Jun 17, 2024 Human Resources and Governance Committee Meeting

[00:00:03]

GOOD AFTERNOON.

[1. Call General Session to Order]

THIS IS PEGGY HAGG, COMMITTEE CHAIR, A HEREBY CALL THIS MEETING TO ORDER.

THIS MEETING'S BEING WEBCAST LIVE TO THE PUBLIC ON OUR COTS WEBSITE.

BEFORE WE PROCEED, I'D LIKE TO HIGHLIGHT THE ANTITRUST ADMONITION AND SECURITY MAP, WHICH ARE INCLUDED IN THE POSTED MEETING MATERIALS.

THE FIRST ORDER OF BUSINESS IS AGENDA ITEM TWO, NOTICE OF PUBLIC COMMENT, IF ANY.

TODAY'S MEETING AGENDA WAS POSTED PUBLICLY ON JUNE 10TH AND PROVIDED INSTRUCTIONS FOR THE PUBLIC FOR COMMENTING IN PERSON.

TO DATE, NO ONE HAS EXPRESSED INTEREST IN COMMENTING.

IS THAT STILL CORRECT, JOHN? YES.

THANK YOU.

NEXT STEP IS

[3. April 22, 2024 General Session Meeting Minutes]

GENERAL SESSION MEETING MINUTES.

THERE'S A DRAFT OF THE MINUTES IN YOUR UH, MATERIALS.

DOES ANYONE HAVE ANY COMMENTS OR WOULD LIKE TO MAKE A MOTION? I APPROVE APPROVAL.

THANK YOU.

BILL MOVES TO APPROVE JOHN.

SECOND.

ALL IN FAVOR? AYE.

ANY OPPOSED? OR SESSIONS? THE MOTIONS UNANIMOUSLY PASSED.

NEXT MA BACK WILL PRESENT.

AGENDA ITEM FOUR, HUMAN

[4. Human Resources Operations Report]

MARA, GOOD AFTERNOON.

MORRIS SPAC, VP OF HR.

THIS AFTERNOON I'LL BE DISCUSSING OUR YEAR TO DATE HR WORKFORCE STATISTICS, IMPORTANT WORK THAT HR IS PERFORMING, WHICH ALIGNS WITH THE ERCOT 2024 TO 2028 STRATEGIC PLAN.

AND I WILL ALSO SHARE WITH YOU PROGRAMS THAT WE'RE CELEBRATING THIS TIME OF YEAR.

THIS SLIDE PROVIDES YOU AN OVERVIEW OF EARTH HOT'S TOTAL HEAD COUNT, AS WELL AS THE BREAKDOWN PER FUNCTIONAL AREA.

AS OF THE END OF MAY, WE HAD 934 FULL-TIME EMPLOYEES, 33 CONTINGENT WORKERS.

AND SINCE THE REPORT WAS PUBLISHED, WE'VE WELCOMED 18 INTERNS TO JOIN US INTO ERCOT AS WELL.

AND WE'RE CURRENTLY SOURCING A LITTLE MORE THAN MARK.

CAN YOU GET A LITTLE BIT CLOSER TO THE MIC? IS THAT BETTER? YEAH, THANK YOU.

HR HAS ONBOARDED 68 EMPLOYEES SINCE JANUARY 1ST.

25% ARE FEMALE AND OVER 64% ARE OF A DIVERSE ETHNICITY IN THAT GROUP.

AND AS I PREVIOUSLY MENTIONED, SINCE THE REPORT WAS PUBLISHED, WE WELCOMED 18 INTERNS INTO OUR ENGINEERING IT CLIENT SERVICES AND BUSINESS CONTINUITY BUSINESS AREAS.

OUR CLIENTS ATTRITION AS AT THE END OF MAY IS 5.4 FOR TOTAL ATTRITION AND FOUR FOR VOLUNTARY ATTRITION.

AND WE'VE HAD A TOTAL OF 24 EMPLOYEE TERMINATIONS YEAR TO DATE OVERALL.

SO NEXT I WANNA TALK ABOUT EXCITING INITIATIVES THAT WE'RE PERFORMING YEAR TO DATE IN HR AND THOSE DIRECTLY ALIGNED TO OUR FIVE YEAR STRATEGIC PLAN.

NOW THIS WORK DIRECTLY TIES TO CULTIVATING A HIGHLY SKILLED WORKFORCE TO DRIVE ERCO T'S ONGOING AND FUTURE SUCCESS, IMPLEMENTING A WORKFORCE AND LEARNING STRATEGY, CREATING GREATER CAPACITY FOR DEVELOPING INTERNAL EXPERTISE AND THOUGHT LEADERSHIP, AS WELL AS ENHANCING OUR OVERALL EMPLOYEE EXPERIENCE WITH THE COMPANY.

NEWER ENHANCED HR PROGRAMS ARE CURRENTLY BEING DEVELOPED TO ENGAGE EMPLOYEES AS WELL AS IMPROVE ORGANIZATIONAL PERFORMANCE AT ERCOT AND SUCH PROGRAMS INCLUDE A NEW PROFESSIONAL DEVELOPMENT PROGRAM THAT IS FOR ALL EMPLOYEES, SUCCESSION PLANNING AND DEVELOPMENT TO ENSURE OUR FUTURE LEADERS ARE PREPARED AND EQUIPPED TO LEAD ERCOT OPERATIONS AND TRANSFORMATION EFFORTS GOING FORWARD.

