Payments Yields Better Directors: Letter
I enjoyed reading Sarah Snell Cooke’s support of paying directors. I think paid directors will give credit unions another tool to manage their credit union better.
When I started at SAFE 33 years ago, our directors all worked at McClellan Air Force Base. They got paid time off to attend board meetings, planning sessions and committee meetings. We were the credit union that served the base and they considered us part of their employee services. Today, the base is closed, and we don’t have any employers who sponsor the credit union. Our directors take vacation time or unpaid time off to serve the credit union. Granted, most of our board is retired but we soon have a new generation of directors and we will want to recruit community leaders who are working. I think that will require us to offer them compensation. Most credit unions no longer have directors who are subsidized by a sponsor.
In my opinion, all directors receive indirect compensation. Most credit unions pay for their directors and their spouses to attend credit union conferences. Many of those conferences are at high-end locations and include a great deal of leisure time.
I don’t give much weight to the assumption that paying directors might jeopardize our tax exemption. The bankers will fight our tax exemption no matter what we do or what we don’t do. Our case for the tax exemption will depend on how well we achieve our mission of helping improve our member’s financial well-being and how much of our membership needs that help.
Good management, I believe, is the main reason why one credit union outperforms another. You can’t have good management without a good CEO. That requires a good board. The most important duty a board of directors has is to hire, evaluate, compensate and hold accountable the CEO. The board is also responsible for the strategic direction of the credit union. You get what you pay for in life and in credit unions.
The problem is always whether an employee or a director, volunteer or not, is held accountable. We will attract better directors and retain them longer if we pay them. Very good directors should be paid more–maybe a lot more. If you want to address the problem of performance not justifying the pay then you need to address accountability. As you know from our past correspondence, I don’t think most directors are held accountable by the members. Members don’t elect most directors and have almost no information on which to judge their performance. Members evaluate their credit union by how well it serves them. If the service doesn’t meet their needs they move their business. Members don’t act like owners. If we want accountable board members then we need members to act like owners.
SAFE Credit Union
North Highlands, Calif.