Problem 5: Our Management Structure

All of our key metrics are trending in the wrong direction and the last three years have been an utter disaster! If we never hear from other points of view, we can never change.

I began by telling you that there were five major problems facing our marina… five problems that we need to fix in order to turn this marina around. And one by one I’ve laid out the problems in detail and given you data to support my conclusion. If we fix these problems, I believe that we can get our values back to where they once were and beyond. I truly believe that we can return this marina to its former glory -- a place we can be proud to own!

But sadly, we are not going to fix any of these other problems until we address our biggest problem -- the elephant in the room, if you will. So what is our biggest problem? It’s our current management structure. I know that’s not easy to hear. Believe me, it’s certainly not easy for me to say it. The last thing I want is enemies in a small town. But as the Proverb says,

“Faithful are the wounds of a friend; but the kisses of an enemy are deceitful.” - Proverbs 27:6

I want you to take a moment and look objectively at our marina, like you were an outside investor. Not as a board member or a slip owner, but as an investor. Our current management structure is actually preventing us from fixing the other problems. Let me explain by using an analogy.

Sailboats are, generally speaking, “self-righting” because they are designed to be able to capsize and then return to upright without any help. This happens because of how the weight is distributed. The weight is down low and the buoyancy is up high, so if one turns over, it will right itself. Self-righting is “in the design”.

And, like sailboats, companies are normally designed to be self-righting. The corporate structure is typically set up in a way so that if the company “capsizes”, there are built-in mechanisms to “right the ship” so to speak. But there is a design flaw in our structure. And that design flaw is keeping us from self-righting. I’ll explain what I mean.

Our Bylaws allow us Members to elect a Board of Directors who in turn manages our Association. That Board makes most of the everyday decisions related to running the business of the marina from setting direction and priorities, to making short and long term plans, from managing and operating the docks and facilities, to the collecting of fees and the spending of money. That’s a good thing. It’s how it should be.

Every owner can’t be involved in every decision, nor should we be. But what makes our problems impossible to fix is our “design flaw”. Because of our design flaw, it is unlikely that our Board will ever change. And that makes changing direction unlikely unless we first fix our structural problem.

Here is the design flaw: Our Bylaws don’t set terms for Directorships, allowing for Directors to rotate off after serving a couple of years. Most corporations have staggered terms for Directors in the bylaws but ours doesn’t. Because of this structure we are all but guaranteed a semi-permanent Board and that inadvertently leads to tunnel vision.

I’ve read through the minutes of the Board of Director meetings as far back as records are posted. In the table below are the names of the board members running our company for each of the last five years, and, if things continue on the current path, this year, next year and probably years to come:

2017

Jim Edwards, President

Tim Halsey, Vice President

Mac Ernest, Secretary

Hank DeBragga, Treasurer

David Kibbe

2018

Jim Edwards, President

Dino Harrell, Vice President

Hank DeBragga, Treasurer

Mac Ernest, Secretary

David Kibbe

2019

Jim Edwards, President

Dino Harrell, Vice President

Hank DeBragga, Treasurer

Mac Ernest, Secretary

David Kibbe

Richard Oates

2020

Jim Edwards, President

Dino Harrell, Vice President

Hank DeBragga, Treasurer

Mac Ernest, Secretary

Richard Oates

Jerry Dowless

2021

Jim Edwards, President

Jerry Dowless, Vice President

Hank DeBragga, Treasurer

Emily Bradford, Secretary

Richard Oates

Mac Ernest

Dino Harrell

2022

Jim Edwards, President

Jerry Dowless, Vice President

Hank DeBragga, Treasurer

Mac Ernest, Secretary

Dino Harrell

Richard Oates

Anthony Zeledon

Over the last six years there have been a total of only ten names on the various boards of directors. And of those ten names over six years, three have served only one year. That means that the vast majority of our leadership over the last six years has been by the same people and it means there is effectively no turnover of leadership.

