Top management of credit unions must now be aware "they are no different from any other industries sharing the economic pain" and look toward possible compensation reductions, a California salary consultant warned Thursday.
"We have seen and heard about, situations where credit union executives are already talking to their boards about reducing current compensation because of the significant impact on both the income statement and the balance sheet," observed Alec Berkman, head of Executive Compensation Solutions of Covina.
Moreover, the U.S.Central/WesCorp conservatorship by NCUA "is a signal that the credit union movement anticipates an extended recovery from this challenging economic environment." His firm has yet to see situations where CU boards have asked execs to reduce salary. But, he went on, "we have heard of several cases of suspended bonuses or executive retirement plans being abrogated."
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Berkman, ECS founder and chairman, said there are several reasons a CU executive team might consider pay reductions. But "politically it is difficult for executives to take bonuses that might be perceived as misaligned with the economic climate."
"There may be a rapid need for liquidity but reducing executive compensation won't serve that need to any meaningful degree," he maintained. "Executives might want to show that they are sharing the pain with the other employees, especially at credit unions that have, or intend to make staff reductions or wage cutbacks "
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