MADISON, Wis.-Executive compensation at credit unions is on the rise, according to a new study from the Credit Union Executives Society.
The study found that CEO base salaries increased by 4.37% for 2011, up from 3.62% in 2010. CEOs at credit unions between $200 million and $399 million in assets reported the largest average increase at 6.44%.
The numbers increase further when incentives and total compensation are accounted for. CEO total compensation for 2011 was up 5.07% (compared to 2.39% for 2010), with $200 to $399 million-asset CUs again seeing the highest average increase at 8.04%.
The study, administered by enetrix, a division of Gallup, Inc., surveyed 467 CUs (both members and non-members of CUES), 77% of which participated in the 2010 study.
Charlie Carlson, an analyst at Carlson-Dettmann Consulting who has worked with CUES on its compensation studies for several years, said that the major takeaway in the 2011 data is that compensation is beginning to rebound.
"People tend to talk in terms of how the economy is doing, but frankly the economy could be relatively flat and certain organizations or industries are going to be quite strong," said Carlson. "What we've got going on here is that after an appropriate time to reflect on where we are-and a lot of organizations did take a hit-we're seeing a fairly steady, although not dramatic, step up."
Breaking down CEO compensation by asset size, CEOs with assets between $20 million and $29.9 million earn an average of just under $90,000, while CUs with assets north of $1 billion pay their CEOs an average of $496,000. Among all asset sizes surveyed, the average credit union CEO makes $261,478.
The compensation survey includes little information from credit unions with assets below $19 million, which Carlson attributed to the lack of responses from managers of those CUs.
Salary Setting Metrics
Many credit unions nationwide are still struggling to make loans, but Carlson said that the increase in executive pay is a reflection of board confidence in the industry and a sign that CU compensation is aligning itself closer with that of banks. Loan growth was among the primary metrics used in establishing compensation.
The survey found that board evaluations were the most common factor in setting incentive pay, identified by 57.8 % of respondents, followed by earnings, 57.1%; loan growth, 35.5%; membership growth, 21.3%, and member satisfaction, 20.9%.
Among other executives, base salary increases ranged from 3.04% for business lending executives to 7.30% for business development managers. In terms of total compensation, the percentage change for all executive positions was significantly higher than the increases awarded in 2010-more than two percentage points in many categories.
He noted that compensation packages today are "much more performance-driven" than they used to be, a trend that started 10 or 15 years ago. Additionally, he said, we're seeing "the maturation of an industry in terms of leadership. A lot of credit union leaders have been at those organizations for a long time, and are at a point in [their] career where you've got to make a decision about retaining this executive or running the risk of losing them."
Carlson added that one of the questions moving forward will be how executive pay is affected by the looming management turnover at CUs as older executives begin to retire.
The Big Question
The more immediate question, however, is how these numbers will fare in 2012 and subsequent years if the economy continues to stumble along. "I think we're going to be in a slow time for a while," said Carlson. "But as a credit union, other things going on within the organization can be very positive" that affect compensation, even if loan growth is still slow. "You can have efficiencies, consolidating-it really depends on what you're doing strategically. What happens in terms of executive compensation could be more tied to the health of the organization" as opposed to a single criteria like loans.
The 2011 CUES Executive Compensation Survey can be
