CUNA Sets Record Straight On CU vs. Bank Exec Compensation

WASHINGTON (11/18/13)--The Credit National Association is setting the record straight on the issue of credit union CEO vs. bank CEO compensation after theAmerican Banker cited a statistic that is "misleading," said CUNA.
Among like-sized institutions, credit union CEO compensation is in line with that of banks CEOs. But when bank CEOs' opportunities to gain bank stock grants or stock options are taken into account, credit union executives' compensation is much lower, according to CUNA's 2011-2012 CEO Total Compensation Survey.
CUNA economists estimate that the CEO of a bank with more than $100 million in assets earns 42% more total compensation than the CEO of a similar-sized credit union, when stock grants and stock options--adjusted for asset size differences--are considered.
A Nov. 13 item in the Banker titled "Banks Trail Credit Unions In Exec Pay, Loan Growth, Political Clout" cited an Enetrix study that claimed the median base salary of credit union CEOs is higher than that of bank CEOs. The Banker failed to note the study's fine print on page 14:  that payout from bonuses and stock options, which are far more valuable than base salary, are not available to credit union CEOs, since they are member-owned cooperatives.
The claim is "very misleading," said Paul Gentile, CUNA's executive vice president of strategic communications and engagement.  He noted the comparisons in the section of the study include only base salary--not long-term incentives provided to bank CEOs such as yearly bonuses, stock grants and stock options.
"When credit union CEOs end their careers, they have nothing to cash in because the members own the whole credit union," said CUNA's compensation study.  It pointed out that with the increased scrutiny given to CEO salaries, banks have moved more toward other forms of raising compensation levels rather than base salary.
The typical credit union is smaller than the typical bank, and credit union CEOs are thus paid substantially less than bank CEOs, said CUNA's study.  The median-sized credit union has $20 million in total assets. The typical banking institution is roughly 10 times larger, with $200 million in total assets.
In today's complex financial environment, compensation for CEOs must be sufficient to attract talent needed to manage financial institutions that in many cases offer a complete menu of financial services and act as stewards for their member savings, CUNA's study said.