President's Report (2011)

Econometrica, Vol. 80, No. 6 (November, 2012), 2853–2857




SINCE ITS FOUNDATION in 1930, the Econometric Society has used fairly in- formal governance arrangements. The original Constitution has been changed five times (the last one in 1992), but it has remained a thin document with no reference to key governance bodies such as the Executive Committee. There is a much longer document, called the Aide Memoire, which contains a detailed description of the rules and procedures that govern the Society.

After several years of study and deliberation, the Executive Committee de- cided that it was time to update the governance arrangements, and to proceed with the incorporation of the Society as a Delaware Non-Stock, Non-Profit Corporation. Incorporation puts our legal status on a firmer footing. (The American Economic Association has been incorporated since 1923.) I want to thank the law firm of Skadden, Arps, Slate, Meagher & Flom LLP for its able assistance (on a pro bono basis) with the incorporation process.

In October 2011, I appointed a Governance Committee, chaired by Oliver Hart, to review all aspects of the governance of the Society (see Section 2 for the composition of the committee). This was motivated in part by the planned incorporation, but also to address gaps and inconsistencies in our governance and to assure that we continue to operate in a manner that befits our purposes. The working group on econometrics and the Econometric Society, which John Moore set up in 2010 (see his Annual Report, Section 6 in Econometrica, September, 2011), was terminated as the charge was folded into that of the Governance Committee.

In April 2012, the committee posted a preliminary report for discussion by the Fellows. The report summarized the current governance arrangements and put forward a number of proposals. The committee also posted a draft of the By-Laws that would replace the current Constitution, as required by incorpo- ration. The final report was posted on the Society’s website in July 2012.

The Executive Committee discussed the By-Laws at its meeting in August 2012 and made some minor changes. The By-Laws were then passed to the Council for approval, as required by the Constitution. The Council overwhelm- ingly approved the By-Laws. The By-Laws have now been presented to the Fel- lows for review and ratification by a two-thirds majority of the voting Fellows. The intention of the proposed changes is to enhance the global presence of the Society by increasing the geographical representation in the Council, and to strengthen the role of the Council in the governance of the Society by increasing the number of Council members in the Executive Committee and in the Nominating Committees. Although the voting power of the Fellows re- mains unchanged, Society members would directly elect members of the Re- gional Standing Committees. The proposal also makes it possible for Fellows to nominate members of the Nominating Committee for Officers and Council and to nominate candidates for Second Vice-President and Council, provided the nominations are supported by a specified minimum proportion of Fellows. The proposed By-Laws keep intact almost everything that is in the current Constitution. Where possible, the same wording, in some cases dating back to the original Constitution from 1930, has been maintained. In addition, the By-Laws include essential governance provisions, many taken from the Aide Memoire, that are required for the incorporation. However, the Aide Memoire

needs to be changed so as to become consistent with the new By-Laws.

If the Fellows ratify the By-Laws and incorporation, the Executive Commit- tee will propose to the Council a revised version of the Aide Memoire with the rest of the governance changes. Until this is done, the current Aide Memoire will apply in all matters that do not conflict with the new By-Laws.

In addition to the proposed formal changes in governance, the Executive Committee has discussed increased transparency and engagement. Our plan is to make more information about Executive Committee deliberations and decisions available on the web, and, where appropriate, seek guidance from Fellows and members before making such decisions. As an example, before the 2011 election of new Fellows, we opened a forum on the web that allowed the Fellows to air their views about the changes we had made the year before to the electronic voting process, including the introduction of the one-click vote. The forum was a great success, with large participation and very thoughtful suggestions and debate. As a direct result of the forum, the Executive Com- mittee decided to eliminate the one-click option. We plan to use forums more often in the future (two new ones opened this year), and hope that Fellows and members will use this channel to participate in the betterment of the Society.

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