The salary outlook for credit union executives and rank and fileemployees reflects what's been happening during the U.S. economic recovery. It's still stuck in the slow lane, andno one really knows when it will change into the fast lane.

The Credit Union National Association recently released its2012-2013 “Complete Credit Union Staff Salary Survey Report,” whichreveals most credit unions (79%) with $1 million or more in assetsgave a salary increase to at least some of their full-timeemployees, including executives, in 2012. This percentage, however,was the same in 2011.

And while the 79% is better than the low mark of 73% in 2010, itis still well below the high mark in 2008 when 92% of credit unionsgave executives and employees an average pay raise of 4.27% and3.95%, respectively.

The CUNA survey also found the big freeze on wages appears to bethawing. Thirty-two percent of credit unions anticipated freezingwage in 2012 for some of their full-time employees. In 2011, 38% ofcredit unions froze wages, which is far below the 45% mark in 2009and 2010.

Although the majority of credit unions are providing salaryincreases and lifting freezes on wages, annual pay increases havestayed low for credit union employees over the last four years. Theaverage full-time management salary increase credit unions budgetedfor 2012 was 2.53%, which is up slightly from 2.44% last year.Interestingly enough, however, credit unions expect the averagefull-time management salary increase to drop to 2.26% in 2013,which is very near the low mark of 2.25% in 2010. These salaryincreases are well below the average salary increase of 4.27% in2007 and 3.59% in 2008.

In 2012, the average base salary for a creditunion CEO and president was $106,758, while the median salarywas $78,000. The average total cash compensation for a credit unionCEO president, including base salary, incentives and bonuses,totaled $112,243, while the median was $79,038, according to theCUNA report.

“Wage increases are still low, and they are most likely to staythat way for a while,” said CUNA Senior Research Analyst BethSoltis. “Some compensation experts think that this is the newnorm.”

For nonmanagement credit union employees, base pay increasesalso remain low. In 2012, credit unions budgeted an average basepay increase of 2.43%, which increased slightly from 2.36% in 2011.Additionally, it is expected that the average full-timenonmanagement base pay increase will drop to 2.23%, which mayreplace the lowest base salary increase of 2.26% in 2010, accordingto the report.

Paul R. Dorf, managing director at Compensation Resources Inc.of Upper Saddle River, N.J., agreed that average salary increaseswill remain low, but he is seeing average wage hikes of up to 3% atsome credit unions his company serves.

“I believe it's still a matter of supply and demand in the jobsmarket,” Dorf explained. “Turnover is down, and it has been downsince 2008 across most industries, particularly in the financialservices industry where so many people had been laid off. Inreality, until the economy starts improving much more than it has,and until companies start hiring additional people, salaryincreases will remain on the low side.”

The CUNA salary survey found that credit unions are hesitant tohire new employees. About 20% of credit unions with $1 million ormore in assets plan to add full-time and/or part-time employees in2012, which is similar to the percentage of hiring among creditunions in 2011. These credit unions plan to add nearly fourfull-time employees and nearly two part-time staff.

However, among credit unions with more assets, the hiringpicture looks brighter. For example, about 50% of credit unionswith $100 million to $200 million in assets are planning to hirefull-time employees this year. That percentage jumps to 58% amongcredit unions with $200 million to $500 million in assets andclimbs to 70% to 80% among credit unions with $500 million or morein assets.

While credit union employees may not be gaining much when itcomes to wage increases, they may be making up for it in bonusesand incentives.

The CUNA report showed that variable pay, bonuses and incentivesare becoming an increasing popular way among credit unions toreward their employees.

For example, half of credit unions with $1 million or more inassets offer bonuses to their full-time employees, the report said.A little more than half of credit unions (52%) provided bonuses(rewards for exceptional job performance) to management employees,while 42% of nonmanagement credit union employees receive bonuses.Those percentages, according to the report, have increased from 47%and 38%, respectively, from last year.

What's more, 30% of credit unions offer incentive payments(reward tied to achieving specific goals or targets) to managementfull-time employees and 31% provide incentives to nonmanagementfull-time employees.

Dorf believes more credit unions will offer employees bonusesand incentives because they don't increase the employee's basewage, which in turn enables credit unions to control their regularpayroll costs. Increasing the employee's base wage also increasesthe cost of certain benefits such as paid time off, vacation pay,life insurance and 401(k) contributions. In addition, Dorf saidbonuses and incentives are effective ways to retain high performingemployees.

Prevalence of bonuses and incentive payments also increase withcredit union asset size, according to the CUNA salary surveyreport. For example, half of credit unions with $20 million to $50million in assets have bonuses/incentives for their full-timeemployees. The percentage goes up to 66 percent among credit unionswith assets of $100 million to $200 million, and more than 70% ofcredit unions with $200 million or more.

The report found that the vast majority of credit unions areprepared for the future insofar as replacing the wave of CEOs whoare expected to retire over the next few years.

About 66% of credit unions have formal succession plans ineffect and another 14% are expected to have succession plans inplace by the end of this year. Twenty percent of credit unions,however, do not have a CEO succession plan.

When replacing their CEO, credit unions are most likely to giveinternal candidates first preference, followed by giving internaland external applicants equal preference, according to the CUNASalary Survey report. Nearly half (47%) of credit unions offer theCEO position to internal applications first, while 41% post the topjob internally and externally at the same time. Only 7% of creditunions prefer to hire a new CEO from the outside.

About 75% of credit unions consider their executive vicepresident to be qualified to for the CEO position, followed by CFO(60%), chief operations officer (50%) and chief information officer(22%).

The CUNA Salary Survey report measures compensation data for 90full-time and ten part-time positions at credit unions with $1million or more in assets, including base salaries, incentives,bonuses, total cash compensation and salary ranges. The survey wassent to 5,800 credit unions with $1 million or more in assets.About 1,400 surveys were returned to CUNA research.