The measure, which passed the House Financial Services Committee last Tuesday and was scheduled to be voted on by the full House last Friday, lets regulators limit "inappropriate or imprudently risky" pay packages.
The bill exempts firms with assets of under $1 billion. According to data compiled by the NCUA and CUNA, there are 153 credit unions with assets of $1 billion or more.
The bill, which was approved by the House panel along party lines, gives shareholders more opportunity to weigh in on executive compensation. It also mandates that federal regulators write rules requiring financial institutions to disclose incentive-based pay plans for their executives.
"Credit unions are being swept up by the wave of trying to punish the bad actors, and we are trying to limit that to the extent possible," said CUNA Vice President for Legislative Affairs Ryan Donovan. "The NCUA already has many regulations that restrict packages of this kind."
According to CUNA's most recent member survey, the median salary of a credit union CEO is $71,000 annually and the average salary is approximately $93,000.
NCUA Rules and Regulations ban employees and volunteers of federal credit unions from receiving "directly or indirectly, any commission, fee or other compensation in connection with any loan."
Also, "officials, senior management employees and their immediate family members of an FCU that has outstanding loans or investments in a CUSO must not receive any salary, commission, investment income or other income or compensation from the CUSO either directly or indirectly, or from any person being served through the CUSO."
NAFCU President Fred Becker wrote the panel that credit unions should be exempt from this law because of their structure and nonprofit status.
"Quite frankly, those running for-profit entities, including community banks, have a profit motive that can open the door for abuse. In stark contrast, not-for-profit cooperatives quite simply have different motives, which substantially lessen the incentive for abuse," he wrote.
The measure would give shareholders an annual nonbinding vote on salary and bonuses for top executives at all U.S. public companies.
House Financial Services Committee Chairman Barney Frank (D-Mass.) said in a statement that the measure was aimed at "empowering the shareholders to decide the appropriate level [of compensation] because it's their money."
Rep. Spencer Bacchus (R-Ala.), the panel's senior Republican, said the enhanced regulatory powers give the government too much say on an issue that should be left to the private sector.
"The government should not be in a position of setting executive compensation," he said.