AND I'LL BE TALKING TO YOU MORE AS A COMMITTEE IN EXECUTIVE SESSION ON SUCCESSION PLANNING FEEDBACK.

WE'RE ALSO WORKING ON CREATING NEW THINK TANKS THAT ANY EMPLOYEE CAN PARTICIPATE IN.

AND THOSE ARE TO WORK ON EXCITING NEW IDEAS AND INNOVATIONS OF THE COMPANY.

SO WE CURRENTLY, OR OR WE CURRENTLY OFFER DEVELOPMENT OPPORTUNITIES FOR BOTH INDIVIDUAL CONTRIBUTORS AND MANAGERS THROUGHOUT THE COMPANY AND THROUGHOUT THE YEAR.

BUT THERE'S NO REAL COMPREHENSIVE SYSTEMATIC PROFESSIONAL DEVELOPMENT PROGRAM IN PLACE CURRENTLY.

SO WE'VE BEEN PUTTING A LOT OF WORK IN THIS YEAR TO DEVELOP SUCH A PROGRAM THAT WILL SUCCESSFULLY NAVIGATE THE COMPLEXITIES AND DYNAMICS OF TODAY'S RAPIDLY EVOLVING BUSINESS TRANSFORMATION AND ENVIRONMENT.

AND THESE COURSES ARE DESIGNED TO ENGAGE EMPLOYEES, IMPROVE PERFORMANCE AND ELEVATE LEADERSHIP BENCH STRENGTH ACROSS THE COMPANY.

SO THIS CAN SLIDE.

THIS SLIDE CONTAINS A HIGH LEVEL OVERVIEW OF THE TOPICS WITHIN THOSE COURSES OF THE UPCOMING NEW PROFESSIONAL DEVELOPMENT PROGRAM THAT WE'LL LAUNCH SOON.

[00:05:01]

SO FOR MANAGERS, WE'RE HYPER-FOCUSED ON THE CONCEPTS OF LEADING PRODUCTIVE WORK GROUPS AND HOW TO INFLUENCE PEOPLE TOWARDS PRODUCTIVITY, NAVIGATING THE BALANCE BETWEEN EMPOWERMENT AND ACCOUNTABILITY.

AND THIS WILL NOT ONLY HELP MANAGERS BETTER BE ABLE TO DELEGATE, BUT TO ALSO ELEVATE THEIR ENTIRE TEAM'S ABILITY TO EMPOWER, UM, AND BE ACCOUNTABLE FOR WORK.

AND THEN FINALLY, LEADING IN A MATRIX.

AND THIS IS REALLY IMPORTANT AS OUR THOUGHT CONTINUES TO PROMOTE CROSS-FUNCTIONAL COLLABORATION AND WILL RELY MORE AND MORE ON EMPLOYEES WORKING COLLABORATIVELY ACROSS THE ENTIRE COMPANY.

AND THEN THE NEW SYSTEMIC DEVELOPMENT PROGRAM FOR INDIVIDUAL CONTRIBUTORS WILL INCLUDE WORKING IN A MATRIX, SELF-LEADERSHIP AND ACTIVELY CONTRIBUTING AS A TEAM PLAYER TOWARDS SHARED TEAM SUCCESS.

SO THINK TANKS.

THIS IS A NEW CONCEPT AT ERCOT.

SO WHEN WE WERE WORKING ON OUR 2024 TO 2028 STRATEGIC PLAN, WE HAD A GROUP OF EMPLOYEES THAT WORKED ACROSS THE ORGANIZATION AND CAME TOGETHER AND CAME UP WITH DIFFERENT IDEAS THAT THEY THOUGHT THAT WE SHOULD INCORPORATE INTO OUR STRATEGIC PLAN.

ONE OF WHICH, ONE OF WHICH IS THE CONCEPT OF THINK TANKS.

AND SO WE'VE BEEN WORKING AS AN HR DEPARTMENT ON A SKELETON PLAN FOR THE NEW ERCOT THINK TANKS.

AND WE'VE BEGUN SOCIALIZING IT WITH PEOPLE ACROSS THE COMPANY AND GETTING THEIR FEEDBACK AS WE WORK MORE AND MORE ON THIS PROGRAM.

SO ULTIMATELY THE THINK TANKS WILL INTRODUCE EMPLOYEES SOON AND IT'LL PROVIDE AN OPPORTUNITY FOR IDEA INCUBATION, INNOVATION, CROSS-FUNCTIONAL COLLABORATION WITH EACH OTHER.

AND OVERALL IT WILL ELEVATE EMPLOYEE ENGAGEMENT AS WELL.

AND SO I WANNA CLOSE THIS AFTERNOON REPORT WITH SEVERAL THINGS THAT WE'RE CELEBRATING AT THE COMPANY.

FIRST, LIKE I SAID, WE WELCOMED OUR CLASS OF 2024 INTERNS.

