That's the consensus of credit union CEOs and other experts about the bill recently passed by the U.S. House that would add regulations on the compensation of top executives at credit unions with $1 billion or more in assets.
"We'll have to spend some time explaining our compensation at annual meetings because some people go to annual meetings to make a point, but we'll be fine," said Kirk Kordeleski, president/CEO of Bethpage Federal Credit Union. "If you compare the pay of credit union executives with those of executives at banks of similar size, credit union executives are usually paid comparably or less."
William Donovan, a Washington lawyer who has worked extensively on credit union issues and is NAFCU's former general counsel, said the bill will probably change when it gets to the Senate. But even if the measure passes as is, the impact won't be substantial. "It will be somewhat of an annoyance and inconvenience but won't have a dramatic impact," he said.
The bill, which was passed by the House earlier this month mostly along party lines, gives shareholders more opportunity to weigh in on executive compensation. It also mandates that federal regulators write rules requiring that financial institutions disclose incentive-based pay plans for their executives. It would give shareholders an annual nonbinding vote on salary and bonuses for top executives at all U.S. public companies. It requires federal regulators to write rules requiring financial institutions disclose incentive-based pay plans for their executives.
According to data compiled by CUNA and the NCUA, there are 153 credit unions with assets of $1 billion or more. CUNA's latest survey of member credit unions, the median salary of credit union CEOs is $71,000 annually and the average salary is approximately $93,000.
CUNA, NAFCU and some credit union executives have complained that the measure lumps credit unions in with for-profit institutions, some of which have top executives who receive pay increases tied to risks they have taken.
"The structural compensation differences between for-profit stock-based banks and not-for-profit natural person credit unions are substantial and have nothing to do with asset size.
"The credit union structure does not include the substantial self-enrichment drivers that a stock-based bank is built upon. Inclusion of credit unions, even at the $1 billion or higher in assets level, appears to reflect a clear lack of understanding as to the fundamental structural differences in executive compensation between not-for-profit natural person credit unions and for-profit banks," The Golden One Credit Union President/CEO Terry Halleck said.
The Senate could take up the bill as a stand-alone measure or include it in larger regulatory restructuring legislation that it is likely to consider this fall.
Even though the Senate is also controlled by Democrats, the rules in that chamber give Republicans, who mostly oppose the measure, more opportunity to slow down the passage of legislation or attempt to modify it.
The NCUA already places restrictions on certain types of compensation, designed to avoid the types of pay packages that for-profit financial institutions use. The agency's regulations ban executives and volunteers of federal credit unions from receiving commissions from loans or salary, commission, investment income, or other income or compensation from a CUSO.
Last year, the agency's outreach task force concluded that the compensation of the three top executives at each credit union should be collected and released publicly in aggregate. However, the NCUA Board did not vote on a task force recommendation to disclose the actual compensation of the top three to the credit unions' membership. Halleck said the status quo, with executive compensation decisions entirely in the hands of credit union boards, works well and doesn't need to be fixed.
While Bethpage FCU's Kordeleski said the measure would "be a pain in the butt and disrupt the staff for a month or so, but there are a lot of other issues that take up more of our attention.''