MADISON, Wis. — Should credit unions pay their directors? That's the question asked in a recent study from Filene Research Institute.
"It will likely surprise many that some credit union directors are not technically volunteers, noted Matt Fullbrook the manager of the Clarkson Centre for Business Ethics and Board Effectiveness at the Rotman School of Management at the University of Toronto, who performed the study.
"However, the amount most directors receive is quite modest and pay is never the primary motivator for serving," Fullbrook added.
Filene acknowledged that many feel paying directors is "anathema to the cooperative spirit of credit unions," while others feel it will improve director accountability. The credit union think tank said it also wanted to quantify existing director compensation rates in the United States.
The report takes a closer look at trends such as: How prevalent is director pay? What does it look like? And how does it affect the performance of credit unions that use it? Researchers scoured state laws across the country and examined IRS Form 990 filings for every state-chartered credit union in the states that allow director compensation.
According to the research from 145 credit unions in 12 states, directors earn somewhere between $60 and $37,597. Federal credit unions are allowed to compensate a single board officer, but are expressly forbidden from paying other directors.
State are otherwise free to write their own rules.
Tennessee, Oregon, and Washington recently joined 10 other states that have long allowed compensation in various forms. Research found that credit union board pay is still, on average, modest. Most credit unions that could compensate their boards do not, but compensation is more prevalent among larger credit unions.
"This board compensation research is intended to foster productive discussion," said Ben Rogers, research director for Filene Research Institute. "For each argument, for and against compensating directors, the report offers discussion questions."
The board compensation research project was made possible by support from Credit Union Executive Society (CUES), DDJ Myers and Quantum Governance.
"We felt it was important to support this research so that we, as an industry, have a clearer understanding of the strategic decisions credit unions are making and what inputs leaders are using to make those decisions," said Dawn Poker, interim CEO and SVP/chief sales & member relations officer of CUES.
