CEO 80-18 -- March 20, 1980

CONFLICT OF INTEREST

SCHOOL BOARD MEMBER EMPLOYED BY CORPORATION SELLING MATERIALS TO SCHOOL BOARD AND RECEIVING BONUSES INDIRECTLY AFFECTED BY SALES TO SCHOOL BOARD

To: John R. Espey, Member, Pinellas County School Board, Clearwater

Prepared by: Phil Claypool

SUMMARY:

Reference is made to CEO 77-51, in which it was found that the Code of Ethics would not prohibit a school board member from being employed as a field representative by a company selling testing materials to his school district, based on his not representing the corporation in that county and because materials purveyed by the corporation were not available from alternate sources. The school board member now questions whether his receiving bonuses from the corporation was in violation of the Code of Ethics, based on the corporation's bonus plan having made available 5 percent of its sales growth each year for bonuses to the company's field representatives and regional managers. Of that amount, 40 percent would have been allocated by the national sales manager based upon individual efforts; as the subject school board member's territory did not include that county, an increase in sales to the school district would not have resulted directly in a greater bonus for him. The amount of bonus he received could have been affected only indirectly by virtue of an increase in the bonus moneys available for distribution in his sales region. Taking all the factors into consideration, his share of whatever bonus money might have been generated by an increase in sales to the county on whose school board he sat would be so small and so difficult to predict as to not interfere with the full and faithful discharge of his public duties as a school board member. Accordingly, his employment by the corporation is deemed not to have been in violation of the Code of Ethics by virtue of the bonus plan.

QUESTION:

Did a prohibited conflict of interest exist when I, a school board member, was employed by a corporation which sold materials to the school board and when I received bonuses from the corporation indirectly affected by sales to the school board?

This question is answered in the negative.

In a previous opinion to you we advised that the Code of Ethics for Public Officers and Employees would not prohibit you from being employed as a field representative by a company selling testing materials to the Pinellas County School District while you served as a school board member. See CEO 77-51. The basis for that opinion was that your employment did not constitute a private pursuit which interfered with the full and faithful discharge of your public duties, as you did not represent the corporation in the Pinellas County area and since materials purveyed by the corporation were not available from alternate sources.

You advise that in your original letter you indicated that you worked on straight salary and did not receive a commission. However, you advise, you failed to mention that the corporation does have a bonus plan because it was a new program at that time. Although you are no longer employed by the corporation, you question whether your previous employment may have been in violation of the Code of Ethics because of the effects of the bonus plan.

The Code of Ethics for Public Officers and Employees prohibits a public officer from being employed by a business entity which is doing business with his agency. See s. 112.313(7)(a), F. S. As we advised in CEO 77-51, that provision of the Code of Ethics would have prohibited your employment with the corporation, except for the following provision:

Construction. -- It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city, or other political subdivision of the state involved. [Section 112.316, F. S.]

For the reasons stated in that opinion, we found that your employment did not constitute a private pursuit which interfered with the full and faithful discharge of your public duties as a school board member.

The question presented now is whether your standing to receive bonuses from your employer interfered with the full and faithful discharge of your public duties as a school board member. In our opinion, any bonuses your may have received from your employer did not interfere with the discharge of your public duties, as the bonuses would have been influenced only indirectly and remotely by the corporation's sales to the Pinellas County School District.

The incentive bonus plan of the corporation in effect from 1976 to 1979 made available 5 percent of the corporation's United States sales growth in a given year for bonuses to the company's field representatives and regional managers. Twenty percent of this amount was to be distributed equally among all field representatives and regional managers eligible to receive bonuses that year. Forty percent of the amount was to be distributed among the company's five regions according to each region's sales growth, with the distribution to personnel in the region being allocated by the regional manager, based upon variables set by the manager. Finally, the remaining 40 percent was to be allocated by the national sales manager based upon individual efforts of field representatives and regional managers. Thus, it appears that any increase in sales by the company to the Pinellas County School District could only indirectly and remotely have been of any benefit to you. Of any increase in sales, only 5 percent would have been made available for bonuses. Of that amount, 40 percent would have been allocated by the national sales manager based upon individual efforts; as your territory did not include Pinellas County, an increase in sales to your school district would not have resulted directly in a greater bonus to you, but only in an increase in the total amount of bonus money available. Similarly, as to the 40 percent divided among the five regions of the county, your individual efforts would not have resulted directly in an increased bonus because Pinellas County was not included in your sales area. Your bonus might have been increased indirectly, however, by virtue of an increase in the bonus moneys available for distribution in your region. Finally, as to the 20 percent of the increase which was to be divided equally among eligible persons, it appears also that your bonus might have been increased somewhat by an increase in total bonus moneys if sales to Pinellas County were increased. In a telephone conversation with our staff, you advised that nationwide there were 20 to 25 persons receiving bonuses in any given year and that, within your region, there were four to five persons receiving bonus money per year. Taking these factors into consideration, it appears that your share of whatever bonus money might have been generated by an increase in sales to Pinellas County would be so small and so difficult to predict as not to interfere with the full and faithful discharge of your public duties as a school board member.

In CEO 76-124, we found that the Code of Ethics did not prohibit a city councilman from being employed by an electrical equipment manufacturers' sales agent which received commissions on sales made to the city by companies other than the agent, even though his bonuses were based in part on those commissions. On the other hand, in CEO 76-85 we found that the Code of Ethics prohibited members of a city's insurance advisory committee from receiving 40 percent of a successful bidder's commission, after having prepared the bid specifications, evaluated the bids, and made a recommendation to the city commission. In the first opinion, even though the city councilman stood to receive some bonus money from sales to the city by persons other than himself, he could not directly affect the amount of his bonus by his official action. In the second opinion, however, it was clear that the amount of compensation could be directly influenced by the members of the insurance advisory committee. In our view, your situation is much closer to that of the first opinion than the second, since the amount of bonus you might have received could not have been directly affected by your actions on the school board.

Accordingly, we find that no prohibited conflict of interest existed when you were employed by a corporation which sold materials to the Pinellas County School Board and when you received bonuses from the corporation indirectly affected by sales to the school board, assuming that you made no sales to the school district and that you complied with s. 112.3143, F. S., relating to voting conflicts of interest.