This concentration of power may be acceptable as long as we are moving in the right direction, but unfortunately, it lends itself to becoming an echo chamber and without input from outside points of view, it becomes nearly impossible to ever change directions. That lack of fresh perspective and innovation means we are set up for bad decisions and insulated from self-correction.

To anyone looking at our marina objectively, we’re clearly on the wrong path now, and we have been for the last several years. All of our key metrics are trending in the wrong direction and the last three years have been an utter disaster! And if we never hear from other points of view, we can never change. Let’s talk specifics:

To his credit, Dino Harrell, after seeing some of the data I’ve developed, asked me to run for board member. He thought that I had some ideas that the board needed to hear. Reluctantly, I decided to run for the board. We all saw how that turned out. Jim, being the voting proxy for the vast majority of the slip owners, decided that Anthony Zeledon, whose background is law enforcement, who lives out of town, and who rarely visits the marina, would be a better candidate to serve on the board. Message delivered: “We don’t need your new ideas. We’ve got this.”

Hank DeBragga has been our Treasurer for at least the last six years. I wouldn’t know Hank if we met on the street but from our brief email correspondence, I have no doubt that he’s a nice guy. But Hank is our “CFO” or chief financial officer and he didn’t even attend the last two annual meetings. As CFO, he should be the one guiding financial policy and watching our expenses. And he apparently approved the tripling of insurance premiums and the continual hiking of owner fees to roughly twice that of all the other area marinas. I don’t blame him for the mess we are in, but another perspective might be helpful.

Mac Ernest seems like a nice guy too. My two brief interactions with him tell me he’s both smart and capable. But both as Secretary and six-year member of the board, Mac has fully supported all the disastrous decisions that have brought us to the place we are today. Maybe having some outside points of view would be a good thing.

And Jim Edwards has been our President for as far back as the online records show; at least for the last six terms. According to our bylaws, the President “shall be the principal executive officer of the Association and… shall in general supervise and control all of the business and affairs of the Association.” In other words, he’s the CEO.

In the business world, whenever a CEO presides over a 26% drop in market cap over a five year period, while his competitors gain value over the same period, it’s time for him to go. It’s not personal, it’s business. Jim also led the effort to change and then enforce our disastrous hurricane evacuation policy, and he’s resisted any mention of changing it. Under Jim’s leadership, turnover rates have more than quadrupled. Any objective arbiter would say it was time to give somebody else the reins.

But besides being the CEO, Jim is also the voting proxy for the vast majority of the members who can’t make it to the annual meeting. His company, Bow to Stern Boating, has the dockmaster contract for the marina and he also charters boats from the marina. Recently he began advertising mechanical and electrical services to boaters here at Oriental Harbor and at the October 2021 Board meeting there was a discussion of Bow to Stern maybe getting into the slip management business as well. Jim is a nice fellow, a successful businessman, and a pillar of our community, but Jim shouldn’t be on our Board.

Conflict of interest, like pornography, might be difficult to define, but you know it when you see it. And while all this might be perfectly legal, it violates the very spirit of conflict of interest law and it has to end if we are to turn this marina around. We simply can’t have one person whose company receives over 20% of our gross revenues also be on the Board, and the voting proxy for the majority of our Members. It looks bad to our Members and it looks bad to our community.

Please understand my intentions. It is not my desire to offend any of you. I’m being direct with you because I’m your friend.

“Faithful are the wounds of a friend; but the kisses of an enemy are deceitful.”

This is not personal for me. It's strictly business. When I evaluate our marina’s management, just like I would for any other company I invest in, it’s obvious to me that it’s time to make some changes. I truly believe that if you look at it objectively, you’ll come to the same conclusion. Over the last year, my company has made a substantial investment in Oriental Harbor and I simply can’t sit by and watch as our marina heads down the wrong path. Again, it’s not personal. It’s business.

But I believe we can fix our problems. Teddy Roosevelt once said, “Complaining about a problem without proposing a solution is called whining." I’m not a whiner, I’m a fixer. For fifteen years I fixed companies for a living. So now that I’ve detailed our five major problems, in my final segment, I’ll give you my solutions.

Go to Solutions >>>