CU Turns To Board Term Limits

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PORTLAND, Ore.-Credit unions have long struggled to find the right mix of experience and fresh ideas for their boards of directors, and one CU believes it has found a good balance.

Over the past few years Unitus Community Credit Union has phased in term limits: directors may serve four terms of three years. After 12 years on the board, the director must come off the board for at least one year. After that sabbatical the director may start the process again, but after a maximum of 24 years out of 25, he or she will be termed out.

Laurie Kresl, VP of planning and business development for the $840-million credit union, credited longtime board member Gordon Akeson with the foresight to tackle the issue back in 2004 when he began unofficial discussions of how to improve the seven-member board's composition.

"Gordon is a bright man and a very strategic thinker," she said. "Seven years ago he was our board chair. He looked at the group and realized it was getting up in age. One board member had recently died and others had 15 to 20 years of service. Some of the directors might have wanted to retire soon. And there was an issue that the board no longer was representative of our membership. They were former employees of the telephone company, which was fine before but now that we were a community credit union it was no longer the case."

The former Oregon Telco Credit Union first changed its name to Oregon Telco Community CU, then became Unitus Community CU in October 2004.

A 'Gentle' Approach

In 2006 the idea of term limits was formally introduced to the board. Kresl said it was done "gently" by broaching the topic of succession planning.

"A couple of the board members had expressed a desire to retire, but Pat [Patricia Smith, the CU's CEO] urged them to stay because there was no pipeline of new people to replace them," Kresl recalled. "There is a give and take, and [board chair] Gordon and [CEO] Pat were concerned, because we did not want to lose all those years of credit union knowledge. On the other hand, our industry is changing very quickly, so it is important to be on top of things. The board was having to be more involved on the regulatory level."

One of the keys to making the idea of term limits more palatable to the existing board members was the creation of two post-director roles that allowed them to keep in touch with the CU. The "director emeritus" position allowed someone who had termed out to continue to attend board meetings, participate in discussions and lend an opinion, but without the ability to vote. Another position was "ambassador," or someone who attends community events and gives the credit union a broader reach.

"These positions created scenarios where board members could still be involved, which went a long way toward making people feel better," she reported.

The board's nominating committee began addressing the issue of creating more interest in serving on the board. Because there was no formal pipeline, it started a program to identify future strong board members. Signage was placed in branches and notices were put in newsletters in the fall when nominations were coming up. Kresl said it took "a good three years" of working continuously, including profiling existing members and making phone calls to ask if people would be interested to fill the pipeline. Unitus Community hosted events where interested candidates could come in and meet current board members. If a candidate was seen as having potential due to, for example, a financial background, but did not necessarily have credit union knowledge and experience, that person sometimes was invited to join the audit committee.

"We wanted to make sure we didn't have four of the seven board members change all at the same time because we would lose so much expertise at once," she said. "We wanted to have the pipeline filled first before we implemented term limits. We had three years of build time before the first two board members termed off the board. Generally one or two, usually two, board members are up for election on any given year."

Sad To Leave

One termed-out board member was "pretty sad" when it came to his last day, Kresl said. The director said he understood why Unitus needed to have turnover, and he was impressed by the new board members, but felt the sting of the end of an era.

"Even though he knew it was the right thing for the credit union, he was sad that his time on the board was over after more than 20 years."

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