Conflict of Interest Policy

Purpose

Article VI, Section 16 of the Wisconsin Energy Conservation Corporation (WECC) Bylaws provides that the WECC Board of Directors shall "ensure that no actual or appearance of conflict of interest by Board Directors will improperly or adversely affect WECC, and therefore, will maintain and abide by WECC's policy statement." The purposes of this Conflict of Interest Policy are: (a) to carry out the intent of WECC's Bylaws; (b) to ensure that no conflict of interest will improperly and adversely impact the actions of the WECC Board of Directors, its Executive Director or other Covered Persons (as defined below) and to avoid any appearance of conflict of interest; and (c) to update the scope of WECC's conflict of interest policy in light of evolving applicable law.

Conflicts of interest occur when multiple loyalties may pull a person who is in a position to influence a decision toward opposite courses of action, for example, if a WECC Director were to vote on a WECC decision that may result in personal or professional gain for the Director, their business, their spouse, or a family member. WECC's Conflict of Interest Policy is intended to protect WECC's interest when it is contemplating entering into a transaction or arrangement that might affect the private financial or other interest of a "Covered Person" as defined below. No policy can cover every possible situation, but the objective of this Policy is to provide guidance that will enable WECC to identify potential conflict situations and address them so that WECC's decision-making process is not compromised. The Policy is intended to supplement but not replace any applicable state and federal laws governing conflicts of interest applicable to nonprofit organizations.

Scope

WECC's conflict of interest policy shall apply to the following persons ("Covered Persons"):

Members of the WECC Board of Directors;
WECC's "Officers" as defined below.
"Key Employees" as defined below.

In addition, the Board of Directors and WECC's Executive Director, in their discretion, may elect to extend the principles and procedures set forth in this Policy to additional WECC employees when they reasonably deem such extension to be in the best interest of the organization.

Definitions

Conflict of Interest. Generally, a conflict of interest may occur if an interest or activity influences or appears to influence the ability of a Covered Person to exercise objectivity or impairs a Covered Person's ability to perform his or her management or employment responsibilities in the best interests of WECC.

Without limitation, a Covered Person is considered to have a potential conflict of interest when:
- He or any Family Member or any Controlled Entity may receive a financial or other significant benefit as a result of the individual's position at WECC;
- The Covered Person has the opportunity to influence WECC's granting, business, administrative or other material decisions in a manner that leads to personal gain or advantage for the Covered Person or any Family Member or for any Controlled Entity: or
- The Covered Person has an existing or potential financial or other significant interest that impairs or might appear to impair the individual's independence in the discharge of his or her duties to WECC.
Controlled Entity. A "Controlled Entity" is one in which a Covered Person serves as Officer, Director, Key Employee or greater than 35% owner, when the interest of the Covered Person and Family Members are taken into account.
Family Member. A "Family Member" includes all of the following for a Covered Person: spouse, domestic partner, ancestors, child (whether natural or adopted), brother or sister (whether whole or half blood), grandchildren, great-grandchildren and spouses of brothers, sisters, children, grandchildren and great-grandchildren.
Key Employee. A WECC employee other than an Officer or member of the WECC Board of Directors, who meets all of the following tests:
- Receives reportable compensation from WECC in excess of $150,000 for the calendar year ending with or within WECC's tax year; and
- Has responsibilities, powers, or influence over WECC as a whole similar to those of WECC's officers or directors; or manages a discrete segment of the activity of WECC that represents 10% or more of the activities, assets, income or expenses of WECC; or has authority to control or determine 10% or more of WECC's capital expenditures, operating budget or compensation for employees; and
- If WECC has 20 or more employees that satisfy the $150,000 test and the responsibility test, is one of the top 20 such employees for the calendar year ending within WECC's tax year.
Officer. An "Officer" is a person elected or appointed to manage WECC's or another organization's daily operations, including officers of the organization's board of directors and the top management official and top financial official of the organization.

Procedures

Duty to Disclose. In connection with any actual or possible conflict of interest, any Covered Person must disclose the existence of their financial or other interest that gives rise to a potential conflict of interest. This includes disclosing all material facts to the Board of Directors, Officers, Executive Director or other persons with delegated powers considering the proposed transaction or arrangement before any vote or action is taken. On a matter where there is a potential conflict or perception of conflict, Covered Persons shall err on the side of disclosure, rather than risk an inappropriate failure to disclose.

