The embattled board of Columbia CU, on trial for its failed bid to convert the credit union to a bank, narrowly survived a member revolt last week.
The eight directors up for recall in the rare member initiative retained their seats by close margins, some by less than 2% of the 13,153 votes cast by the members during the two week balloting period. The balloting culminated in a highly-pitched special meeting of the members, which pitted dissident rank-and-file members of the $620-million credit union, upset with the board's bid to convert Columbia to a bank, against supporters who included the employees of the credit union, who clearly made the difference in the directors' campaign to retain their seats.
A rump organization created by the board, calling itself "Friends of Columbia CU," dominated the scene at the special meeting, attended by about 1,400 credit union members, with dozens of employees and their family members sporting pink "Retain the Board" stickers on their Columbia CU shirts, and holding banners outside Hudson's Bay High School, where the special meeting was held, urging a "no" vote on the recall.
During a one-hour debate preceding the final vote on the recall, dissident members who launched the recall initiative faced off against employees who recounted their belief that Columbia is a good place to work. Laurie Kusch, a 29-year employee at Columbia, drew the biggest ovation, by far, when she recounted how the embattled directors were responsible for instituting the credit union's first employee incentive plan. Another long-time employee became emotional as she reported how the credit union celebrated her birthday with a cake.
Reasons For Support
The credit union employees gave varying reasons for their outpouring of support for the directors. One employee told The Credit Union Journal that management explained to them if the dissidents won the recall that jobs would be threatened at the credit union. Another said the dissidents didn't want the credit union to grow, which is necessary to increase earnings to continue paying higher wages and benefits.
One employee explained that workers were also nudged to join the board's side in the fight with an increase in their annual bonuses from $50 to $300, despite a drop of 30% in net income for the credit union last year. But several other employees subsequently contacted The Credit Union Journal to say the bonuses played no role in their positions.
The employees were joined by a handful of local business owners who supported the efforts by Columbia to expand its member business lending, one of the stated reasons for the ill-fated conversion to bank.
"The bottom line is, this board's done nothing wrong. And if you really believe that, in America, you're innocent until proven guilty, then you've got to vote to retain this board," said Tom Grace, a local business owner, during the debate at the special meeting.
The final vote followed what appears to be an unprecedented expenditure of credit union funds on behalf of the embattled directors' efforts to retain their jobs. The credit union spent as much as $100,000 on the recall initiative, with as much as half of it spent in the final days to defend the directors, according to several sources familiar with the process. That included the hiring of a Wall Street proxy solicitation firm, Mellon Financial Advisors, to call each eligible member to urge a no vote on the recall; paid ads in the local newspapers and on radio stations; the retention of a powerful, Portland-based law firm, Miller Nash LLP, to defend the directors in court; and the printing of signs and other advertisements.
Following the vote, Karen Martel, board chair who was retained by the largest margin, expressed a weary satisfaction at the vote outcome. "I'm happy we were able to come to a solution ensuring that the voting rights of every member was protected," she said.
Martel refused to disclose the costs of the special meeting, insisting she could not do so because the issue is still subject to litigation.
But the close escape for the board has not ended the ouster bid by the dissident group. The group, calling itself "Save Columbia CU," has vowed to continue its efforts in the courts and in the next round of board elections, which could occur as soon as next month when up to four seats on the nine-member board are scheduled to be voted at the regular annual meeting. The dissidents also hope a state court will disqualify several incumbent directors from continuing to serve, because five of the current board members have exceeded the nine-year term limits approved by the board in 1999. If so, it would open a majority of the board's nine seats to another ballot in the coming weeks.
"We're not ready to give up, just yet," said Steve Straub, one of the Save CCU founders and a former CEO of the credit union.
