Federally chartered credit unions would be required to report the annual compensation of their senior executives to members under a proposal from the National Credit Union Administration.
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 state-chartered credit unions and publicly owned corporations that are required to make such information available to the general public.
The NCUA said it would only require executive compensation be disclosed to members, either in annual reports or on Web sites, because it is only the members that the executives are responsible to, according to NCUA board member Gigi Hyland, who chaired a task force on the issue.
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 that suggested requiring more information on executive pay to be made available.
State-chartered credit unions are currently required to disclose the compensation to top executives in Internal Revenue Service 990 tax forms that until recently were aggregated by state credit union regulators. But federal charters are exempt from that requirement.
Publicly traded corporations are required to disclose the executive compensation in annual proxy statements.
The task force also recommended making permanent the NCUA's Member Services Assessment pilot program, which collected information on how well credit unions serve their fields of membership.
The NCUA also would collect information on what products and services each credit union offers under the proposal issued last month.
The task force study was an outgrowth of congressional inquiries into how credit unions serve the underserved. In an initial response to Congress in 2005, the NCUA examined income levels of members at 450 credit unions. In its report issued Feb. 26, the task force proposed that the NCUA expand that effort and collect the data every year.
Meanwhile, Congress has begun debate on whether to expand the Community Reinvestment Act beyond banks and thrifts to include credit unions and other entities.
The task force decided against requiring credit unions to collect data on their own detailing actual member economic levels, because of avid opposition from credit unions, according to Ms. Hyland. Credit union representatives objected to the "burden" of such data collection and worried about how it would be interpreted, she said.
Credit unions have been fighting efforts to collect data assessing their services to the underserved for years. An effort by former NCUA chairman Norm D'Amours to enact a CRA-like requirement that all community charters provide such data created a massive fight with the trade associations, and the NCUA board eventually tabled the proposal.
However, the data-collection issue is sure to resurface as increasing numbers of credit unions opt for community charters.
The report, which includes 12 recommendations in all, was compiled after six town hall-style meetings conducted around the country by the group that were attended by credit union trade associations, industry executives, and consumer groups. The NCUA board is expected to approve the recommendations, given the three board members' public positions on these issues.
