DENVER-While many in the credit union community were shaking their heads at the news one CEO had been paid more than $9 million in compensation in 2010, compensation experts and CEOs said the industry should expect to hear of more such high payouts in the coming years.
But that, too, has some people concerned the large sums will only strengthen banker rhetoric to eliminate the CU tax exemption, and also called into question the skill of board members in setting CEO compensation (
A number of sources, on and off the record, told Credit Union Journal that the $9-million payout to Dave Maus, CEO of Public Service Credit Union, is out of line. However, consensus among two credit union CEOs and one executive compensation analyst is that the number, while on the higher end of retirement packages, is not unreasonable and is not completely unexpected.
The majority of the $9.8 million reported on Form 990 for 2010 by PSCU is not base compensation for Maus, and is deferred compensation earned over the course of 31 years and paid out in January 2010 as a retirement benefit, according to Maus, who spoke with Credit Union Journal. Alec Berkman, principal and CEO of Executive Compensation Solutions, Covina, Calif., had a similar assessment after reviewing PSCU's 990 Form.
According to Maus, 62, removing his 2010 salary and bonus brings the $9.8-million figure down to about $9.3 million. The CEO set his annual salary in the range of $400,000 to $500,000; $451,000 is the average for his peer group, according to a recent Executive Compensation Solutions survey.
"I think over time people will have to get used to seeing bigger benefit packages than we have seen in the past," said Berkman, who reminded that retirement packages are created to retain top talent and help the CU prosper. "We have more sophisticated credit unions and leaders, more things to pay attention to, and more decisions to make. This is not the credit union world of 20 years ago, not even 10. It's a competitive marketplace."
Growth To $1.14 Billion
While sources questioned whether generous retirement packages really are worth the money paid over the years, Maus contended they are. "I have taken a $15-million credit union to $1.14 billion in assets. We have gone from 6,000 members to 132,000, and taken undivided earnings from $30,000 to net worth of more than $111 million at 9.97% of assets today."
Maus continued that proper incentives are necessary to keep strong leaders in place at the credit union. "In order to retire with a lifestyle that is 75% of your ending salary, these are the kinds of programs you have to do. My plan is structured no differently than pension plans for any type of government employee and public servant."
Maus also pointed out his contributions to the credit union movement as CUNA chairman, chairman of CO-OP Financial Services, and other numerous trade associations and CUSOs. "Boards need to invest in their CEO in such a way that they encourage credit union performance and contributions to the CU industry."
But the leader of another credit union even larger than Public Service CU disagrees. Henry Wirz, CEO of the $1.9-billion SAFE CU in North Highlands, Calif., termed Maus' package "an obscene amount. Perhaps there is some justification the credit union has for this, but it is not immediately obvious to the rest of the world given the size of the award. The interesting thing is the average employee at PSCU, according to 5300 data, earns $63,000. This sends a very inconsistent message to the public and to members. I question whether the CEO is adding (based on the retirement payout) that much more value to the operations. For example, in 2011 PSCU's delinquent loans increased 63% in environment in which most other credit unions' delinquencies went down. Now they did increase net income 61%, so that is a mixed bag."
According to December 2011 Call Report data, PSCU's ROA was 1.83% after assessments, and operating expense to average assets was 3.22%. Membership growth was negative (-1.17%) as was loan growth (-13.06%). Net income was $19.6 million for the year.
