I'm very much what you see is what you get. I feelthe need to forewarn bosses that I will always be honest with them,and occasionally more honest than I should be forself-preservation. I'm respectful about it and always do it for theright reasons, but there you have it.

I can't abide phonies, laughable mission and vision statements,people who try too hard to look smart and credit union “volunteers”that aren't.

I've written several times in favor of paying credit union board members. I believe it could helprecruit board members, as well as provide the proverbial stick andcarrot for some who need it so credit unions can justify removingunderperforming board members.

However, running to Capitol Hill with the message that creditunions are run by volunteer boards of directors is disingenuous.Sure, most are, but that's never been the message because “most”doesn't deliver as strong an impact. In fact, until recently Ididn't know some credit unions paid their directors, and some ofthose better than many full-time jobs.

I was quite disenchanted with this discovery. I've been coveringthe credit union community for 14 years and had no idea somevolunteer directors are paid, in my own home state even. And paidwell! Heck, some credit union executives were caught unaware.

More on Board Director Pay:

Part One – Surprised to Learn VolunteersPaid
Part Two – Liability, Demands Make PayNecessary

It's all about disclosure. I recognize that these credit unionsmade the appropriate disclosures as required by the IRS. I'mreferring to credit unions as a whole. Those who kept this dirtylittle secret lost some credibility in my mind that day.

And, the financials at some of the credit unions have notyielded the results to demonstrate the value of what they're payingfor. Check out our page 1 story on some of the credit unions thatpay board members and the accompanying graphics on pages 22 and 23.It's a mixed bag, which can be explained in part by different goalsindividual credit unions have and investments the credit unions aremaking, but negative ROA is not aligned with any credit unions'plan.

So some will say (because I've already heard it), “Cooke, this proves paying board membersdoesn't make them or the credit union successful.” I never saidthat paying board members alone was a silver bullet to resolvecredit unions' issues with uninterested, unqualified board members.It also takes a setting of expectations and evaluation and goalsetting and follow-up. And if the credit union is not financiallysuccessful to the standards set by a knowledgeable board, the boardmust act to direct management toward improvement or termination.Board members take on very serious risk, and just because someinsurance protection is available, are not absolved of their duty.Succumbing to complacency due to moral hazard is not oversight.

Some board members will argue that they should be paid becauseothers are. That is no reason to be paid for a position either. Atrue reason for compensating board members, if a credit uniondecides to, is the real value they bring to the table. Theresponsibilities of credit union directors warrant compensation.Just because one serves as a director does not mean that directorwarrants it.

Targeting compensation to expertise could make sense. Forexample, an accountant or attorney might earn several hundreddollars an hour for a service. One hour a month equals $150.Obviously, there's more work to it than that, but compensatingcredit union board members isn't about getting rich. A smallbusiness owner might earn $100 per hour. One hour board meetingequals $100. The compensation equivalent for a stay-at-home parent(priceless, I know), $75, and so on. It's a logical starting pointthat can be pegged to real data. Now if that stay-at-home parent isa licensed accountant, up it goes, but if a board member regularlyshows up unprepared and doesn't participate in a meaningful way,you dock them. The idea is less about the money and more aboutbeing able to set and regulate expectations. If they don't perform,you fire them.

Credit union members should be able to vote for board membersfrom among the membership, but they also have full lives and mayneed assistance weeding out those who are truly not qualified.Otherwise board elections just become a popularity contest, andwhile the prom king and queen may make a cute couple, it doesn'tpaint a pretty picture for the credit union.

Sarah Snell Cooke
Publisher/Editor in Chief
[email protected]