAC for presentation to its own management and/or its Board of Directors shall also be provided to OPRHP on an ongoing basis. OPRHP also would have the right to participate in meetings with SPAC’s outside auditor(s) and to review audit materials, documents and draft financial statements prior to their presentation to the Board.
7. In order to safeguard its endowment, SPAC would adopt an investment policy which, among other things, would authorize the replacement of the fund manager after six months of underperformance. In addition, SPAC would adopt an investment spending policy and review the same on a periodic basis.
8. Any compensation package to upper level management should be conditioned upon meeting performance goals established at the beginning of each fiscal year. Such goals would relate back to the adopted annual budget and the Board approved long term strategic plan.
9. Closer coordination with OPRHP, NYCB, the Philadelphia Orchestra and CCE (Clear Channel Entertainment) with respect to cross-promotions, scheduling, joint fund raising and development, thereby better leveraging SPAC’s relationships with these entities.
March 16, 2005