CUNA Letter Fails to Address Non-Disclosure of Executive Pay at FCUs

A letter by the Credit Union National Association (CUNA) to Senator Hatch (R - UT) fails to address why federal credit unions should not be required to disclose senior executive compensation. The letter also discusssd how credit unions have evolved over time.

CUNA wrote Senator Hatch on February 6 in response to Senator Hatch's January 31 letter to National Credit Union Administration (NCUA). See my January 31 blog post on Senator Hatch's letter.

Senator Hatch noted that federal credit unions, unlike most tax-exempt organizations, do not file an informational return with the Internal Revenue Service, which includes information on senior management compensation. Senator Hatch wrote that in 2006, the Government Accountability Office (GAO) recommended that the NCUA require federal credit unions to disclose senior executive compensation; but NCUA failed to implement this recommendation. Hatch pointed out that such disclosures would ensure that federal credit unions were a good steward of their tax benefit. In other words, the taxpayer subsidy is not being diverted to excessive pay but rather towards the public policy mission of credit unions.

But CUNA's letter does not directly address the topic of disclosure of executive pay (see page 2 of the letter -- link below).

Instead CUNA states that credit unions need to be able to attract and retain quality talent. Further, credit unions, unlike publicly-traded banks, cannot issue stock or stock options as part of their executive compensation packages. Therefore, when evaluating executive compensations packages, these factors should be taken into consideration.

Additionally, CUNA states that executive pay is determined by credit union boards, who are accountable to the members, and that credit unions are closely supervised and examined by federal and state regulators.

However, if credit union boards were accountable to their members, then NCUA would not have proposed a rule requiring merger-related compensation to be disclosed to members.

CUNA's letter failed to provide a cogent argument as to why federal credit unions should not be required to disclose executive compensation.

Read the letter.