Controversy Over CEO Pay

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PORTLAND, Ore. - (07/26/04) -- The death of the Portland TeachersCU/Oregon Community CU merger, the largest credit union combinationever, followed a chain of events that included the refusal ofPortland Teachers CU to disclose the compensation--$1.6 million--ofits CEO. Cliff Dias, to members, according to an account in thePortland Register-Guard newspaper. The compensation, which includedincentive bonuses, is more than twice the amount paid to TomSargent, CEO of First Tech CU, the state's second largest creditunion, who earned $680,000 in compensation last year, according tothe newspaper. Records obtained by The Register-Guard show thatPortland Teachers CU refused to disclose their CEO's pay, eventhough regulators threatened to withdraw their tentative approvalof the merger unless members were apprised of the pay pact. The twocredit unions, the regulators warned in a letter, were running"potentially large reputation and strategic risks," if members wereto find out about the pay package after completion of the merger.Five days after the threat, the $1.6 billion credit union pulledout of the merger, the newspaper reported. The two credit unionsended their merger agreement in May, citing "operationaldifficulties," of combining the two institutions. But a letter fromthe regulator obtained by The Register-Guard said state officialswere more concerned about "good corporate governance," and notoperational difficulties.

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