ALEXANDRIA, Va. – Federally chartered credit unions would be required to report the annual compensation of their senior executives to members under a proposal issued by NCUA yesterday.
The proposal tries to satisfy some of the criticism aimed at credit unions over transparency on executive pay, but would fall short of current requirements for both state chartered credit unions and publicly owned corporations that are required to make such information available to the general public.
NCUA said it only would require executive compensation be disclosed to members, either in annual reports or on websites, because it is only the members that the executives are responsible to, according to NCUA Board Member GiGi Hyland, explaining recommendations in the NCUA Outreach Task Force, which she chaired.
The disclosure of executive compensation, long a secretive process among credit unions, was cited by the government accounting office in a study on credit unions two years ago, which suggested that credit unions be required to make more information available on executive pay.
State chartered credit unions currently are required to disclose the compensation to top executives in IRS tax Form 990s that until recently were aggregated by state credit union regulators. But federal charters are exempt from that requirement.
Publicly traded corporations are required under the Securities and Exchange Act to disclose the executive compensation in annual proxy statements filed with the SEC and available to the public.
The Task Force also recommended the expansion of NCUA’s Member Services Assessment Pilot, which collected information on how well credit unions serve their fields of membership, by making it permanent.
NCUA also would collect information on which products and services each credit union offers, under the proposal.
The Task Force study was an outgrowth of congressional inquiries into how credit unions serve the underserved. In an initial response to Congress, NCUA arbitrarily studied 450 credit unions in its MSAP in 2005 and provided general information on the economic level of credit union members. The study issued yesterday proposes NCUA expand that effort and collect the data every year.
Release of the report comes as Congress begins debate on whether to expand the Community Reinvestment Act beyond banks and thrifts to include credit unions and other entities.
The recommendations must be approved by the NCUA Board, which is likely to give its approval, given all three board members’ public positions on these issues.
