MADISON, Wis. — The credit union industry is seeing strong salary increases in the executive ranks.
According to the 2006 CUES Executive Compensation Survey, the base salary for credit union CEOs increased by 8.5%, a very strong rate historically, and compared to 7.72% in 2005. Total CEO compensation was up 9.75%, compared to 8.15% in last year's survey.
Pay for performance, or at-risk pay, continues to be a growing trend, especially at larger credit unions. According to the survey, the average bonus as a percent of base salary was 22.55% for credit unions of $1 billion or greater, compared to just 6.27% for CUs between $10 and $20 million. Approximately 78% of CEOs and other executives reported receiving a bonus.
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"I think what's most interesting is the size of increases for credit union executives continues to be strong. For awhile we were seeing increases in the low double digits, now we're in the 10% range," said Charles Carlson, president/CEO of enetrix, the firm that administers the salary survey.
Carlson said credit unions are out pacing mid-market firms where exempt jobs are increasing in the 4% range. Large private sector firms, said Carlson, typically have very high compensation increases.
"I just think it reflects the competitiveness of the financial services industry, and with credit unions offering fuller services, their CEOs and direct reports play key roles."
Despite the strong increase, credit union executives continue to trail the banking industry in compensation for the top executive positions–CEO, chief operations officer, CFO, chief lending officer, and branch/member services executive.
Carlson said board attitudes to CEO compensation are also changing. "There is a clear push by boards to have more of an arm's length relationship with execs on pay setting. They are making their own informed decisions using market data," said Carlson.
One thing boards must be concerned about is developing retirement packages that can keep up with rising compensation. "Retirement accounts may not be keeping pace because of the way qualified pension plans are written under the tax code. They discriminate against highly-paid individuals," said Carlson.
The survey's results also indicate what many have been saying for years–credit union CEOs are very seasoned and a number will be retiring in coming years. Approximately 59% of credit unions reported having CEOs who have been in the industry for more than 20 years.
CEOs with CUSO responsibilities make more than those without. For CUs with assets of greater than $400 million, CEOs with CUSO responsibilities earned an average base salary of $288,087, compared to $261,420 for those without.
The survey was based on data from 805 credit unions, 746 of which provided CEO data. The data is continually updated online throughout the year. For more information on the survey visit www.survey.cues.org.
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