SO OUT OF OVER 1800 APPLICANTS, WE SELECTED 18 STUDENTS TO JOIN US IN OUR IN THIS YEAR'S INTERNSHIP CLASS.

AND THIS CLASS IS OFFERED THE ABILITY TO COLLABORATE BOTH WITH ERCOT SUBJECT MATTER EXPERTS, ERCOT LEADERSHIP, OTHER PRIOR INTERNS, AS WELL AS EMPLOYEES THAT ENTERED ERCOT IN, UM, FROM AN ONE OF OUR OPERATIONAL DEVELOPMENT PROGRAMS. AND WE ALSO GIVE THEM THE ABILITY TO GO TO SITE VISITS AND TOUR THE CAPITAL SO THAT THEY LEARN MORE ABOUT THE WAYS THAT WE INFLUENCE AND THE SERVICE THAT WE PROVIDE TO TEXANS OUTSIDE OF OUR CAMPUS WALLS.

AND LAST YEAR I TALKED TO YOU ABOUT A NEW VITALITY PROGRAM.

IT'S A NEW DEVELOPMENT PROGRAM THAT WE LAUNCHED IN JANUARY OF 2024.

AND IT PROVIDES LEADERSHIP DEVELOPMENT AND INFLUENTIAL TRAINING.

AND IT'S A COMBINATION OF TRAINING OPPORTUNITIES THROUGH THE CREATIVE CENTER OF LEADERSHIP, CCL, AS WELL AS THROUGH AN ACTION LEARNING PROJECT.

AND THE WAY THOSE PROJECTS WORK IS THAT WE SEPARATE THE PARTICIPANTS AND THERE'S ABOUT 14 PARTICIPANTS THIS YEAR INTO SMALL TEAMS. AND WE ASK THEM TO COLLABORATE AND WORK WITHIN THEIR TEAM TO ASSESS WHAT IS A REAL CHALLENGE THAT THE COMPANY HAS FACING US RIGHT NOW AND WHAT ARE SOME POTENTIAL SOLUTIONS FOR THOSE.

AND SO I WANNA SHARE WITH YOU THE THREE EXTRA LEARNING PROJECTS FROM THIS YEAR'S VITALITY PROGRAM PARTICIPANTS.

SO GROUP ONE IS FOCUSED ON GRID TRANSFORMATION, ITS INITIATIVES OF THE COMPANY.

SO ACTING AS A CONSULTING TEAM.

THIS TEAM TEAM ONE WILL PERFORM RESEARCH AND PROVIDE RECOMMENDATIONS FOR EFFECTIVE STRUCTURE AND PROCESSES TO BE ESTABLISHED FOR THE SUCCESS OF GRID TRANSFORMATION INITIATIVES.

GOING FORWARD, THE TEAM WILL LEVERAGE WHAT THEY LEARN FROM THEIR CCL TRAINING ON THE DIRECTIONAL ALIGNMENT AND COMMITMENT OR DAC FRAMEWORK TO ASSESS ERCOT CURRENT STATE AND MAKE RECOMMENDATIONS FOR IMPROVEMENTS BASED ON THOSE RESPECTIVE FINDINGS.

TEAM TWO IS DEVELOPING AN ERCOT INTERNAL SURVEY DESK PROCEDURE AND PROPOSAL FOR A CATALOG OF TOOLS AND SCRIPTS THAT ERCOT EMPLOYEES CREATE THAT PROVIDE EFFICIENCIES IN THEIR WORK, BUT HAVE NOT BEEN LARGE ENOUGH TO BE INCORPORATED INTO OUR COMPANY'S ENTERPRISE MANAGED PROCESSES.

AND THIS PROJECT AIMS TO EMPOWER ERCOT EMPLOYEES TO DEVELOP THESE CIVILIAN DEVELOPED TOOLS THROUGH A CONSISTENT PROCEDURE, ENABLE ERCOT EMPLOYEES TO LEVERAGE OTHER SUCH TOOLS, AND ALSO ESTABLISH THE PROCESSES FOR IDENTIFICATION, MAINTENANCE OF, AND INFORMATION SHARING OF THOSE TOOLS ACROSS THE COMPANY.

AND THEN FINALLY, TEAM THREE, THEY RECOGNIZE THAT ERCOT FACES CHALLENGES WITH KNOWLEDGE SHARING ACROSS ALL THE DIFFERENT BUSINESS UNITS.

AND SO THIS LEADS TO DUPLICATED EFFORTS AND A LOSS OF TIME DUE TO THE REINVENTING AND OF THE PROCESSES AND TOOLS THAT MAY ALREADY BE AVAILABLE IN OTHER PARTS OF THE BUSINESS.

SO THE GOAL OF

[00:10:01]

SO A LOT OF GREAT WORK COMING OUTTA THIS NEW DEVELOPMENT PROGRAM AND I'M EXCITED TO SEE THE IMPACT NOT ONLY ON THIS GROUP, BUT THIS WILL BE AN ANNUAL PROGRAM.

SO WE'LL HAVE NEW PROJECTS AND NEW SOLUTIONS COMING IN THE COMING YEARS AS WELL.

