Compensation for Vantage West Officials
At our 2017 Annual Membership Meeting, we discussed the topic of compensation for Vantage West Officials and it was opened to the floor for Member questions and comments.
Following a productive dialogue, Members voted to ratify a proposed bylaw amendment related to this topic.
What Happens Next?
While ratification of the bylaw amendment aligns our bylaws with recently-updated state law and allows a compensation policy to be implemented, this step by itself did not implement the policy.
The board is now completing its due diligence analysis on the topic. A third-party vendor was hired to conduct broad research and a committee was commissioned to provide recommendations on compensation amounts. Upon conclusion of the due diligence process, Members may be asked to vote on a compensation policy for implementation.
Vantage West will keep Members up-to-date as progress is made toward this potential vote of the Membership.
About Official Compensation:
Though Arizona law now allows for compensation for credit union officials, Vantage West’s bylaws did not. Therefore, in order to proceed, a bylaw amendment was required to align our bylaws with the new state regulation.
To clarify, the recently-adopted bylaw amendment allows for compensation, but does not implement it.
The bylaw amendments are worded in a manner that allow for such compensation, without formally adopting or implementing the compensation policy. Now that members have ratified the amendments, Vantage West will continue its due diligence review.
Upon completion of the due diligence review, a determination will be made as to whether or not to proceed with implementation of an official compensation policy.
If it is determined to be in the best interest of the credit union and its members, the special measure will be put to the membership for a vote prior to a future Annual Membership Meeting, and results will be announced at the meeting.
Vantage West’s board recognizes that the credit union’s members are its owners and that it is members who elect the board, whose role it is to operate the credit union in the members’ best interests.
Therefore, to assure that members are well-informed, any proposed policy will establish clear requirements for member disclosure, including an initial notice to members, annual notices to members and provisions for member access to the compensation policy.
Implementation of any final compensation policy would only become effective following a fully-informed, special vote of the membership “for” its implementation. A vote on this special measure will take place following completion of the full due diligence process. Notice will be communicated prior to a future Annual Membership Meeting, with the results announced during the meeting.
Now that the related bylaw amendment has been ratified by the members at the 2017 Annual Membership Meeting, a full due diligence analysis is underway.
To assure transparency and member involvement during the due diligence process a special Committee of members is being commissioned to conduct an analysis and recommend compensation amounts.
In order to determine what fair and reasonable compensation should be paid, the Committee will evaluate several factors including, but not limited to, a comparison of Vantage West’s size, complexity, and the expectations & responsibilities of its officials to that of other credit unions and/or non-profit organizations of similar size and complexity that already pay their officials, and submit their recommendations.
Once the more-broad due diligence and the Committee’s recommendations are submitted, a compensation policy, including proposed compensation amounts, will be presented to the entire membership for a vote in a future Annual Membership Meeting. Compensation information will be provided to members as part of the proposed policy so they can make an educated and informed vote.
A policy to compensate Vantage West’s officials would only affect the voting members of the Board of Directors and Supervisory Committee, who have historically dedicated their time and expertise to Vantage West on an unpaid, volunteer basis.
Vantage West has a dedicated team of employees who work each day to serve our members. Such employees are hired to perform specific duties, and are already compensated for the work they do. These employees include the CEO, executive and leadership staff, back-office operations, branch staff, and more.
Below, we’ve highlighted a few considerations both for and against compensation. Many papers, articles, discussion boards, professional organizations and more can be a resource for further information on this topic. Members are encouraged to educate themselves and draw independent opinions and conclusions prior to being asked to vote on the compensation policy.
Reasons TO Compensate
- The responsibilities, liabilities and time commitments expected of credit union officials has grown considerably over the past several years; compensation can attract and retain more high-caliber professionals willing to take on such responsibilities.
- Compensation can equate to higher expectations in terms of the time commitment it takes to yield better results for the credit union and its members; the board can ask and expect more of paid officials.
- Compensation leads to greater accountability, stricter expectations, and stronger motivation for officials who want to continue serving to also continually enhance their skills.
- Compensation recognizes the contributions of officials who commit such time and expertise while facing tremendous personal liability in order to serve the membership’s best interests.
Summary: Compensation offers the ability to attract and retain more-qualified candidates who can be held to greater accountability standards. It also recognizes and rewards the dedicated contributions officials make in serving the credit union and its members, along with the personal liability that accompanies such dedication.
Reasons NOT TO Compensate
- The concept of compensation for credit union officials may be viewed as contradicting the credit union industry’s core philosophy and values.
- Compensated officers may become entrenched by the incentive of personal monetary gain, rather than allow for regular renewal of the Board of Directors and Supervisory Committee.
- Compensation may divert some dollars from being invested in serving the credit union’s members to paying officials instead.
- Compensation may threaten the already-delicate tax-exempt status of credit unions giving banks additional leverage to lobby for credit union taxation.
Summary: Credit unions were organized under a cooperative, not-for-profit spirit where officials who are elected by and from the membership serve to assure that the credit union is overseen and operated in the best interest of the members – who are the owners of the credit union. While the industry has been challenged to recruit a continually reliable pool of candidates willing to take on the ever-growing fiduciary responsibility and liability of such positions, the concept of compensation which may provide benefits and solutions to such challenges, also begs questions as to how the credit union spirit and philosophy will be preserved.