Mckenzie Electric Cooperative Inc

“The cooperative is a member owned cooperative.”

“Each member of the cooperative has one vote in elections of the board members.”

“Each cooperative member is allowed a vote to approve any by-law changes.”

“The form 990 was presented at a board meeting. The ceo and director of accounting and finance reviewed the form 990 prior to it being presented to the board and prior to it being filed with the irs.”

“Prior to becoming a board member, an individual must disclose any potential conflicts. A nominating committee determines if any of the disclosures by a prospective candidate represent a conflict of interest. Board members are required to disclose any conflicts that arise during their tenure. Annually there is a discussion when the board is asked to complete the relationship letters which are completed for the form 990. The ceo and director of accounting and finance are subject to the employee conflict of interest policy. Anyone with a conflict must abstain from voting on the issue in question.”

“The process for determining the compensation for the ceo and director of accounting and finance includes the review of state wide salary data through ndarec and consulting, as needed, by the nreca consulting service. Compensation for all management positions and union contracts are approved by the board. This process for the ceo and director of accounting and finance takes place annually in september.”

“The financial statements are presented at the annual meeting held by mckenzie electric cooperative and they are also published in the north dakota living magazine. Copies of the governing documents, conflict of interest policy, and financial statements are available upon request.”

“Included in column f, estimated amount of other compensation, is the estimated annual increase in the actuarial value of the defined benefit plan. The estimated increase for all individuals listed on the table is as follows: jamie cross - $33,025 matt hanson - $13,782 karl aaker - $16,709 austin fiechtner - $8,241 zane frick - $15,326 james hansen - $24,763 ryan zastoupil - $1,812 this amount is an estimate of the increase of the value of the plan and is not a current year expense of the cooperative, therefore these amounts have not been carried over to compensation of current officers, directors, trustees and key employees on the statement of functional expense for the applicable individuals. The actual expense incurred for all individuals listed on the table who participate in the defined benefit plan is as follows: jamie cross - $63,022 matt hanson - $44,997 zane frick - $28,903 karl aaker - $29,780 austin fiechtner - $18,946 james hansen - $51,420 ryan zastoupil - $17,555”

“The cooperative has interpreted the instructions to part ix, line 4, to mean patronage capital allocated for the year, rather than patronage capital retired. This is consistent with the bylaws of the cooperative.”

“The labor, pension and payroll taxes reported on lines 5 - 10 are already included in distribution expense, administrative & general expense, and customer expense. Therefore, these amounts are being subtracted out as an other deduction (allocated costs) on line 24e in the amount of $9,531,899.”

“Retired capital credits gain/loss -164,964. Capital credits retired -5,841,665. Net margins allocated 52,314,742.”

“Oversight process of the audit and selection process of the independent auditors has not changed from prior years.”