Controversy erupts over Durham Co-op referendum that would strip workers of own class of shares, governance
Update: Nov. 9:This story has been corrected to reflect that Michael Bacon is a former co-op board member, not a current one; also, voting on the board candidates ends Nov. 13.
Since it opened in March, the Durham Co-op has come to symbolize the ideals of democracy, egalitarianism and fair trade. Owned by its members—people who buy shares— the co-op, for many, is a rebuke to Whole Foods, which pretends to be progressive but is actually a large corporation run by a libertarian, anti-union CEO.
However, the co-op’s patina could be tarnished by a controversy involving a vote on its articles of incorporation. If the members pass a referendum on Sunday, it could eliminate from governing documents the ability of workers to buy a separate class of shares from consumers. It also would prevent worker-owners from electing up to two representatives to the board of directors. Ten people currently sit on the board.
The disempowerment of rank-and-file co-op workers runs afoul of the very values the store espouses, says David Roswell, an owner and investor. He also sells his pottery at the co-op. “The workers don’t want to lose this right,” Roswell says. “The co-op is taking away the tool for democracy, wealth building and control. That’s what distinguishes the co-op from Whole Foods.”
Consumer-owners have been voting for nearly two weeks on both the bylaw changes and on candidates to the board. Voting ends Sunday at the co-ops’s annual meeting. [Update: voting ends Nov. 13 on board candidates.] Critics of the change want the store to delay the referendum to allow for more discussion among the membership.
As the co-op ends its first year in business, traditionally a financially tenuous time for any start-up, employees who are not in management still do not earn a living wage. Last spring, workers were earning a little more than $9 an hour. (Bull City Rising tried to contact workers through intermediaries, but so far has been unsuccessful.)
Currently, the bylaws allow an employee who works at the co-op for six months can buy a worker share in the store. If workers were able to buy a separate class of shares, they could be enrolled in profit-sharing, which could supplement their wages.
“The line is that it’s not best practice to allow this,” Roswell says. “Just because it’s uncommon doesn’t mean that it isn’t a best practice.”
The best practice “line,” as Roswell puts it, comes from CDS Consulting Co-op. Based in Vermont, the consulting group advises co-ops nationwide on governance, marketing, finances and other operational basics.
Bull City Rising contacted CDS Friday at 1, but has yet to receive a response.
There is at least one other co-op that has a hybrid model, one that allows workers to buy a separate class of shares and have board seats: Weaver Street Market in Carrboro. In fact, during its inception, the Durham Co-op essentially copied the market’s bylaws. Chatham Marketplace did the same, and created a similar model.
“We looked at the incredible success of Weaver Street, then and now I believe the largest co-op grocery in North Carolina, and certainly one of the largest in the Southeast, particularly in its phenomenal employee retention, and felt that our mission as a co-op dedicated to serving central Durham included being good employer,” says former Durham co-op board member Michael Bacon. “Based on that work, we decided that we wanted to adopt the employee ownership plan, because despite the misgivings that some co-operative consultants had, we believed that this newer model that Weaver Street had developed had proven itself successful and wanted to emulate that.”