MADISON, Wis.-Credit unions are opening up the purse strings a bit and paying more for staff, increasing the percentage paid on annual raises, reducing the number of wage freezes, and boosting incentive pay.
However, the trend may not last that long, as CUs say they will reduce pay increases in 2013.
That's according to CUNA's 2012-2013 Complete Credit Union Staff Salary Survey Report. While the higher raises last, they are good for the industry, protecting key positions from being cherry-picked by banks of other corporations, according to Beth Soltis, CUNA senior research analyst.
The survey found credit union CEOs have gotten a bump up in base pay, putting them a little closer to their bank counterparts in overall salary, at least among the higher asset categories.
Following three consecutive years in which the percentage paid on annual raises declined (see chart), full-time CU management base pay increases for 2011 were up 19 basis points to 2.44%, and are projected to be 2.53% in 2012. Credit union full-time non-management saw a 10-basis-point bump to 2.36% in 2011 and are expected to reach 2.43% this year according to CUNA.
By comparison, as of January 2012, according to the Delves Group, the salaries of exempt bank employees were adjusted upward by 2.71% and the salaries of non-exempt bank employees were increased 2.83%.
Incentives For Non-Management
When it comes to variable pay, 30% of credit unions in 2011 offered incentives to management and 31% to non-management. Last year 52% of CUs gave management bonuses and 42% to non-management. These percentages have increased from 47% and 38%, respectively, from last year's CUNA study.
"Credit unions still don't use variable pay to the extent that banks and many for-profit companies do," explained Soltis. "The fact that incentives have grown a little indicates credit unions are trying to reward their employees without raising base wages, and therefore fixed costs. They are trying to recognize employees without putting any risk on credit unions."
But by not rewarding staff the CU runs too great a risk for employees becoming dissatisfied, disengaged and moving on, noted Soltis.
CEOs may be less likely to move on thanks to growth in base pay, which in the higher asset categories was greater than their bank counterparts'. Leaders of banks above $1 billion actually saw a reduction in base pay, according to the latest numbers. As of Jan. 1, 2012, data from the CUNA report compared with that of the Delves Group for banks shows CEOs that run credit unions from $500 million to $1 billion now make a base salary of $306,613 annually ($286,671 as of Jan. 1, 2011) compared with $245,043 base pay for bank leaders ($232,535 as of Jan. 1, 2011).
CEOs who run CUs with more than $1 billion in assets make $427,275 ($411,928, 2011), compared with bank leaders who make $414,651 ($437,339, 2011). CEOs in charge of credit unions below $500 million make $74,000 ($73,019, 2011) to bank bosses' $226,248 ($216,513, 2011).
"This is far from an apples-to-apples comparison," cautioned Soltis. "You can't compare bank and credit union CEO base salaries and make a true comparison, because bank base pay is often only 20% to 40% of total salary, while for credit unions base pay is about 90% of total pay. From what I hear, the decrease in bank CEO base pay is due to the fact banks are now paying more in incentives and bonuses."
Another Study Also Finds Increases
The July 12 issue of Credit Union Journal reported that credit union CEO total compensation, including salary and bonuses, increased an average of 5.93% in the previous 12 months, the highest increase since 2008, according to the 2012 CUES Executive Compensation Survey.
The average covered the period May 1, 2011, through April 30, 2012, and compared to an average hike of 5.01% in 2011 and of 2.54% in 2010, the lowest of the past decade. The CUES data showed that average base with bonus compensation for CEOs for credit unions over $1 billion in assets rose last year to $523,694, with those under $30 million averaging $86,582. The average compensation for all credit union CEOs was $260,807.
While the CUNA study shows raises increased for CU staff each of the last two years (including 2012 projections), CUs told CUNA they will cut back in 2013, to 2.26% for full-time management, one basis point above the 2010 increase, and 2.23% for full-time non-management, three basis points below 2010 figures.
"I think there is a lot of caution out there regarding the economy, a lot of uncertainty," concluded Soltis.
CUNA's web-based survey was conducted by enetrix between January 2012 and May 2012; 5,800 CUs were polled and 1,400 responded.
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For info: www.cuna.org. Related story at www.cujournal.com, "Credit Union CEO Salaries See Highest Hike Since 2008, CUES Survey Finds"