AND FINALLY, I'LL CLOSE BY CELEBRATING ERCOT 2024 DEVELOPMENT PROGRAMS. THE ENGINEERING DEVELOPMENT PROGRAM WAS LAUNCHED IN 2012.

IT'S BEEN HUGELY SUCCESSFUL.

WE'VE HAD 67 GRADUATES CURRENTLY WORKING WHO GRADUATED FROM THIS PROGRAM IN ERCOT RIGHT NOW.

SO THE RETENTION RATE IS ALMOST 90%.

SO IN 2022, HR REALLY BEGAN TALKING TO THE OTHER BUSINESS AREAS AND LOOKING FOR OTHER AREAS THAT COULD REALLY HAVE A NEW DEVELOPMENT PROGRAM AND THEY COULD TRAIN AND INVEST IN LESS SEASONED TALENT AND INTERNALLY DEVELOP THOSE PARTICIPANTS INTO THE TOP TALENT THAT WE NEEDED THE COMPANY.

AND SO TWO NEW PROGRAMS WERE LAUNCHED IN 2023, OUR GMS DEVELOPMENT PROGRAM AND OUR SYSTEM OPERATOR DEVELOPMENT PROGRAM, THE GMS DEVELOPMENT PROGRAM CURRENTLY HAS SIX PARTICIPANTS WHO ARE MORE THAN HALFWAY THROUGH THEIR CURRICULUM RIGHT NOW.

THEY'RE DOING A GREAT JOB.

AND IN MAY, 2024, WE HAD TWO PARTICIPANTS GRADUATE FROM OUR SYSTEM OPERATOR PROGRAM.

SO THEY HAVE NOW JOINED OUR OPERATOR TEAM AS SYSTEM OPERATORS.

SO CONGRATULATIONS TO ERCOT FIRST TWO ODP GRADUATES.

AND THAT CONCLUDES MY REPORT FOR YOU TODAY.

ANY COMMENTS OR QUESTIONS FOR MARA? MA? I, I'VE GOTTA JUST WANT TO GO BACK TO, UM, LEMME FIND IT, THE HEADCOUNT OVERVIEW, SLIDE NINE, I BELIEVE, AND REALLY GENERALLY TALK ABOUT SOME OF THE SLIDES NINE TO 11.

I THINK IT'D BE HELPFUL FOR US TO ALSO, WHEN YOU REPORT ON THIS, TO GET THANK YOU, UH, GET SOME BUDGET NUMBERS IN HERE SO WE CAN TRACK HOW WE'RE DOING AGAINST BUDGET.

UH, SO THAT WOULD BE HELPFUL TO DO.

AND THEN ALSO ON THE, THAT WOULD BE NINE AND 10 THEN ON ATTRITION, IT'S GOOD TO SEE THE ATTRITION NUMBERS, YOU KNOW, LEVEL OFF FROM WHAT WE SAW POST JURY, WHICH IS GREAT.

UM, BUT IT WOULD ALSO BE HELPFUL FOR YOU TO BRING TO OUR ATTENTION ANY, ANY OUTLIERS LIKE BY DEPARTMENT SO THAT WE CAN SEE IF THERE ARE ANY TRENDS, YOU KNOW, LIKE CERTAIN DEPARTMENTS WE'RE SEEING, UH, HIGHER ATTRITION JUST SO IT CAN BE ON OUR RADAR SCREEN TO, TO BRING THAT TO US.

AND I'M NOT SURE THE BEST WAY TO PRESENT IT, BUT IF YOU COULD TAKE THAT BACK AND THINK ABOUT IT SO THAT THAT'S HIGHLIGHTED TO US WHEN WE LOOK AT THESE NUMBERS.

OKAY.

ONE TREND THAT WE ARE SEEING, IT'S NOT NECESSARILY IN A PARTICULAR DEPARTMENT, BUT JUST ACROSS THE BOARD, WE DO HAVE A VERY SEASONED WORKFORCE AND WE HAVE A LOT OF RETIREMENT.

UM, AND SO I REALLY THINK THESE DEVELOPMENT PROGRAMS AND BRINGING IN THIS NEWER TALENT, DEVELOPING THEM UP WILL REALLY HELP WITH THAT.

THAT IS ONE TREND THAT WE'RE SEEING.

OKAY.

ANY OTHER COMMENTS? THANK YOU, MARA.

NEXT ON THE AGENDA, UH, JOHN WILL PRESENT AGENDA

[5. Recommendation regarding Amendments to the Board Policies and Procedures]

UH, THE COMMITTEE AND LEGAL STAFF HAVE BEEN WORKING WITH, UH, TAC TO COME UP WITH REVISIONS TO THESE POLICIES AND PROCEDURES.

AND I THINK MOST PEOPLE HERE SAT IN ON THE BEGINNING OF THE R AND M COMMITTEE WHERE THEY'RE ENDORSING, UH, THESE CHANGES TOO.

SO, UH, IF YOU WANNA RUN THROUGH THIS PRETTY QUICKLY, JOHN, 'CAUSE I THINK WE'RE UP TO SPEED GENERAL.

SURE.

YEAH.

