HONG KONG -- A credit union leader from Australia and one fromthe U.S. put their heads together in a wide ranging discussiontouching upon a number of hot button CU issues.

In a moderated conversation before attendees at WOCCU's 2008World Credit Union Conference, Phylip Doughty, CEO of MECU Ltd.,Australia, and Tom Dorety, CEO of Suncoast Schools Federal CreditUnion and CUNA chairman, touched upon the disclosure of CUexecutive pay, the idea of paying CU directors a salary, differingpolicies toward CU to bank conversions and making credit unionsgreener.

Australian credit unions disclose the incomes of their boardmembers and senior staff in an aggregate manner and in bands, asDoughty explained. Thus, a credit union might report that it paysits five senior executives, as a group, between A$100,000 andA$600,000, for example, and not disclose anyone's precisesalary.

This is in sharp contrast to the way the topic has been handledin the U.S. In the U.S., a few CUs voluntarily disclose executivepay and some state-chartered credit unions must do so. Butfederally chartered credit unions do not disclose their executivepay and the U.S. credit union trades are on record opposing anyregulation to do so.

For his part, Dorety said that the way Australian credit unionsaddress disclosing the income of credit union executives and boardmembers might provide a compromise model in the U.S.

Dorety made his remarks after reiterating CUNA's opposition todisclosing income from credit union CEOs. But after the end of theevent and speaking for himself, Dorety acknowledged that changingstandards of openness and increased transparency might make it veryhard for credit unions to resist some degree of disclosure.

"If you look at where trends in this area are going, it seemsunlikely that we can just dig our heels in and say we refuse toopen up," Dorety said, even as he acknowledged that a limitedapproach as they have down under would give some credit unionboards of directors heartburn.

Another point of difference the two executives explored dealtwith the notion of paying CU directors. Many Australian creditunions pay directors and Doughty said that the trend, in his view,was firmly fixed in that direction.

Doughty said the move to pay directors had its roots in theregulations and laws that both banks and CUs in Australia share.Meeting that regulatory burden has required Australian CU directorsto possess a degree of expertise and experience that would beimpossible to attain without paying them.

Dorety countered with the U.S. credit union belief that, so farat least, volunteer boards of directors are able to hire theoutside professionals they need to help make the decisions theyconsider.

The conversation then moved to a discussion of differingpolicies toward converting credit unions from cooperative tofor-profit basis.

Demutualizations are not unknown in other parts of the world,but the U.S. may be the only country that does not mandate that theequity of the closing credit union be distributed to the CU'smembers as part of the process.

"That's bloody outrageous," blurted Doughty after Doretyexplained to conference attendees the U.S. policy of transferringthe equity of the closing credit union to the new corporation andoffering CU members only the opportunity to buy shares of it.

"You're telling me that these buggers keep the earnings and thenmake CU members buy back what they already own," he said,incredulously to Dorety. "Don't ever complain to me aboutregulation, mate. Your lot clearly don't have any regulation atall!"

Doughty had explained that in Australia, a credit union thatdemutualizes must return the equity as shares back to all themembers who often benefit additionally if further reorganizationsincrease the value of their shares. In one recent case, Doughtysaid, shareholders from a former CU that demutualized saw theirshares increase in value several times.

He said that Australian credit unions strove to keep the membersin touch with the value of their credit unions because it wasalways a minority of credit union members who were most invested,in the form of loan commitments, in keeping their CUs as CUs.

"When you hold a couple of loans at interest rates 40 basispoints below competition, you have a definite interest in keepingyour credit union a credit union," he said. "But if you don'treally hold any loans any longer, you might not feel the sameway."

Finally, Doughty said that focusing on environmentallysustainable operations and lending policies can both save CUs moneyand provide them an avenue to younger members.

Doughty told attendees that his credit union has benefited fromoffering members low-interest loans to make water and powerimprovements to their homes. The CU also plants trees to offset theenvironmental impact of cars it finances and contributes to a landbank to offset the land used in homes it helps build.

MECU has also sharply reduced the solid waste it produces,Doughty said, and even composts scraps from the CU's cafeteria anduses the compost on its own landscaping and gardening so the CU nolonger purchases fertilizers.

Doughty told attendees that the CU has benefited as well from alot of employee support for the policy as well as increased memberinterest and business.

"Make no mistake, our members first want the best deal for theirhip pocket," Doughty said. "But if we can offer competitiveproducts which also have this green dimension, that will win theirbusiness and their increased loyalty," he added.

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