When it looked like we were headed into a deep, dark recession about five years ago, a lot of credit unions reacted by freezing salaries.
In 2008, about 23% of credit unions did so. And in 2010, when the economy sank to new depths, 45% of credit unions imposed some type of salary freeze.
It’s good to see those frozen salaries starting to thaw. Only 29% of credit unions are freezing some or all salaries this year, according to the 2013-2014 CUNA Staff Salary Report (see “Hire expectations”).
While that’s a move in the right direction, it’s still well above prerecession levels. If you go back to 2006, only 7% of credit unions planned salary freezes.
Another sign the economy is on the mend is that credit unions appear to be getting ready for CEO retirements now that older CEOs have seen their retirement funds bounce back. Two-thirds of credit unions have formal succession plans, while another 14% plan to implement them by the end of this year.
While the average age of a credit union CEO is a spry 54, they’re not all spring chickens. Twenty percent of CEOs are between the ages of 60 and 64 and another 10% are age 65 or older. The average age of a credit union CEO planning to retire is 63.
When the CEO departs, 48% of credit unions will offer the job to internal candidates first while 42% will post the job internally and externally at the same time. Only 6% prefer solely external candidates.
Among those preferring internal candidates, about two-thirds say the executive vice president or chief financial officer would be best-suited to become CEO. Almost 55% say the chief operations officer would be the lead candidate, and 18% would pick the chief information officer.
About 30% of credit union CEOs have employment contracts. The likelihood of having an employment contract increases with asset size: 70% of CEOs at credit unions with more than $1 billion in assets have an employment contract.
Most of these contracts (60%) were initiated by the board of directors, 32% were initiated jointly by the board and CEO, and only 7% were initiated solely by the CEO.
Credit unions tend to be benevolent employers that pay at or above local market rates. With thin earnings projected for the next few years, the challenge will be to remain competitive and offer the types of salaries and benefits credit unions are known for.
Once the Financial Crimes Enforcement Network’s new customer due diligence rule becomes effective May 11, 2018, credit unions will be required to identify and verify the beneficial owners of business-type accounts.
The 2017 CUNA GAC kicks off Feb. 26, registration starts Sunday and leads into that evening’s ED (Filene) Talk, and continues Monday with the kickoff of the general session and a number of breakout sessions.