UM, THE, I I DON'T HAVE TO COVER THE PRESENTATION AT LENGTH AT ALL.

THIS KIND OF REITERATES THE MAIN, UH, THEMES OF THE REVISIONS, UH, THAT WE'VE ALREADY GONE OVER.

THE MAIN, UM, THE MAIN PIECE HERE IS WE'RE REALLY, UH, CLARIFYING AND DOCUMENTING HOW THE BOARD PROCESSES REVISION REQUESTS, UH, INCLUDING, UH, THE, THE COMMITTEE'S, PARTICULARLY THE RM COMMITTEE'S ROLE IN THAT.

UM, THE, PROBABLY THE MAIN THING TO TO, TO NOTE HERE IS THAT AFTER WE, AFTER WE BROUGHT THIS TO THE COMMITTEE, UH, BACK

[00:15:01]

UM, AND, UH, THE MEMBERSHIP WAS GENERALLY WAS SUPPORTIVE OF THE CHANGES THAT WE MADE.

AND I THINK THAT, UH, WE ARE OF THE OPINION THAT THE DRAFT THAT WE'RE PRESENTING TODAY ADDRESSES ALL OF THEIR CONCERNS.

THE MAIN THING THAT WE'VE DONE SINCE THE FEBRUARY MEETING, UH, TO ADDRESS THE TAC COMMENTS IS TO ADD SOME LANGUAGE TO SECTION ONE, UH, THAT, UH, CLARIFIES HOW VARIOUS PARTIES CAN COMMENT ON ITEMS UNDER DISCUSSION, BOTH REVISION REQUESTS AND ANY OTHER ITEMS ON THE AGENDA.

AND THE LANGUAGE REALLY JUST, UM, FOLLOWS WHAT OUR ESTABLISHED PRACTICE IS, AND IT'S JUST DOCUMENTING THAT THAT PRACTICE.

THIS SLIDE JUST SUMMARIZES THE OTHER CHANGES THAT WERE MADE SINCE THE LAST VERSION THAT WE PRESENTED IN FEBRUARY.

I DON'T KNOW IF ANYONE HAS ANY QUESTIONS ABOUT ANY OF THE CHANGES THAT WE'VE MADE OR ANY OF THE LANGUAGE IN GENERAL.

DOES ANYBODY HAVE ANY QUESTIONS ON THE REVISED POLICY? YES, I JUST HAVE ONE QUESTION, UH, AROUND, UH, PUBLIC COMMENT.

UH, DO WE HAVE SOME KIND OF BOUNDARY CONDITIONS IN TERMS OF NOT WHO AND NUMBERS, BUT AMOUNT OF TIME? YEAH, WE HAVE DISCRETION TO OH, OKAY.

UH, YOU KNOW, TO HANDLE COMMENTS THAT WAY.

SO THE LAW PROVIDES THAT THE PUBLIC CAN COMMENT, BUT THE CHAIR HAS DISCRETION FOR HOW TO HANDLE THAT.

YEAH.

YEAH, I THINK, I THINK THEY, STAFF AND TECH WENT THROUGH A GOOD PROCESS HERE TO TRY TO, UH, DOCUMENT WHAT, WHAT THE CURRENT PRACTICES IS, BUT ALSO TO PROVIDE THE FLEXIBILITY WE NEED IN, IN CERTAIN SITUATIONS ON COM.

ON COMMENTS, FOR EXAMPLE.

UH, IF THERE ARE NO FURTHER COMMENTS, I'LL ENTERTAIN A MOTION TO RECOMMEND APPROVAL OF THE PROPOSED AMENDMENTS TO THE BOARD POLICIES AND PROCEDURES AS PRESENTED.

J JOHN MOVES.

BILL SECONDS.

ALL IN FAVOR? AYE.

ANY OPPOSED? DETENTIONS? THE MOTIONS UNANIMOUSLY PASSED.

THANK YOU, JOHN.

JOHN HAD TO JUMP IN AND SUBSTITUTE FOR CHAD AT THE LAST MINUTE THERE, SO THANK YOU YOU FOR DOING THAT.

NEXT UP IS ANOTHER VOTING ITEM AGENDA

[6. Recommendation regarding Ratification of Officer]

THIS MOTION IS FOR THE RATIFICATION OF KEITH COLLINS AS A VICE P PRESIDENT OF COMMERCIAL OPERATIONS, EFFECTIVE TODAY, JUNE 17TH, 2024.

UH, AND ACTUALLY THIS IS HIS FIRST DAY ON THE JOB, SO HE'S GETTING THROWN INTO IT.

UH, DOES ANY HAVE ANY COMMENTS OR WISH TO MAKE A MOTION? ALL THANK YOU, BILL MOVES.

JOHN SECOND.

ALL IN FAVOR? AYE.

ANY OPPOSED? ABSTENTIONS.

UH, THE MOTION'S UNANIMOUSLY PASSED.

NEXT UP IS, UH, AGENDA

[7. Review Conflict of Interest Disclosures Submitted by Employees and Directors]

THE COMMITTEE CHARTER REQUIRES US TO REGULAR REVIEW POTENTIAL CONFLICTS OF INTEREST TO CLOSE DISCLOSED BY THE COMPANY'S EMPLOYEES AND BOARD.

