Trade publications are criticized by some as cheerleaders for their respective industries. They’re captives of the advertisers. Credit Union Times was founded in 1990 to provide unbiased news coverage the industry was lacking. We work incredibly hard to keep it that way, reporting the good and the bad.
Despite our efforts I received a letter from a reader regarding an article that appeared in the May 23 of CU Times featuring an advertiser—right next to an ad from said advertiser. The article was admittedly a softball piece on CU Members Mortgage marking its 30th anniversary in business. We do these types of articles on occasion to keep readers informed of milestones that various providers (as well as credit unions and others) reach and to break up the hard news. Different readers enjoy a variety of stories, including softer stories.
However, as the reader pointed out, “When you see the article is placed beside the large ad (2/3’s of a page maybe) you have to wonder what is this really about?” To his credit the reader also disclosed that he serves on the board of a competing CUSO.
Believe that it is precisely the fact that the editors don’t pay attention to where specific advertisements are placed that this incident occurred, and it was not intentional on the part of anyone at CU Times. We didn’t become the most successful independent credit union publication by operating like that and we never will. Articles are placed solely on the basis of news value. We’re reviewing our production processes to determine whether any changes are necessary to avoid such an unfortunate coincidence in the future.
Contrary to the reader’s assumption (and, honestly, my own) that CU Members Mortgage would be very happy with the placement, they were not. They were concerned the placement beside the ad made it look like an advertorial rather than an independent news story. That attitude demonstrates a very sophisticated public relations stance, which isn’t always the case.
Trust and integrity are very important to our business as it is to yours. Unfortunately, a recent news report on FoxNews.com didn’t paint credit unions in a very positive light. It highlighted the retirement compensation of David Maus at Public Service Employees Credit Union in Colorado, who made more than $11 million in 2010 due to the payout on his retirement package. The Fox report noted that Maus’ compensation was an extreme case but brought into question, as if from the American Bankers Association’s playbook, the federal tax exemption. And they’re right.
An Executive Compensation Solutions survey found that credit unions with assets greater than $1 billion paid their CEOs in 2011 an average of $486,117, up from $460,234 in 2010. A similar survey by the ABA found banks with more than $1 billion in assets paid their CEOs an average of $550,479 in 2011. The difference in compensation between the credit union and bank executives is nearly 12%, and credit union CEOs aren’t eligible for nearly so sweet deals in retirement as the bankers for much of the same responsibilities.
Overall credit union executives do earn significantly less than their bank counterparts, and while that alone doesn’t justify the credit union tax exemption, it’s certainly a factor to consider.
In the bigger picture, all credit unions—federal charters, too—will be better off disclosing their executives’ compensation packages. Compensation can vary greatly between credit unions due to location, lines of business, experience, field of membership and size or other factors. There are plenty of reasonable explanations for much of the differences. Operating in the sunshine is a good thing, whether it’s for the government or its instrumentalities. Federal credit unions are one of the few, and possibly the only, tax-exempt entities that don’t disclose executive compensation. Not disclosing makes it more suspicious than I suspect it really is based on industry surveys.
The industry was up in arms when Grace Mayo’s compensation was reported so high as Telesis sank into conservatorship. Disclosure is one way to guard against that type of scenario.
Credit unions do need to pay competitively to get the required talent. The Fox News interview featuring the talking head equating it to him justifying making George Clooney money because they’re both in media was incredibly lame. Not only because the two men aren’t at all in the same business, but unlike the commentator, credit unions are the better-looking choice.