Without limiting the foregoing, each Covered Person shall notify the Executive Director not less than annually of his or her existing affiliations (including employment) with other organizations and/or firms. This notification shall be updated as new affiliations are created or existing affiliations end. The Executive Director shall compile each Covered Person's information and shall, in the case of the Board members, provides a combined list to each Board member of the affiliations of the other Board members.
Determining Whether a Conflict of Interest Exists. After disclosure of the interest and all material facts, and after any discussion with the Covered Person, he/she shall leave the Board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining Board or committee members shall decide if a conflict of interest exists.
Procedures for Addressing the Conflict of Interest
1. A Covered Person may make a presentation at the Board or committee meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
2. The chairperson of the Board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
3. After exercising due diligence, the Board or committee shall determine whether WECC can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.
4. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the Board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in WECC's best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.
5. No contract or other transaction between WECC and a WECC Director or any entity in which a WECC Director is a director or officer or has any material financial interest is void or voidable because of the relationship or interest or because the director is present at the meeting of the Board or committee that authorizes, approves or ratifies the contract or transaction or because the director's vote is counted for that purpose, if any of the following applies:
  - The relationship or interest is disclosed or known to the Board or the Committee that authorizes, approves or ratifies the contract or transaction and the contract or transaction was authorized, approved or ratified by a vote or consent sufficient for the purpose without counting the votes or consents of the interested Directors.
  - The fact of such relationship or interest is disclosed or known to the members of the Board or the committee entitled to vote and they authorize, approve or ratify that contract or transaction by vote or written consent.
  - The contract or transaction is fair and reasonable to WECC.
Violations of the Conflicts of Interest Policy
1. If the Board, or committee or the Executive Director (in the case of Key Employees other than the Executive Director) has reasonable cause to believe a Covered Person has failed to disclose actual or possible conflicts of interest, it shall inform such Covered Person of the basis for such belief and afford the Covered Person an opportunity to explain the alleged failure to disclose.
2. If, after hearing the Covered Person's response and after making further investigation as warranted by the circumstances, the Board or committee (or Executive Director, as applicable) determines the Covered Person has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
Special Situations

Confidential Information.
Confidential Information learned by Covered Persons in the course of their service for WECC shall be held in confidence and not disclosed to others without the prior consent of WECC.

Gifts. As a general rule, Covered Persons may not receive or offer any gift or anything else of significant value for the purpose of influencing the actions of WECC or the Covered Person. Gifts received from vendors, suppliers, consultants and grantees as part of normal business practice must be declined or given to WECC. This guideline is not intended to prohibit normal business practices such as meeting over meals, corporate items given at conferences or token hosting gifts, so long as they are of nominal and reasonable value and promote WECC's legitimate interests. Any questions regarding special situations should be referred to WECC's Executive Director.

Records of Proceedings
The minutes of the Board and all committees with Board delegated powers shall contain:
1. The names of the persons who disclosed or otherwise were found to have a financial or other interest in connection with an actual or possible conflict of interest, the nature of the financial or other interest, any action taken to determine whether a conflict of interest was present, and the Board's or committee's decision as to whether a conflict of interest in fact existed.
2. The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.
Compensation
1. A Covered Person who receives compensation, directly or indirectly, from WECC for services is precluded from voting on matters pertaining to that person's compensation.
2. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from WECC for services is precluded from voting on matters pertaining to that member's compensation.
3. No voting member of the Board or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from WECC, either individually or collectively, is prohibited from providing information to any committee regarding compensation.
Annual Statements
Each Covered Person shall annually sign a statement which affirms such person:
1. Has received a copy of WECC's Conflicts of Interest Policy.
2. Has read and understands the Policy,
3. Has agreed to comply with the Policy; and
4. Discloses the information requested by WECC to monitor and enforce compliance with the Policy.
The current form of Disclosure Statement is attached to the Policy as Appendix A.

Periodic Reviews
To ensure WECC operates in a manner consistent with its mission and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:
1. Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm's length bargaining.
2. Whether partnerships, joint ventures, and arrangements with management organizations conform to WECC's written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further WECC's tax-exempt mission and do not result in inurement, impermissible private benefit or in an excess benefit transaction.
Use of Outside Experts
When conducting the periodic reviews as provided for in Article VIII, WECC may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the Board of its responsibility for ensuring periodic reviews are conducted.