UH, JOHN'S, AGAIN, IS STEPPING IN FOR CHAD AND IS GONNA MAKE THIS PRESENTATION, SO THANK YOU.

I'LL DO MY BEST.

OKAY.

SO WE LOOKED AT THIS LAST YEAR FOR THE FIRST TIME.

THIS IS SOMETHING THAT WAS ADDED TO THE CHARTER, I THINK IN 2022.

AND THE COMMITTEE IS, UH, CHARGED WITH PERIODICALLY REVIEWING, UH, DISCLOSURES BY EMPLOYEES AND DIRECTORS OF CONFLICTS OF INTEREST.

AND SO, UH, WE'VE NOW DONE THIS TWO YEARS IN A ROW.

UH, THE MAIN TAKEAWAYS HERE ARE THAT, UM, NO DIRECTORS OR OFFICERS DISCLOSED ANYTHING THAT, UH, TURNED OUT TO BE A CONFLICT OF INTEREST, UH, FROM THE BEGINNING OF 2023 INTO 2024.

UM, YEAH, LET ON THIS SLIDE, I, I THINK THIS IS A GOOD SLIDE FOR BOARD MEMBERS, UH, THAT THE STAFF HAS PUT TOGETHER, UH, THE REQUIREMENTS IN THE LAW ON, IN THE CONF POTENTIAL CONFLICTS OF INTEREST FOR BOARD MEMBERS IS PRETTY STRICT

[00:20:01]

SO I JUST WANTED TO, YOU KNOW, HIGHLIGHT FOR THE, THE COMMITTEE AND, AND THE BOARD THAT THIS IS A GOOD SLIDE THAT KIND OF SUMMARIZES EVERYTHING IN ONE SPOT.

AND IT MAY BE A GOOD REFERENCE IF YOU EVER WANT TO GO BACK AND LOOK AT IT, BUT WHY DON'T YOU WALK US THROUGH IT, JOHN? SURE.

AND, UM, THIS IS JUST HIGHLIGHTING THE VARIOUS RULES THAT GO INTO DIRECTOR CONFLICTS OF INTEREST.

UH, THE MAIN ONE BEING, UH, PUBLIC UTILITY REGULATORY ACT, SECTION THREE NINE AND 1 51 G THREE.

AND THAT LANGUAGE IS VERY PLAIN AND STATES THAT, UM, BOARD MEMBERS MAY NOT HAVE FIDUCIARY A FIDUCIARY DUTY OR ASSETS IN THE ELECTRICITY MARKET FOR THIS REGION.

AND, UH, IT'S LIKE I SAID, VERY PLAIN.

THERE ARE NO EXCEPTIONS BUILT IN.

AND THE WAY THAT WE'VE INTERPRETED THAT IS THAT, UM, DIRECTORS MAY NOT OWN ANY SECURITIES OF A MARKET PARTICIPANT, STOCKS, BONDS, OPTIONS, ET CETERA.

UM, AND THAT'S DIFFERENT FOR, UH, THAN THE RULE FOR OUR EMPLOYEES.

WE HAVE A, A, AN EXCEPTION TO THE RULE THAT YOU MAY NOT OWN SECURITIES OF A MARKET PARTICIPANT THAT APPLIES FOR EMPLOYEES, FOR MARKET PARTICIPANTS THAT ARE NOT HEAVILY INVOLVED IN THE MARKET.

SO BIG BUSINESSES OUT THERE THAT HAVE A VERY SMALL ERCOT OPERATION.

THE IDEA BEING THAT THERE, UH, YOU KNOW, THERE'S REALLY NOTHING THAT THE EMPLOYEES COULD DO HERE THAT WOULD'VE AN IMPACT ON THE STOCK PRICE DEFINITION OF A MUTUAL FUND JUNKIE, SORRY.

MUTUAL FUND IS NOT THE ONLY WAY YOU CAN END UP OWNING A BASKET OF STOCKS.

UM, I FOR EXAMPLE, HAVE A, AN INVESTMENT IN A, A THING THAT BASICALLY IS THE, UM, S AND P 500.

YEAH.

IT, IT JUST OWNS THE S AND P 500, BUT IT OWNS STOCKS.

YEAH.

SO THIS IS PROBABLY A OVERLY SIMPLIFIED, SO MUTUAL FUND IS NOT THE RIGHT TERM.

IT'S MAYBE SHOULD BE CORRECT FUNDS OR SOMETHING.

YEAH, WE CAN CLARIFY THAT FOR, FOR NEXT YEAR.

IT'S NOT JUST MUTUAL FUND.

SO IT'S ANY KIND OF BROADER INVESTMENT PORTFOLIO THAT JUST HAS A SMALL SLIVER OF, UH, UM, AND I HAVE NO ELECTRIC SECTOR BUSINESSES DICTATE WHAT THEY OWN AND OKAY.

HOW MUCH OF ANY STOCK.

AND IN FACT, I HAVE NO IDEA WHY THEY OWN .

THAT'S THE IDEA.

