ALEXANDRIA, Va. -- Federally insured credit unions that are insolvent, in conservatorship or have ratings of CAMEL 4 and 5 could not offer golden parachutes to their executives under a proposed NCUA rule.
The agency unveiled the rule at today's NCUA Board Meeting.
NCUA's rule defines golden parachutes as payments that are "contingent on the termination of that person's employment and received when the credit union making the payment is troubled, capitalized or insolvent.''
The proposed rule would also prohibit any federally insured credit union, regardless of its financial health, from paying legal or professional expenses incurred in federal or state administrative proceedings that result in a monetary punishment, cease and desist order or removal from office.
The proposed rule, which is subject to a 30-day comment period, is identical to the one the agency issued in 2009 for corporate credit unions.
NCUA Attorney Pamela Yu said there are exemptions to the golden parachute rules to allow for previously agreed to deferred compensation plans and legitimate "nondiscriminatory,'' severance pay plans. Troubled credit unions that hire new managers to improve their financial health would be allowed to offer golden parachute plans, Yu explained.
The NCUA Board would have final authority over whether a golden parachute is allowed and the criteria it uses will include: What degree the employee had managerial or fiduciary responsibility; The length of time the employee was affiliated with the credit union and does the payment represent a reasonable payment; Any other factors that could be considered.