Removing Barriers Blog

CUNA Supports NCUA Effort to Update Executive Compensation Rules
Posted June 24, 2019 by CUNA Advocacy

Today, CUNA sent a comment letter on NCUA’s advance notice of proposed rulemaking (ANPR) regarding compensation in connection with loans and lines of credit to members.

We support the overall intent of the regulation, which is generally to appropriately limit undue risk to credit unions regarding lending. However, to remain competitive with our banking counterparts, we believe changes to the regulation allowing additional compensation to senior executives is appropriate, so long as there is an appropriate balance that incorporates sufficient risk management.

Our letter addresses two primary issues:

  • The need for clarification on the term “overall financial performance.” The regulation permits a bonus to a credit union employee in connection with a loan if the bonus is based on the credit union’s “overall financial performance.” Credit unions have expressed confusion on what factors can be considered when assessing the credit union’s “overall financial performance.”
  • The current differences between credit union and bank compensation. Based on CUNA research, bank CEO compensation packages consist of a significantly larger percentage of performance-based compensation: approximately 24% of bank CEO compensation is variable (bonus, stocks, and options) versus only 8% at credit unions. Further, the vast majority of small credit unions do not offer any type of bonus.