YEAH, THIS IS OBVIOUSLY A VERY BROAD REQUIREMENT AND IT'S A CHALLENGE BECAUSE IT CHANGES ALL THE TIME WHO THE MARKET PARTICIPANTS ARE.

UM, BUT WE GET THE NOTICE I THINK ONCE A QUARTER WITH A CONFLICT OF INTEREST, UH, REMINDER FROM STAFF.

YEAH.

AND IT IS A CHALLENGE.

THE MARKET PARTICIPANT LIST CHANGES PRACTICALLY DAILY AND YOU KNOW, WE CAN'T REALISTICALLY ASK THAT PEOPLE CHECK EVERY DAY TO SEE, YOU KNOW, WHAT THE CHANGES ARE IN THE LIST.

SO I THINK FOR PRACTICAL PURPOSE, WE FELT THAT ASKING PEOPLE TO DO IT ONCE A QUARTER SEEMED REASONABLE.

ANY OTHER QUESTIONS ABOUT THE DUTIES OF, UH, DIRECTORS TO DISCLOSE CONFLICTS OF INTEREST? I'M GONNA MOVE ON TO, I JUST HAVE ONE.

THE QUALIFIED FINANCIAL INSTITUTION.

CAN YOU GO, CAN YOU EXPLAIN WHAT THAT IS AGAIN? I MAY PHONE A FRIEND HERE.

RICHARD, DO YOU RECALL THE DEFINITION OF A QUALIFIED FINANCIAL INSTITUTION? YOU DO NOT.

OKAY.

COULD WE COME BACK TO YOU FOR, FOR THAT? WHERE DOES IT, I'M SORRY.

I IN THE, I'M SORRY.

ON THE PAY THAT ON THE TOP RIGHT HAND BOX, UM, REPORTING RELATIONSHIPS WITH A, WITH A MARKET PARTICIPANT VENDOR OR QUALIFIED FINANCIAL INSTITUTION.

YEAH.

AND YOU'LL SEE IN THE FINANCIAL UPDATES THAT WE GIVE, THEN ONCE A YEAR WE GIVE AN UPDATE AND LESLIE PUTS IT TOGETHER AND PROVIDES IT.

SO IT'S PEOPLE THAT WE'RE DEALING WITH.

SO THAT QUALIFIED FINANCIAL INSTITUTIONS A DEFINED TERM.

AND THEN WE HAVE THE LIST.

AND SO WE HAVE THE LIST OF MARKET PARTICIPANTS WHO ARE THE QUALIFIED FINANCIAL INSTITUTIONS AS WELL AS THOSE THAT WE DEAL WITH WHO ARE NOT MARKET PARTICIPANTS.

SO WE PROVIDE THAT EVERY YEAR AT THE BEGINNING OF THE YEAR.

AND THAT, BUT IT IS A, IT IS A DEFINED TERM.

IT'S WHO ERCOT IS DEALING WITH.

BUT WHAT'S, WHAT RELATIONSHIP ARE YOU REFERRING TO THEN? I MEAN, CUSTOMER, UH, WELL, YEAH, THAT'S, I GUESS THAT'S WHAT I'M ASKING.

YEAH, IT MAKES ME WONDER 'CAUSE WE HAVEN'T EVER REALLY FOCUSED ON THAT, OR AT LEAST I HAVEN'T.

YEAH, I UM, BUT IT BUT

[00:25:03]

A BANK THAT IF YOU'RE DOING BUSINESS WITH SOMEBODY THAT ERCOT IS DOING BUSINESS WITH, BASICALLY THAT DOESN'T MEAN WE CAN'T DO IT, BUT WE SHOULD DISCLOSE IT.

YES.

IT JUST NEEDS TO BE DISCLOSED.

I BET NOBODY ON THIS BOARD HAS DONE THAT.

YEAH.

SO DO YOU SEND OUT THE, WHEN YOU SEND OUT THE QUARTERLY LIST OF MARKET PARTICIPANTS, DO YOU ALSO SEND THE UH, QUALIFIED FINANCIAL INSTITUTION LIST? NO, BUT WE CAN DO THAT.

YEAH, WE SHOULD DO THAT.

OKAY.

WILL YOU MAKE A NOTE TO SOMEBODY TO MAKE SURE THAT HAPPENS? YES.

SORRY, IT TOOK ME THREE YEARS TO SEE THAT.

THAT'S GOOD QUESTION.

DIDN'T EITHER EITHER.

I'M GLAD YOU ASKED.

ANY OTHER QUESTIONS ABOUT DIRECTOR OBLIGATIONS HERE? I WAS GONNA SKIP AHEAD.

THIS IS JUST KIND OF REVIEWING THE, UM, THE PROCESSES AROUND DISCLOSURES AND WHAT WE DO.

UM, THIS SLIDE JUST, I GUESS, YOU KNOW, YOU COULD SEE HERE THAT THE, UH, NUMBER OF EMPLOYEE CONFLICT DISCLOSURES WENT DOWN A LITTLE BIT.

IT'S GENERALLY REMAINED STABLE OVER THE LAST FEW YEARS.

