NRHA Governance and Consideration of the Run for a Million Invitational
Courtesy of NRHA.com
Reining fans and participants around the world are aware of the Run for a Million Invitational, its magnitude, and the unique platform it brings to reining. The National Reining Horse Association Board of Directors understands and appreciates the opinions of all members and how they feel lifetime earnings should be recorded. The board of directors and executive committee took part in many discussions with members, and, as a decision-making body, fulfilled its responsibility to make a decision with the best interests of the organization in mind. The steps are outlined below.
The corporate organizational documents of the National Reining Horse Association relating to board action and conflicts of interest are consistent with best practices followed by other similar tax-exempt organizations. The board of directors and executive committee are obliged to act with duty of care and loyalty to the Association, which includes following its bylaws, rulebook, and policies while exercising reasonable judgment and good faith. When recently presented with the question of approving the Run for a Million Invitational, the process was followed—at both the executive committee and board level.
The event was discussed at the February executive committee meeting. In early April, the executive committee reviewed the application for approval as it was different from typical applications received by the NRHA office. After discussion of the possible benefits and disadvantages, the executive committee approved for the event to be recognized as a Category 11 event (NRHA-approved class not corresponding to other NRHA Categories. Not for horse/rider eligibility, Top 20 Program or World Champions or Top Ten Awards.). As with any other event not owned by NRHA, NRHA will not provide funding for the event, distribute payouts, or manage the event in any way. However, the venue’s potential to raise awareness of reining, create and engage fans, and distribute significant payouts within the industry surpasses anything on the horizon for NRHA.
Discussion continued about how the earnings would be counted for historic milestones. Therefore, the question was brought to the board in April to reconsider. The NRHA Bylaws state that the board can countermand any decision made by the executive committee. A 2/3-majority vote is required. A motion was made and seconded to handle the earnings in a different manner than previously approved by the executive committee. Following discussion, including disclosure of perceived conflicts, the directors disapproved the motion (by six votes in support of the motion and 11 votes in opposition). Therefore the board of directors did not overturn the executive committee’s decision. The event is still approved as a Category 11 show and the winnings count for lifetime earnings.
For any board, there may be potential conflicts of interest especially because boards are most often populated by leaders in the given sector. The presence of a conflict of interest does not violate the duty of loyalty, nor is it regarded as a reflection on the integrity of the board or the director. According to the NRHA’s governance documents, any director or officer who has a material direct or indirect financial interest shall disclose his or her financial interest in any proposed transaction or arrangement involving NRHA. An individual has a financial interest if he or she has, directly or indirectly, through business, investment, or family: a material ownership or investment interest in any entity with which the Association has a transaction or arrangement; or a material compensation arrangement with the Association or with any entity or individual with which the Association has a transaction or arrangement.
In this instance, the president asked board members, prior to the vote, to disclose and discuss any potential conflicts. NRHA considers that disclosure important because it gives the board sufficient knowledge to evaluate the overall fairness and propriety of the transaction. With this in mind, the board then proceeded to deliberate and vote. Additionally, after the board’s consideration of the matter (including potential conflicts) and subsequent review of the bylaws with legal counsel, it was confirmed that the matter did not involve prohibited conflicts of interest.
Again, the NRHA Board of Directors keeps members’ opinions top-of-mind in all its deliberations. In this instance, and many others, the board went through an exhaustive process to properly deliberate before making decisions.
Founded in 1966, NRHA is a nonprofit organization dedicated to promoting the reining horse worldwide while celebrating and advancing the finest traditions of Western horsemanship. NRHA encourages the public interest in agriculture and ranching activities, provides for all levels of reining competition, and maintains the recognition of worthwhile purses.