The credit union industry has been rocked by unexpectedleadership changes recently, including Kyle Markland, who resigned Aug. 30 as president/CEO of the$1.6 billion Affinity Plus Federal Credit Union in St. Paul, Minn.,after 16 years at the helm, and Harry Ovitt, who was killed in a car accident Aug. 8 afterleading the $303 million NSWC Federal Credit Union in Dahlgren,Va., for 27 years.

In scenarios such as these, emotions may run high as boards dustoff long-term succession plans, perhaps realizing in those tension-filledmoments they lack a backup strategy to deal with the death of anotherwise healthy CEO or one that abruptly leaves for personalreasons.

Most credit unions say they have a succession plan in place,said Bridget McNamara-Fenesy, senior client consultant to creditunions at Executive Compensation Solutions, a Covina, Calif.-basedbenefit and compensation strategy firm.

“A much smaller percentage will say they have something in placefor a sudden departure,” McNamara-Fenesy said.

So what—or should—happen during the 24-hour period that followsthe sudden departure of a CEO? Ideally, it would be theresponsibility of the board chair to convene the board and the restof the leadership team, McNamara-Fenesy advised.

There should be a determination of who has the authority to makedecisions, including internal and external communication, andparticularly for the press. If a CEO is removed for purposes ofmismanagement, the board should discuss how this will beaddressed.

Depending on the plan in place, the new leadership could shiftto the board chairperson, someone else on the board or the creditunion's management team, McNamara-Fenesy said. However, thedesignated person may not yet be ready to assume an interim rolegiven the circumstances.

“One of the key mistakes is not having anticipated somethingalong these lines. Members and regulators may get a sense that acredit union is vulnerable,” she said. “There could be somescrambling. Other credit unions might see this as an opportunity todo a rushed merger.”

In the event of a sudden resignation, removal or death, it is imperative the chairman ofthe board and second in command on the executive team jump intoimmediate action, said Russell White, president of Pinnacle Solutions, a Charlotte,N.C.-based strategic planning firm. One first point of business isto craft a proper press release or statement, he said.

“Anytime there is a sudden change in top leadership, controllingthe story is paramount and it works best when you can get in frontof the information being released by the media,” Whitesuggested.

The statement should include clear facts and carefully wordedinformation to make sure the statement has a positive feel, Whitesaid. For instance, he suggested concluding with, “Although Ms. CEOis no longer with us, the credit union is strong and will continuewithout losing a step.”

White said obviously, if the position is vacated by a suddendeath, the statement would be much softer and address the loss thecredit union has experienced. Still, the management team shouldexpress the credit union's strength and how it will work hard tomaintain exceptional member service in light of thecircumstances.

Next Page: What Comes Next

The next point of business would be to address employee inperson, White said. At a multi-branch credit union spread across awide area, that may not be possible. In that case, a statement verysimilar to the press release might include a focus on stability, heexplained.

“One of the biggest mistakes I see credit unions make after aloss of a CEO is to get emotional,” White said. “Regardless oflove, or angst if the CEO was removed, the immediate focus needs tobe on logically maintaining the positive direction of the creditunion business, at least outwardly to employees, members and thegeneral public.”

Unfortunately, the CEO's departure may bring out negativitywithin the ranks.

“I see credit unions suffer through determining who is now incharge,” White said. “It's either a wrestle for power or, on theopposite end of the spectrum, no one wants to step up.”

Even in such a jolting moment, a succession plan at leastestablishes seamlessly who would step in from the executive team onan interim basis, White said.

The shift could also become complicated based on the executive'scompensation package, particularly if the CEO departure occurredbefore a retirement date, or if some type of fraud or other crimewas committed, said Kevin Mahan, president and consultant actuaryof CUBED/Mahan Actuaries, an executive benefits consultation firmin Pasadena, Calif. Having contingencies in place in the cases ofan arrest, death or disability are a must, he said.

“Replacing the top guy can be very pricey. If you know who thenext person is, say a CFO that was training to become the CEO, thenyou know what will happen,” Mahan said. “But unless you'veidentified him or her, you go to a search firm.”

Life insurance plans can also impact a credit union's incomedepending on whether the CEO left voluntarily or involuntarily,Mahan said. The scenario could be either a positive or negativeeffect on the bottom line.

“There should be no ambiguities,” Mahan warned.

White emphasized that emotions can be the death knell after anunexpected change in leadership.

“(Once) the emotion of the moment enters into the decision, ahardening of the attitudes can happen quickly, stalling the creditunion from moving forward,” he said.