Under the proposed regulations that the NCUA and other regulators are about to send out for comment, large credit unions would have to file an annual report on incentive-based compensation programs and couldn't have any programs that encourage exposure to inappropriate risks.

Credit unions with $1 billion or more in assets couldn't have programs that might lead to material loss and have to document their compliance procedures. Credit unions with assets of $10 billion or more would have to meet all those requirements and defer at least 50% of their incentive-based compensation for at least three years and adjust payments to reflect subsequent losses.

Because of the financial problems facing some credit unions, some have been cutting back on salaries and incentive-based plans. But they hope financial conditions improve so they can offer such programs.

Tom Dorety, president/CEO of Suncoast Schools Federal Credit Union in Tampa, Fla., said the impact of the rules will depend greatly on how the NCUA enforces them.

"It depends on how reasonable they are in collecting information. Will they give us the opportunity to explain what we are doing thoroughly?" asked Dorety, whose credit union has assets of $5.4 billion.

He said the lack of an incentive-based program hasn't been a factor during any recruitment discussions with prospective executives.

By contrast, State Employees' Credit Union President/CEO Jim Blaine, who is often critical of the way the NCUA does its job, isn't worried about the agency's impact on his credit union in this area for a simple reason: his credit union never has, and as long as he is in charge never will use incentive-based salary programs.

"In a cooperative where you are serving your members, you can't put in a structure where the employee is set up to serve two masters," said Blaine, whose $21.5 billion credit union is headquartered in Raleigh, N.C.

He noted that the salary structure is reviewed regularly by outside consultants and that the lack of an incentive-based structure isn't an issue because SECU doesn't usually hire senior level executives from outside.

Most of the top executives started at an entry level, he explained, and the executive development system has helped train the majority of top leaders, as well as senior executives at other credit unions. There are 25 credit union CEOs, including Dorety, who have held executive positions at State Employees' Credit Union, Blaine pointed out.

The rules, which will be subject to a 45-day comment period, must be issued by all financial regulators as a result of the Dodd-Frank financial overhaul bill passed last year.

According to the NCUA, there are 184 credit unions with assets of $1 billion or more and six credit unions with assets of $10 billion or more.

NCUA attorney Regina Metz told the NCUA board last month that the proposed rules wouldn't put credit unions at a disadvantage over banks because all regulators would be enforcing them.

But for banks, the threshold will be $50 billion in assets. NCUA Chairman Debbie Matz said her agency established a lower threshold because there currently aren't any credit unions with assets of $50 billion.

That explanation doesn't satisfy either CUNA or NAFCU, both of which say it will hurt credit unions' ability to recruit top talent, and they contend that there is no record of abuse within the credit union system on this issue.

State regulators are also becoming more aggressive in this area. The California Department of Financial Institutions recently announced it will more closely scrutinize executive compensation packages and at the procedures used by boards for determining pay and benefits.

"In determining the compensation of management, the department expects the board to establish levels of compensation appropriate for the size, complexity and attributable performance of the credit union," the DFI said when announcing its policy.

Compensation specialist Dorf said the unique culture and value system of credit unions means they probably won't lose much talent to banks, regardless of the changes.

"In a not-for-profit environment, the executives feel they have a special mission. Also, they are protected more than in banks, so they aren't as likely to leave," he said.