CEO Compensation Issues Can QuicklyDivide Board

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SAN FRANCISCO - (06/27/06)-- What issue is most likely to lead tolong and contentious board meetings? If board members at onemeeting here are any indication, the hands-down answer is CEOcompensation, and especially bonus comp plans. “None of us onour board are ever going to see this kind of a benefit when weretire,” one board member told The Credit Union Journalduring the CUES Annual Meeting here. “We have stateemployees, and a high school teacher. It was a bruising process,and several board members were quite entrenched, saying the CEOmakes six figures and has a car and ought to be able to do(retirement savings) himself.” Said another, “Take (adeferred comp plan) to a board whose average salary when they wereworking was one-third of the CEO’s, and it is a struggle. Itwas painful. But it the fundamental question was do we want to keepthis guy? Do we have someone to run this place if he walks out onus?” But yet another board member added, “In our case,we’re paying (our CEO) $350,000 a year and we believe we can.Sometimes the issue is just base compensation.” But notoffering any type of bonus comp plan brings with it its own risks:“We found out the hard way just how thin the pool ofcandidates can be,” observed another director.

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