Voting

Each stockholder has the right to vote at any election. Ordinarily voting is on the basis of one vote per share; few, if any, of the incorporated mutual companies provide for one vote per member. Irrigation companies with different classes of capital stock may assign in their articles different voting privileges to the several classes, but this is not commonly done.

Cumulative Voting

Cumulative voting is permitted in some States. Under this system, a stockholder may cast as many votes in the aggregate as he holds shares of stock multiplied by the number of directors upon whom he is voting, and may cast that whole number for only one candidate or may distribute the votes at will among several candidates. This makes it possible for an organized minority to elect a representative to the board of directors and thus prevent the majority stockholders from choosing the entire board.

The experiences of the California companies which have adopted the practice of cumulative voting are not uniform. Some of them find that it gives the troublemakers too much opportunity to cause dissension; others have found the results desirable, in that the "kickers" thus elected to the board usually modify their antagonistic views when given a measure of responsibility.

ACTIVE MANAGEMENT BY BOARD OF DIRECTORS

A board of directors, elected at the annual meeting, has the sole responsibility for managing the company. The board formulates the administration policies and employs agents to carry them out; makes contracts; levies assessments; incurs obligations; approves expenditures; sometimes makes the bylaws; and invariably makes rules and regulations for operation of the irrigation system and distribution of water to the users. The weight of this responsibility may be gaged by the great importance of water in management of an irrigated farm, and the necessity for having it delivered at the proper time, in the proper amount, and at the lowest cost consistent with efficient operation. The manner in which control over the water service of a typical company emanates from the board of directors and is reflected through the officers and employees to the irrigated farms of the stockholders is indicated in figure 13. These directors frequently serve for a long time. Periods of service of 30 to 40

years are not uncommon.

Small boards, generally speaking, are desirable for small companies. Three members is, of course, the minimum and is often suf

ficient. However, it was found that three-fifths of the California and Utah companies canvassed in 1935 had 5 board members, and some, as many as 9, 10, and 11. These large boards are usually designed to give representation to geographical areas or other natural divisions of stockholders' interest; for example, various companies serv

FIGURE 11.-SEALED IRRIGATION STANDPIPE WITH CONCRETE DIVISORS. Water is delivered through these pipes into furrows for the irrigation of citrus trees.

ing subsidiary mutual companies give these subsidiaries a voice in the parent company management through election of a stated part of the board.

Terms, Compensation, and Activities

The terms of office of directors are designated in the corporation. laws of some States and are left to the discretion of the companies in others, the terms in the latter cases being stated in the articles of incorporation or bylaws. Companies having any choice in the matter usually prescribe 1-year and 2-year terms. Generally speaking, selection of directors for terms of either 2 or 3 years, with choice of a part of the board each year, has proved to be good practice, for it tends to insure continuity in policy. New board members usually have much to learn before attaining greatest usefulness.

The mutual companies usually pay the directors for attending meetings, the compensation generally ranging from 50 cents to $5 per director for each meeting, and the usual sum being $2 to $3. In rare cases the directors are paid annual salaries. However, it is not uncommon to allow the president either a salary or a higher per diem than the other directors, inasmuch as he usually spends more time on company duties.

The usual practice is to hold, or at least to authorize the holding of, one regular board meeting each month. However, many boards meet only when they have something definite to act upon. So long as affairs move smoothly the tendency in small companies is to hold

Voting Control of Typical Mutual Company, Emanating from from Stockholders

FIGURE 12.-VOTING CONTROL OF TYPICAL MUTUAL COMPANY, EMANATING

FROM STOCKHOLDERS.

In some companies a director is elected from each district as shown; in others, part or all of the board is elected at large. The manager is chosen by and is responsible to the entire board of directors but much of the board's control over the manager is exercised through the president.

Control of Water Service

to Stockholders of Typical Mutual Company Emanating from Board of Directors

FIGURE 13.-CONTROL OF WATER SERVICE TO STOCKHOLDERS OF TYPICAL MUTUAL COMPANY, EMANATING FROM BOARD OF DIRECTORS,

The control of water service to stockholders is the principal function of the mutual company organization. The ditch-tender districts do not necessarily coincide with the electoral districts, and within a given company they vary in size and in number of irrigated farms included. The number and arrangement of the ditch-tender districts depend upon many factors.

only a few meetings each year. It was found in the 1935 canvass that directors of about 20 percent of the California companies and 10 percent of those in Utah devote considerable time to company affairs between meetings. Their position differs from that of directors of ordinary business corporations. Directors in many Utah companies assume responsibility for the proper operation of the irrigation system within the respective districts from which they are elected. They generally leave supervision of the water delivery organization to the president, but keep in touch with relations between the water users and the superintendent, and undertake to correct many minor difficulties.

The boards do a great deal of work through committees. A rather large number have standing committees, important examples being the executive committee and the auditing committee. The purpose of the executive committee is to take action in lieu of the entire board; its function is not to determine matters of policy, but to make decisions in line with established policy and thus save the time and expense of calling together the entire board. It can thus be a valuable adjunct to the board or, if not properly organized, it can be a hindrance. In some cases there has been a tendency to entrust duties to the executive committee that could be more properly handled by the president alone or by the superintendent. An auditing committee is appointed by some companies which do not employ a technical auditor or accountant to audit the company's financial statements. Other standing committees may be those on water distribution, water rights and claims, cleaning and repairs, purchases, finance, water rates, water supply, and pumping plants. A rather general practice among mutual companies is to appoint special committees to look into matters as they arise and to report back to the board of directors.

The majority of the California and Utah companies included in the 1935 investigation reported that all their directors were actively engaged in farming. Many of these men devote only part of their time to general farming or handling of orchards; some are primarily stockraisers. The southern California companies commonly have directors who, in addition to their agricultural occupations, hold responsible positions in other organizations, such as directors of banks, directors or officers of cooperative-marketing associations, mayors and other city or county officials, and officers and employees of various mercantile, manufacturing, professional, and civic organizations and businesses. This holds true in lesser degree in other areas.

EXECUTIVE OFFICERS

The president is usually selected from the board of directors. In some cases the directors make the selection, and in others the stock