MADISON, Wis. — Board members feeling the economic pinch, and credit unions reaching greater parity with banks on CEO base pay, have contributed to a marked drop in CU executive compensation increases in 2009.
That's the stance of Scott Dettmann, principal consultant for enetrix, which administers the Credit Union Executives Society's (CUES) annual Executive Compensation Survey. The latest CUES survey shows that the median base salary for credit union CEOs rose 5.37% in 2009, compared with 7.11% in 2008, and 8.02% in 2007. The median total CEO compensation increases have also seen a significant decrease over the past three years-from 8.81% in 2007, to 7.38% in 2008, to 4.87% in 2009, the survey showed.
"Two things come into play," he said. "The folks who sit on [CU] boards are not employed by the credit union, so they bring to the table what they think credit union leaders ought to be getting. There has been a rapid decline in overall pay increases in the economy and board members feel that pinch."
In recent years, CU executive pay increase percentages have typically been much higher than banks in an effort to retain top talent and bring talent from outside, according to Dettmann. "But credit unions are moving much closer to parity with banks when it comes to base pay," he said, surmising that CUs "don't feel the need to play catch up as much."
While CUs have become much more competitive on base salary, there's still a wide gap in incentives, Dettmann noted. "We are looking at 20% to 30% incentive opportunities for credit union CEOs, compared with at least 60% for banks."
Dettmann predicted CU executives will see the same pay increase percentage in 2010 as 2009, as boards try to determine where the economy is heading. "We've got to come out of this little more," he said. "And the companies that employ credit union directors are going to have to see some economic revival before board members carry any conviction that we need to be doing much more with executive compensation that what we are doing now-which is still a full percentage point above what the rest of the economy is doing."
The CUES survey reported that other CU executives have also received salary increases this year, but again, these were lower than previously. Rates of increase ranged from 4.16% for business lending executives to 9.33% for business development executives.
