Tuesday, November 26, 2019

Does Your CU Treat Members as Owners?

Credit unions claim that their members are owners.

However, credit union governance practices suggest otherwise.

Federal credit unions are averse to disclosing executive compensation.

Unlike state chartered credit unions, which disclose executive compensation information in individual Form 990s, there is no such requirement for federal credit unions.

However, Robert Hoel in a Filene Research Institute report, Power and Governance: Who Really Owns Credit Unions?, wrote: "Denying credit union owners and the general public executive compensation information in a direct and straightforward manner is difficult to justify objectively. Because transparency is a powerful tool for detecting and preventing insider abuses."

Hoel commented that the National Credit Union Administration "may want to require credit unions to include specific compensation information in call reports and make the information available to credit union members at annual meetings."

In a related matter, credit unions don't give credit union members the ability to have a non-binding say on executive pay, stockholders in publicly traded companies have the right to cast an advisory vote on executive compensation.
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