KRS 154A.030: Board of directors -- Senate confirmation -- Qualifications -- Terms --

Removal -- Chairman -- Standards of conduct -- Compensation -- Meetings --

Quorum -- Records -- Appointment and confirmation of corporation president

-- Duties -- Removal -- Open board meetings.

(1) The affairs of the corporation shall be administered by a board of directors

composed of eight (8) members. One (1) member of the board shall be the State

Treasurer, who shall serve on the board in an ex officio capacity. The other sev en

(7) members shall be appointed by the Governor, subject to the advice and consent

of the Senate. Members appointed when the Senate is not in session shall serve only

until the next regular session, or special session if such matter is included in the ca ll

therefor of the General Assembly, at which time they shall be subject to

confirmation by the Senate. If the Senate is not in session, the appointments shall be

subject to review by the Interim Joint Committee on State Government which shall

hold a public hearing and shall transmit its recommendations to the Senate. Should

the Senate refuse to confirm a member then he shall forfeit his office as of the date

on which the Senate refuses to confirm him. Any person not confirmed by the

Senate shall not be reappointed as a member for a period of two (2) years. Members

appointed by the Governor, and confirmed by the Senate, shall be residents of the

Commonwealth of Kentucky and serve a term of four (4) years, except that of the

initial members appointed, two (2) shall be appointed for one (1) year with the term

ending on the twenty -eighth (28th) day of November, 1989; two (2) shall be

appointed for two (2) years with the term ending on the twenty -eighth (28th) day of

November, 1990; two (2) shall be appointed for three (3) years with the term ending

on the twenty-eighth (28th) day of November, 1991; and one (1) shall be appointed

for four (4) years with the term ending on the twenty -eighth (28th) day of

November, 1992. Members, confirmed by the Senate, may serve t hirty (30) days

beyond the end of their respective terms if their successors have not been appointed

and qualified. If the Governor fails to appoint a successor within thirty (30) days of

expiration of a member's term, the board shall make the appointment. No appointed

member shall serve more than two (2) consecutive four -year terms. No more than

four (4) of the members appointed by the Governor shall be from the same political

party. Appointed members may be removed by the Governor for neglect of duty,

misfeasance, or nonfeasance in office. The board shall annually elect a chairman

from among its appointed members.

(2) (a) No member of the board of directors, by himself or through others, shall

knowingly:

1. Use or attempt to use his influence in any manner which involves a

substantial conflict between his personal or private interest and his

duties to the corporation;

2. Use or attempt to use any means to influence the corporation in

derogation of the corporation;

3. Use his official position or office to o btain financial gain for himself, or

any spouse, parent, brother, sister, or child of the director; or

4. Use or attempt to use his official position to secure or create privileges,

exemptions, advantages, or treatment for himself or others in derogation

of the interests of the corporation or of the Commonwealth.

(b) No director shall appear before the board or the corporation in any manner

other than as a director.

(c) A director shall abstain from action on an official decision in which he has or

may have a personal or private interest, and shall disclose the existence of that

personal or private interest in writing to each other member of the board on

the same day on which the director becomes aware that the interest exists or

that an official decision ma y be under consideration by the board. This

disclosure shall cause the decision on these matters to be made in a meeting of

the members of the board who do not have the conflict from which meeting

the director shall be absent and from all votes on which ma tters the director

shall abstain.

(d) In determining whether to abstain from action on an official decision because

of a possible conflict of interest, a director shall consider the following

guidelines:

1. Whether a substantial threat to his independence of judgment has been

created by his personal or private interest;

2. The effect of his participation on public confidence in the integrity of the

corporation and the lottery;

3. Whether his participation is likely to have any significant effect on the

disposition of the matter;

4. The need for his particular contribution, such as special knowledge of

the subject matter, to the effective functioning of the corporation; and

5. Whether the official decision will affect him in a manner differently

from the public, or will affect him as a member of a business,

profession, occupation, or group to no greater extent generally than other

members of his business, profession, occupation, or group.

Any director may request a vote of the disinterested members of the board on

whether any director shall abstain from action on an official decision.

(e) No director, in order to further his own economic interests, or those of any

person, shall knowi ngly disclose or use confidential information acquired in

the course of his official duties.

(f) No director shall knowingly receive, directly or indirectly, any interest or

profit arising from the use or loan of lottery funds or funds to be raised

through the lottery.

(g) No director shall knowingly accept compensation, other than that provided in

this section for directors, for performance of his official duties.

(h) No present or former director shall, within one (1) year following termination

of his mem bership on the board, accept employment, compensation, or other

economic benefit from any person or business that contracts or does business

with the corporation in matters in which he was directly involved during his

tenure. This provision shall not prohi bit an individual from continuing in the

same business, firm, occupation, or profession in which he was involved prior

to becoming a director, provided that, for a period of one (1) year following

termination of his position as a director, he personally re frains from working

on any matter in which he was directly involved as a director.

(i) No director, and no spouse, child, brother, sister, or parent of that director

shall have a financial interest of more than five percent (5%) of the total value

of any vendor, other supplier of goods or services to the corporation, retailer,

or related entity. The corporation shall provide each member of the board with

a list of all current vendors, which shall be updated on at least a quarterly

basis.

(3) Appointed membe rs of the board of directors shall be entitled to five thousand

dollars ($5,000) per year as remuneration for serving on the board, except for the

chairman, who shall receive seven thousand five hundred dollars ($7,500), and all

members shall be reimbursed for necessary travel and other reasonable expenses

incurred in the performance of their official duties.

(4) The board, upon call of the chairman or the president, shall meet at least monthly

for the first eighteen (18) months and bimonthly thereafter and at such other times

as the chairman or the president may determine. Four (4) members of the board

shall constitute a quorum. The board shall also meet upon call of three (3) or more

of the voting members of the board. The board shall keep accurate and com plete

records of all its meetings.

(5) The State Treasurer shall not be compensated for his service on the board.

(6) The president of the corporation shall be appointed by the Governor subject to

confirmation by the board of directors. Should the board of directors refuse to

confirm the appointment of the president, then the Governor shall submit another

name. The person whose appointment was refused shall not be renamed for

confirmation for a period of two (2) years. The board of directors shall meet with in

thirty (30) days of the date the Governor submits the name of a nominee for

president of the corporation and shall, within that time frame, either approve or

reject the nomination. The president of the corporation shall manage the daily

affairs of the c orporation and shall have such powers and duties as specified by

KRS 154A.070 and by the board of directors. The president shall not be a member

of the board. The president of the corporation may be removed by the board of

directors.

(7) All meetings of th e board shall be open unless they may be closed under KRS

61.810 or relate to trade secrets, legally -protectable intellectual property,

confidential proprietary information, the security of the corporation in the operation

of the lottery, or the security of the lottery's retailers.