IF YOU LOOK BACK PRIOR TO 2021, UM, WE WERE USUALLY GETTING AROUND, YOU KNOW, 60 TO, YOU KNOW, 60 TO 70.

SO NUMBERS PRETTY STABLE.

IT TICKED UP IN 2022.

UM, THERE WAS A LITTLE BIT MORE, UH, UH, PUBLICITY WITHIN THE COMPANY ABOUT OUTSIDE EMPLOYMENT AND LED TO A NUMBER OF DISCLOSURES THAT TURNED OUT NOT TO BE CONFLICTS.

AND I THINK SOME OF THOSE PEOPLE DID NOT DISCLOSE THOSE NON CONFLICTS IN 2023.

AND AGAIN, THIS JUST, UH, REITERATES LIKE LAST YEAR THAT THE LARGE MAJORITY OF CONFLICTS THAT ARE DISCLOSED HAVE TO DO WITH EMPLOYEES WHO HAVE A FAMILY MEMBER WHO WORKS FOR A MARKET PARTICIPANT OR A VENDOR.

AND, UM, THOSE ARE USUALLY EASILY RESOLVABLE BY, UH, UM, ADMONISHING THE EMPLOYEE, UH, AND GETTING THE AGREEMENT OF THEIR MANAGER THAT THEY WILL NOT, UM, TAKE ANY BIASED ACTIONS OR, UM, SHARE ANY INFORMATION.

SO DAWN, THE, UH, OF THE HOWEVER MANY SIX, HOWEVER MANY WERE DISCLOSED, UH, BY EMPLOYEES, IS IT CORRECT THAT ALL OF THEM FELL INTO, UH, THAT IT EITHER WASN'T A CONFLICT OR THERE WAS A RESOLUTION AS YOU'VE IDENTIFIED ON, ON THE FOLLOWING PAGE? THAT'S SATISFACTORY.

THAT'S RIGHT.

UH, I, THERE WERE NO EMPLOYEES THAT WE HAD TO, YOU KNOW, TERMINATE FOR EXAMPLE, UM, IN 2023 OR THUS FAR IN 2024.

UM, MOST OF THESE COULD BE HANDLED THROUGH THAT KIND OF ADMONISHMENT THAT I JUST ADDRESSED.

AND WE HAD A HANDFUL THAT WERE, UM, THAT WERE, UH, REPORTED IN, UH, OWNERSHIP OF SECURITIES THAT WERE PROHIBITED AND WE REQUIRED THOSE PEOPLE TO DIVEST.

AND, AND, AND I THINK YOU REQUIRE PROOF OF THAT TOO, RIGHT? WE DO, YEAH.

WE REQUIRE TIMELY PROOF IN THE FORM OF, UH, YOU KNOW, A RECEIPT OR SOME SORT OF ACKNOWLEDGEMENT LIKE THAT.

OKAY.

ARE THERE ANY OTHER QUESTIONS? I JUST WANTED TO FOLLOW UP REAL QUICKLY.

WE'LL SEND YOU THE LIST, BUT IF YOU WANTED TO LOOK AT IT BEFORE THEN, THEN IT'S FROM THE FEBRUARY F AND A COMMITTEE MEETING, IT'S AGENDA ITEM 8.4 AND IT LISTS ALL OF THOSE COMPANIES IN THERE.

YEAH, IT WOULD BE HELPFUL THAT WHEN THE LIST IS SENT OUT AROUND CONFLICTS OF INTEREST THAT EVERYTHING MM-HMM.

IS TOGETHER.

YES.

AND IT CAN CHANGE BETWEEN QUARTERS.

IT POTENTIALLY IT DOESN'T, BUT RIGHT.

IT COULD.

OKAY.

THANK YOU.

YEAH, AND ANYTIME YOU HAVE ANY FEEDBACK ABOUT WHAT WE DO WITH THAT QUARTERLY PROCESS, IT'S RELATIVELY NEW, SO WE'RE HAPPY TO INCORPORATE ANY IMPROVEMENTS.

OKAY.

THANK YOU JOHN.

NEXT

[8. Future Agenda Items]

FUTURE AGENDA ITEMS MORE IN AUGUST.

THERE ARE TWO CHARTERED ITEMS THAT ARE SCHEDULED FOR COMMITTEE DISCUSSION.

THE FIRST IS Q4 ANNUAL BOARD COMMITTEE, SELF-EVALUATIONS, AND ALSO AN UPDATE TO THE BOARD ON THE CORPORATE STRATEGIC PLAN.

THANK YOU, MARA.

THE, A LAST ITEM BEFORE WE MOVE INTO EXECUTIVE SESSION IS AGENDA ITEM NINE, OTHER BUSINESS.

IS THERE ANY OTHER BUSINESS ANY COMMITTEE MEMBER WISHES TO RAISE? HEARING NONE.

THE COMMITTEE WILL

[Convene Executive Session]

NO VOTING ITEMS ARE ANTICIPATED

[00:30:01]

GENERAL SESSION IS NOW ADJOURNED AND THE WEBCAST WILL BE CONCLUDED.

UH, WE WILL TAKE A SHORT BREAK AND THEN WE'LL START IN THE EXECUTIVE SESSION.