A published report here that the proposed merger between Oregon Community Credit Union and Portland Teachers Credit Union was called off due to the $1.6-million in annual compensation being paid one of the CEOs is being disputed by one of the credit unions involved.
Gordon Hoerauf, president and CEO of Oregon Community, said the proposed merger was not called off because state regulators threatened to withdraw approval unless Portland Teachers informed members of the $1.6 million in annual compensation being paid to PTCU's CEO, Cliff Dias.
A story in the Eugene Register-Guard first reported the compensation figures after obtaining documents filed by Portland Teachers Credit Union with the Internal revenue Service.
The newspaper said that Dias earned earned a total of $1.6 million in salary and bonuses in 2003, $1.1 million in 2002 and $553,000 in 2001.
The Register-Guard said Oregon's Department of Consumer & Business Services, Division of Finance and Corporate Securities, insisted PTCU must disclose to its members what Dias' pay would be following the merger.
"Five days after that threat, Portland Teachers backed out of the merger," the newspaper reported in a story dated July 23.
But Hoerauf reiterated to The Credit Union Journal that the merger was derailed due to operational issues, not the threat by regulators.
"I understand speculation based on the timing, but that played no role in the ending of the merger talks," said Hoerauf. "There were too many differences in operational matters, such as lending and employee benefits. For example, Portland Teachers is not a member of the shared branching network. A lot of those issues came up and they could not be resolved by the merger date. There was not any one item, but all the items in total led us to put the merger on the back burner."
"The letter and the state had nothing to do with ending merger talks," he repeated. "Obviously, the timing makes it look that way and I understand that, but it didn't play any role at all."
Dias did not return repeated telephone calls from The Credit Union Journal. Officials at the Oregon Department of Consumer & Business Services, Division of Finance and Corporate Securities, declined to comment.
If the $1.6-million figure for Dias' compensation is accurate, it is nearly four times what CEOs of Portland Teachers CU peer group credit unions are paid. According to the Credit Union Executives Society 2004 Compensation Survey, the 2004 median base compensation for CEOs at CUs of $1 billion or more was $344,400.
The Register-Guard reported that Oregon's director of the Division of Finance and Corporate Securities, Floyd Lanter, wrote in an e-mail reviewing the proposed merger, "Any independent party looking at these (compensation) agreements could easily conclude that the directors and executive officers of (Portland Teachers) have placed their interests ahead of the members. We are certainly led to that conclusion."
