WASHINGTON–Will NCUA require credit unions being absorbed in mergers to disclose any payments and bonuses going to management team members and board members as part of the deal?
That issue is now officially on the agency’s radar and comes at a time numerous credit union executives have told CUToday.info they are troubled by an issue slowly bubbling to the surface: compensation being paid to the leaders of smaller credit unions by larger credit unions in order to entice them into mergers.
“These mergers are the retirement plan for many CEOs at small credit unions,” one person told CUToday.info at CUNA’s GAC.
While much of the attention went to his remarks related to lightening the regulatory burden, overlooked in a 15-point list of regulatory issues that Acting NCUA Chairman J. Mark McWatters unveiled in remarks to CUNA’s GAC was this statement: “The agency should diligently work to preserve small credit unions, as well as minority- and women-operated credit unions. In addition, the agency should require all merger solicitation documents to provide, without limitation, a discussion of any change-in-control payments and other management compensation awards and agreements, and that such disclosures are written in plain language and delivered to voting members in a reasonable time prior to the scheduled merger vote.”
During GAC, CUToday.info spoke with numerous people who expressed anxiety and even consternation related to some large, aggressive credit unions approaching well-capitalized, smaller CUs and using that capital to offer big exit packages to senior managers at the acquired CUs. In addition, CUToday.info spoke with several credit unions that said the deals also include payments to board members at the acquired CU, who upon completion of the merger are then hired as “consultants” or “advisors.” CUToday.info will be providing additional coverage.
The NCUA proposal comes at the same time some people associated with one small credit union in Pennsylvania continue to fight a proposed merger, as CUToday.info reported here.
In that case a group calling itself the Committee for Cornerstone FCU Independence is urging members of the $105-million Cornerstone FCU in Carlisle, Penn., to vote against a proposed merger with the $450-million Belco Credit Union in Harrisburg, Penn.
Mail ballots in that merger proposal are already out to members; a special member meeting at which members can also vote will be held on March 2. The Committee has sent a letter to NCUA Region II Director Jane A. Walters asking her to look at numerous issues related to the merger, and to “make a review decision if the final tally is in favor of the merger.”
A copy of that letter can be found in CUToday.info’s The Vault here.