LOS ANGELES-Re-examining executive benefits-including the possibility of restructuring them-can both save money and generate income, according to Executive Compensation Solutions.
Alec Berkman, president, said the first thing credit unions must do is make sure their executive bonus plans are tied to the CU's long-term performance. "Essentially, leaders do not get substantial bonuses unless there are long-term results."
Results can be best tracked by tying performance objectives to the credit union's Net Promoter Score, which Berkman said Executive Compensation Solutions is recommending much more these days. "It is fairly simplistic, but effective," he said.
Berkman said that credit unions should also take advantage of NCUA rule 701.9 that allows the credit union to place benefit assets into "otherwise impermissible positions," into higher yielding assets, to fund benefits. "The credit union can have a broader investment authority of funding executive benefits, and that drives higher earnings, which drives a higher bottom line."
While cutting costs is certainly top of mind with credit unions, Berkman urged CUs to be careful when reducing benefits. "The last place in the world you want to start cutting back is on your most valuable asset-your people. You have to continue to pay them fairly and give them incentives to run lean and mean. Those credit unions that tend to their knitting in good times and bad win in the long run."
