Policy No. A.1.4
Board approval date:May 9, 2003
Distribution: Board of Trustees, Director/CEO. Senior Management
1.0 Policy Statement:
The complex relationships between government, industry and research institutions, as well as the demands of commerce, necessitate the establishment and communication of a Board of Trustees policy (i) to protect the interests of the Marine Biological Laboratory, (ii) to define the duty of Trustees to avoid actual conflicts of interest and the appearance of conflicts of interest and (iii) to assist Trustees in fulfilling their obligations to the Marine Biological Laboratory under this Policy. This Policy has bases both in ethics and in applicable federal and state laws and regulations. Although this Policy primarily addresses financial conflicts of interest, the Board of Trustees recognizes that conflicts can arise as a result of professional affiliations, and therefore this Policy attempts to address such non-financial conflicts as well. This Policy also is intended to protect the Marine Biological Laboratory’s tax–exempt status and to maintain and foster conduct consistent with its mission and philosophy. All capitalized terms not defined in this Policy shall have the meaning given to them in the Bylaws.
2.1 Financial Interest – includes without limitation: (1) an ownership or investment interest; (2) a compensation arrangement; or (3) a potential ownership or investment interest or a compensation arrangement with any entity or individual with which the Marine Biological Laboratory is negotiating a transaction or arrangement. Financial Interests may be through an ownership or investment interest, or compensation arrangement, and may be held directly or indirectly, for example through an Immediate Family Member or other intermediate entity. An “ownership or investment interest” may be through equity, debt or other means, e.g. a right of first refusal, but shall not include (i) a combined direct and indirect interest that, when aggregated for the Trustee and the Trustee’s Immediate Family Members, (a) does not exceed a fair market value of $10,000, and (b) does not exceed five (5) percent of the outstanding shares of voting stock and/or bonds of a publicly traded company; or (ii) any interest in a mutual fund, pensions or other investments over which the person has no control. “Compensation” includes direct and indirect remuneration that, when aggregated for the Trustee and the Trustee’s Immediate Family Members, does not exceed a fair market value of $10,000 per year, except with respect to gifts, entertainment or other material benefits in which case the applicable annual limit is $250 in the aggregate. Compensation includes without limitation, consulting or employment; gifts, entertainment or other material benefits; royalties or licensing fees, copyrights (whether actual or by contractual right).
A Financial Interest is not necessarily a conflict of interest. Under this Policy a Trustee who has a Financial Interest has a conflict of interest only based on the procedures set forth in this Policy.
2.2 Trustee – as used in this Policy, the term “Trustee” refers and applies equally to senior management, trustees (any individual who serves as a member of the Board of Trustees of the Marine Biological Laboratory in an elected or ex officio capacity) and officers of the Marine Biological Laboratory and voting members of any corporate or Board committee to which the powers of the Board of Trustees of the Marine Biological Laboratory have been delegated.
2.3 Immediate Family Member – a spouse, parent, child or sibling of a Trustee.
3.0 General Standards:
In recognition of the requirement for broad ethical principles, the following general standards of conduct are adopted by the Marine Biological Laboratory:
3.1 Trustees shall report to the Marine Biological Laboratory Financial Interests and organizational affiliations that are, or might appear to be, a conflict of interest related to their duties to the Marine Biological Laboratory.
3.2 Trustees shall disclose any interests or activities in which they are involved or become involved, directly or indirectly, that could conflict with the interests or activities of the Marine Biological Laboratory and shall obtain approval prior to commencing, continuing, or consummating any activity or transaction that raises a potential conflict of interest. Trustees are also obliged to disclose any potential conflict of interest arising from the interest and activities of an Immediate Family Member.
3.3 Trustees are expected to report waste, fraud, abuse, and corruption to the Marine Biological Laboratory.
4.0 Obligation to Disclose:
4.1 Within thirty (30) days from the date of election or appointment to the Board, Trustees are affirmatively required to disclose to the Board, through the Chairman of the Board (or, in the case of a disclosure relating to the Chairman, to the Vice-Chairman), all Financial Interests and organizational affiliations that may give rise to an actual or potential conflict of interest using the Conflict of Interest Disclosure Form (the “Disclosure Form”) attached hereto and incorporated by reference. In addition, Trustees also shall furnish annually by February 15th of each year an update to such Disclosure Form which includes a signed statement certifying that the Trustee has received, read, understood and agreed to comply with this Policy, disclosing any possible or apparent conflicts of interest and confirming his/her understanding that the Marine Biological Laboratory is qualified as a 501(c)(3) tax-exempt organization which, in order to maintain its federal tax exemption, must engage primarily in activities which accomplish one or more of its tax-exempt purposes.
4.2 In addition to the obligations imposed pursuant to Section 4.1, above, if since the last annual update a Trustee acquires a Financial Interest or organizational affiliation that may give rise to an actual or potential conflict of interest, the Trustee must update the Disclosure Form and disclose such Financial Interest.
