BRISBANE, Australia–The payout of $37,000 to the directors of a credit union here that is being merged out of existence has become the subject of some controversy. While such payouts don’t take place at publicly traded companies in Australia, they have occurred at some of the so-called “customer-owned” or mutual organizations in the country, such as credit unions.
According to the Courier-Mail, the one year “retirement fee” for each of five non-executive directors of YCU, a Brisbane-based CU with one branch and 4,000 members, will be triggered if Auswide Bank succeeds in taking over the credit union. The Courier Mail said that YCU declined to say when it put in the clause for directors contracts.
“We believe it’s commercially realistic,” YCU Managing Director Stephen Barnard said of the fee.
The fee helped offset a potential deeper conflict of interest, Barnard told the Courier Mail, adding that board members on three year contracts could conceivably ignore takeover offers because it was more lucrative to stay and do nothing.
Among those opposing the payment is Tony Dunn, a member and former director who has clashed with the current board, the Courier Mail said. Dunn left the board in 2013 and was quoted as saying he cannot recall a fee clause being in his contract. YCU also declined to confirm or deny Dunn’s statement.
Dunn told the Courier Mail directors of customer-owned entities were in positions to benefit the members, but the directors would not do anything for members after retiring. “Why should they get paid another 12 months of fees?” he said.
Auswide Bank has made a $32 million offer to the credit union, meaning each member would receive $4,055 in cash and 696 Auswide shares, which traded at $5.40 just before the takeover. Shares since then have fallen to $5.06, with a dividend being paid, according to the Courier Mail.