MINUTES FORTY-NINER SHOPS, INC. BOARD OF DIRECTORS MEETING Friday January 19 th, 2018 Conference Room Members Present: Dr. Carmen Taylor Mr. Scott Apel Dr. Lee Blecher Mr. Alvaro Castillo Ms. Colette Redden Dr. Wendy Reiboldt Mr. Jonathan Wanless Ms. Sofia Musman Ms. Sylvana Cicero Absent: Staff Present: Mr. Joseph Nino Mr. Don Penrod, Secretary, General Manager/CEO Mr. Robert de Wit, Controller Ms. Rosa Hernandez-Henderson, Director of Human Resources Ms. Marianne Russo, Executive Secretary Mr. Jared Ceja, Director of Bookstore Services A. Call to Order: The meeting was called to order at 10:12 a.m. by Dr. Carmen Taylor, Chair. B. Approval of the Agenda: January 19, 2018 Two items were requested to be included on the Agenda: 1. 49er Shops Personnel Issue under Chair s Report 2. Add Mr. Scott Apel and remove Ms. Mary Stephens under Members Present Motion to accept the Agenda as amended. M/S Dr. Blecher / Ms. Musman By acclamation the Agenda for the meeting of January 19, 2018 was hereby approved. C. Approval of Minutes: November 17, 2017 Motion to accept the Minutes as presented. M/S Ms. Musman / Mr. Apel Page 1 of 5
By acclamation the minutes of November 17, 2017 were hereby approved as presented. D. Chair s Report: Compensation Task Force o Dr. Taylor updated the Board on the progress of the Compensation Task Force. The plan is to include the final compensation plan draft on the March 16 Board Meeting. 49er Shops Personnel Issues o Dr. Taylor reviewed the President s recommendation to adjust the reporting and accountability procedures for the General Manager. The Board Chair will now centralize matters that concern documentation and signing authorization for this position moving forward. o Additionally, as per the President s written recommendation last semester, a change in the Board s Leadership was brought forward. Both the VP of Student Services and VP of Admin & Finance would remain on the Board, however, the VP of Admin & Finance would assume the Chair role while appointing a Treasurer of his or her choosing. This new inclusion may need to be added to our current bylaws since it would supersede the election policy we currently have for these positions. The policy and procedure of the Treasurer selection could be included as an agenda item for the upcoming Spring Board Retreat. o The Work Place Discrimination and Harassment Policy was discussed in regards to the creation of a better process in matters of complaints against the 49er Shops Human Resources Director and General Manager. The University is also currently looking into this issue with other Auxiliaries since many policies do not address higher level and executive employees. More documentation will be sent to the 49er Shops Human Resources department to help with developing that policy and future procedure. A larger discussion will need to be included in a future meeting to better define the roles and responsibilities of this new directive for subsequent communication to all 49er Shops employees. Spring Board Retreat o The retreat will take place on Friday and Saturday, April 27 & 28 th, at the Terranea Resort. o Ms. Russo will schedule a meeting between Mr. Apel, Dr. Taylor and Mr. Penrod to review and postulate topics for this Retreat to bring back to the Board on the March 16 th scheduled meeting. Finance & Investment Committee o Mr. Penrod stated that we invited Mr. Andy Price from Morgan Stanley/ Smith Barney and our SMIF team led by Dr. Ammerman to present for this meeting. o Mr. Price was able to provide information on Sustainable Investing and Page 2 of 5
E. General Manager s Report: the Committee will probably need to meet again on this issue so that by the end of the semester they could put together enough information to formulate a policy to help direct our efforts in the future. Operating Objectives: o Student Success Mr. Penrod presented at the AOA Conference recently with DJ Pepito who is the Director of Research at NACAS From the research currently gathered, we will be able to get quality data to help better support our students and be in line with the Graduation Initiative 2025. o Service Satisfaction The Shops recently hosted four focus groups during December in support of the UDP/USU Foresight training and planning sessions with Michael Gardner and Melissa Soto from Facilities and Physical Planning. The information gathered from these departmental focus groups will serve as a foundation to formulate the planning process for these projects in the next year. o Sustainability Ellie Christov from the Chancellor s Office presented her findings at a luncheon on Thursday, January 18 th, to the campus stakeholders. She discussed what we are currently doing on campus as well as what opportunities are available currently to enhance student health and wellness in a more conscious and deliberate fashion. The final draft of her research will be presented to the University President within the next few months. o Financial Performance At the Finance & Investment Committee earlier that morning, Morgan Stanley/Smith Barney and the SMIF Investment Team discussed the topic of Socially Responsible Investing. As a Board, there needs to be a discussion as to what will be their definition of socially responsible investing. Additionally, it will need to be decided as to what portion of our investment would this direction be given to working toward a policy to present at a future Board meeting. Starbucks Contract & Renovation o The 49er Shops were required to invest for a renovation on both campus locations as part of our Starbucks Master Licensing Agreement renewal. The extent and costs of this renovation were more expansive than was originally reviewed and the Board had asked for further options and clarification before moving forward. Page 3 of 5
o After consulting the 49er Shops lawyer, Mr. Allen Thomas, he confirmed that the best negotiation possible had already been achieved with the delay of the renovation to the UDP Starbucks. Additionally, any additional challenges to Starbucks and this Licensing Agreement could lead to substantial costs for the 49er Shops on many levels. o The Board agreed to move forward as planned with the construction on the University Library Starbucks due to lack of options and time constraints. Beach on 2 nd Street o The Beach on 2 nd Street s lease is up in 2020 so options so a discussion needs to start in anticipation of that timeframe. o The Board requested that more information to be brought at a future meeting in terms of financials, rental rates for the area and budget costs so that a full picture of the future of this location could be better determined. Amazon Contract Update o Amazon has re-negotiated their contract with the 49er Shops as they are doing with several college campuses. o This new contract would be a flat rental lease for the space instead of the original revenue share arrangement. This new 5-year deal will more than offset our original investment. F. 2 nd Quarter FY 2017-2018 Financial Statements Review Mr. de Wit stated that results were down operationally and we were unable to recapture the 1 st Quarter slow start. o Part of this is due to a Residential Dining downward adjustment of $276,000 for a summer conference and Welcome Week. o However, costs of goods and expense control was maintained across all divisions. Second Quarter cash flow was $650,000 with an Investment Portfolio gain of $408,000 along with minimal capital expenditures. Sales are down across business lines from Textbook Sales to Retail Dining and Convenience Stores. o While divisional Directors and managers are working hard within their departments to control labor and costs, some of our biggest financial hurdles have been out of our control. These would include higher room vacancies in Housing, lower campus enrollment and the abundance of construction on campus that have negatively affected several locations. A recommendation was given that we should course correct with a new projected budget and a new game plan for how to better finish the fiscal year. Mr. Penrod agreed that this may be a good year to restate our budget to the Board in an effort to get on a more level playing field without impacting our departments to the point that it might affect current service standards. Additional information will be together for a new budget with corresponding financial data to present at the next Board Meeting in March. Page 4 of 5
Motion: M/S: To accept the 2 nd Quarter 2017-2018 Financial Results as presented. Mr. Castillo / Ms. Redden By acclamation the motion to approve the 2 nd Quarter FY 2017-2018 Financial Results are accepted unanimously. E. Adjournment There being no further business, the meeting was adjourned at 12:15 PM Page 5 of 5