4.3 All information related to financial disclosures and organizational affiliations, whether made on the Disclosure Form, or through other means shall be maintained by the Director/CEO in a secure location and shall be treated as confidential information. Such information shall only be disclosed to the extent reasonably necessary to implement this Policy or to comply with regulatory requirements.
5.0 Government-Sponsored Research:
Acceptance of government-sponsored research funds puts a special obligation on the Marine Biological Laboratory to clearly articulate the conditions under which outside activities and financial interests are proper or improper, to provide for notification of conflict of interest, and to have a sound policy for dealing with violations. Federal regulations relating to procurement standards and conflicts of interest issues related to government-sponsored research are found in the Code of Federal Regulations and various manuals and circulars promulgated by the government agencies that sponsor research.
The following are situations or activities concerning government-sponsored research that might have the appearance of conflicting with the conscientious performance of one’s duty as a recipient of government research funds. These conflict situations, and any actual or potential conflict of interest described in Section 6 of this Policy, must be disclosed pursuant to Section 8.0 of this Policy. Disclosures relating to government-sponsored activities shall be maintained by the Marine Biological Laboratory until three years after the applicable award expires, or for such additional periods of time as required by federal or state rules and regulations.
5.1 Favoring of outside interests that may occur when a Trustee has a Financial Interest in or affiliation with a business concern (including a university) that is engaging in government-sponsored work in which the Marine Biological Laboratory participates, or where the Trustee is a principal investigator of such research at his/her home university, such that the business concern may be in a position to influence the research plan, results, or the reporting or interpretation of results of federally-supported research.
5.2 Associations with organizations (other than professional societies) related to the Marine Biological Laboratory’s areas of scientific research.
5.3 Private remunerative relationships between a Trustee and non-governmental research sponsors for which the Trustee is a principal investigator. An example would be where the Trustee is a paid consultant to a company that sponsors research at the Marine Biological Laboratory.
6.0 Conflicts of Interest Defined/Examples of Inappropriate Activities:
A conflict of interest exists in any instance in which a Trustee’s personal or professional activities or interests conflict with the activities or interests of the Marine Biological Laboratory. Although it is impossible to list every circumstance giving rise to a potential conflict of interest, the following will serve as examples of the types of activities that might give rise to such a conflict and that should be reported in a detailed and timely fashion to the Chairman of the Board (or, in the case of a disclosure relating to the Chairman, to the Vice-Chairman) or, with respect to employees subject to this Policy, the Director/CEO.
6.1 To hold, directly or indirectly, a financial interest in or affiliation with any outside company, organization or concern which the Trustee has reason to believe makes payments to or receives payments from the Marine Biological Laboratory (whether on account of goods, loans or other transactions), or which provides services in competition with the Marine Biological Laboratory.
6.2 To compete, directly or indirectly, with the Marine Biological Laboratory in the purchase or sale of property or any property right, interest or service.
6.3 To accept or take advantage of a business opportunity that the Trustee knows or has reason to know may be of interest to or competitive with the Marine Biological Laboratory.
6.4 To render directorial, managerial, or consultative services to, or to engage in any material financial transaction with, any person or concern which does business with, or competes with the Marine Biological Laboratory.
6.5 To render other services in competition with the Marine Biological Laboratory.
6.6 To accept gifts, entertainment, or other material benefits in excess of $250 in the aggregate from any person or concern which does, or is seeking to do, business with, or is a competitor of, the Marine Biological Laboratory under circumstances from which it might be reasonably inferred by a neutral third party (not the recipient) that such gift, entertainment, or other material benefit was intended to influence or possibly would influence the Trustee in the performance of the Trustee’s duties for the Marine Biological Laboratory.
6.7 To disclose or use information relating to the Marine Biological Laboratory’s business, including but not limited to methods of operation and research and product development, for personal profit or advantage, or to divulge confidential information in advance of official authorization of its release.
7.0 Permitted Interested Transactions:
7.1 The Marine Biological Laboratory may purchase goods or services from or otherwise contract with an entity in which a Trustee has a direct or indirect financial interest (a “Trustee-affiliated entity”) provided that a majority of the disinterested Board members have determined that:
a.the terms of the transaction are fair and reasonable and competitive with what the Marine Biological Laboratory could receive from a non-Trustee-affiliated entity using reasonable efforts;
b.the transaction is otherwise in the best interest of the Marine Biological Laboratory;
c.the nature of the Trustee’s involvement in the trustee-affiliated entity has been fully disclosed in accordance with this Policy;
d.the interested Trustee has otherwise fully complied with this Policy; and
e.the interested Trustee has not voted on the transaction nor been counted toward a quorum at any meeting held to act on the transaction.
