PHOENIX-At the same time Americans are incensed by banks collecting TARP money and paying executives big bonuses, some leaders within the credit union movement are taking accountability for lean years by voluntarily capping their salaries and even reducing their pay.
Deedee Myers, CEO of DDJ Myers here, a national executive search firm, has spotted the trend. "They are diminishing their salaries before letting go employees or slashing expenses that are really important to the credit union," Myers said.
Myers is aware of an entire CU executive team that voluntarily took pay cuts of 10% to 15%. "I also know a CEO that has not funded his retirement plan this year. So he'll have to play catch-up later or work longer. He is aware of that, as are many CU leaders who are taking accountability for the success of their credit unions and leading by example."
That's one of the reasons CUES CEO Fred Johnson asked his board - and received approval - to cap his salary for 2009 and 2010. "You cannot lead from the back, you have to lead from the front," stressed Johnson, who is aware of credit union CEOs and other trade group leaders who have truncated their own salaries. "I didn't feel right taking an increase when I did not expect that we will turn a profit in 2009. It has been a difficult year because of (conference) attendance, and if we don't turn a positive number it makes no sense for me to get an increase."
For 2010, CUES salaried employees will not receive a pay hike - another reason for Johnson's move. "How can I ask someone to do something that I am not willing to do? I was in the Army for 27 years, from private to colonel. It's hard to tell people to get out front and take chances while you wait in the back. I don't do that."
Not all association CEOs are taking pay cuts when years are lean. Credit Union Journal reported in September that CUNA President Dan Mica was earning almost a 13% pay increase in 2008-taking his salary to $1.9 million-when CUNA reported loses in that same year of just under $8 million.
Allene Ashmore, treasurer and manager of the $2.7-million Orange County Teachers CU in Orange, Texas, asked her board to truncate her salary for 2007 and 2008, which they did. But they would not reduce her salary for 2009. "I wanted to take a cut in pay this year but the board would not let me," she explained.
Ashmore said she cut her salary to help members by reducing expenses that she has been struggling to pay. "I have cut my expenses to the bone," she said. "I have been putting a small amount of money aside for years to cover expenses in hard times. I had enough money to cover me for 18 months, but come spring that money will be depleted."
CUES' Johnson said the acts by credit union leaders to cap or reduce their own pay certainly separates the movement from banks. But data from Executive Compensation Solutions suggests that those CU heads making sacrifices are not running the very large credit unions, especially when it comes to bonuses. "Overall we see there may be a few executives that may be making the decision to voluntarily give up their bonus," said Heidi Pederson, president of Executive Compensations Solutions in Covina, Calif., who then turned to the topic of annual salaries. "Overall, although salaries have been declining over the last three years, we continue to see an increase in base pay."
Those findings are from Executive Compensation Solutions' annual survey. Pederson said bonuses among CEOs running sub-$100-million CUs were "fairly flat." But CUs with $4 billion in assets reported bonuses as high as 44.9% "We have found that there is a steady increase in the percentage of the bonus the larger the credit union gets."