7.2 A Trustee may take advantage of a personal business opportunity that may be of interest to, competitive with, or impact the interests of, the Marine Biological Laboratory if:
a.the Trustee has fully disclosed the opportunity in accordance with this Policy;
b.the opportunity has not arisen out of any impermissible use of confidential or proprietary information of the Marine Biological Laboratory; and
c.the majority of the non-interested Trustees of the Marine Biological Laboratory has determined that the Marine Biological Laboratory has no present interest in availing itself of the opportunity and that the Trustee may take advantage of the opportunity.
8.0 Conflict of Interest Procedures:
The Board of Trustees shall utilize the following procedures regarding any Board discussion or decision of a transaction that may involve or affect a firm, entity or arrangement in which a Trustee has a Financial Interest or organizational affiliation:
8.1 Prior to the Board’s consideration of any matter that may involve or affect a firm, entity or arrangement in which a Trustee has a Financial Interest or organizational affiliation, the Trustee shall raise with the Board the issue of a potential conflict of interest, and if such Financial Interest has not yet been disclosed pursuant to this Policy, the Trustee shall provide the Board with sufficient information about the Financial Interest or affiliation to enable the Board to consider fully whether a conflict exists.
8.2 The Board, in its reasonable discretion, may request of such Trustee additional details regarding the nature of the Financial Interest or organizational affiliation if the Board determines that such additional information will assist it in the deliberation of whether a conflict of interest exists.
8.3 If a Trustee believes that providing a full disclosure as provided in Sections 8.1 and/or 8.2 above may breach a confidentiality provision to which the Trustee is bound, such Financial Interest or organizational affiliation shall be deemed automatically to be a conflict of interest.
8.4 The Trustee with the potential conflict shall leave the meeting while the remaining members of the Board discuss and vote upon whether a conflict of interest exists. (The interested Trustee(s) may be counted for purposes of a quorum, however.)
8.5 If a conflict of interest is determined to exist, the interested person shall continue to absent himself/herself from the meeting during the discussion and any vote on the transaction or arrangement; provided, however, that the Board may, by a 2/3 vote of its members (excluding the interested Trustee), waive this requirement, except with respect to a Financial Interest or organizational affiliation that is deemed a conflict pursuant to Section 8.3.
8.6 Approval of the transaction or arrangement shall require a majority of disinterested members of the Board present to determine that the transaction or arrangement is in the Marine Biological Laboratory’s best interest and for its own benefit, and that it is fair and reasonable to the Marine Biological Laboratory.
8.7 The minutes of Board meetings in which a conflict of interest transaction or arrangement is addressed shall include:
a.Names of any persons who disclosed or otherwise were found to have a financial interest, the general nature of such, and whether the Board determined there was, in fact, a conflict of interest;
b.Names of those present for discussions and votes relating to the transaction or arrangement, the general nature of the discussions (specifically including whether any alternatives existed to the proposed transaction or arrangement and the general nature of such alternatives) and a record of the vote.
9.0 Trustee-Affiliated Vendors: A Trustee-affiliated vendor providing goods or services to the Marine Biological Laboratory, as a condition for doing business with the Lab, will be advised in writing of its obligation to conduct all business relating to the contract or arrangement whereby it provides such goods or services through the usual channels for administration of the Marine Biological Laboratory’s contracts, and the affected Trustee will scrupulously refrain from utilizing such Trustee’s position as a Trustee to negotiate, conduct or arbitrate contractual matters. Infractions of this policy may subject the Trustee-affiliated vendor with termination of its relationship with the Laboratory.
10.Notification of Violations/Enforcement:
10.1If a Trustee has reasonable cause to believe that another Trustee has failed to disclose an actual or potential conflict of interest, he/she shall inform the Chairman of the Board (or, in the case of a non-disclosure relating to the Chairman, to the Vice-Chairman) of the basis for the belief.
10.2Upon receipt of such an allegation, the Chairman of the Board (or, in the case of a non-disclosure relating to the Chairman, to the Vice-Chairman) shall convene a committee of the Board to review the matter. The committee shall afford the Trustee the opportunity to explain the alleged failure to disclose and, if appropriate to update his/her Disclosure Form. If after hearing the response of the Trustee and making such further investigation as may be warranted in the circumstances, the Board committee determines that a Trustee has, in fact, failed to disclose an actual or potential conflict of interest, it shall make such recommendations to the full Board for appropriate disciplinary and corrective action.
10.3Failure to comply with this Policy may disqualify a person from serving as a Trustee or, if already serving as a Trustee, the Trustee shall be subject to removal by a two-thirds vote of the Trustees then in office, pursuant to the Bylaws. In the case of a Trustee who is an employee of the Marine Biological Laboratory, failure to comply with this Policy may result in disciplinary action up to and including dismissal, subject to and in accordance with the terms of any applicable employment agreement.
11.0Policy Clarification and Updates
Policy Clarification and updates are available from the Chairman of the Board of Trustees.