According to CUES, the average total executive compensation rose by 14.9% over the last year. That’s stunning.
Usually, we look for increases of 3–4%. But inflation, higher demand for talent, and overall asset growth are driving a remarkable rise in total compensation numbers.
NAFCU’s data shows a slightly lower compensation increase at around 12%. However, that’s still remarkable.
Perhaps more remarkable still is that credit union boards seem to be on board. They understand how competitive hiring is and what the market demands now.
Can this trend continue?
Even in a time when loans have grown at the highest percentage ever, when revenue is up, and the increase in loan-to-share ratio is high, and even when overall income is down due to higher operating costs, the demand for executive talent is still increasing faster than supply thanks to the proliferation of new and necessary executive roles.
Furthermore, today’s credit union world is fundamentally different than it was even a decade ago. The trend toward digital banking and experiences requires different leadership skillsets than what traditional, longtime credit union executives can provide.
Most boards understand this level of executive compensation. They know that credit union CEOs in particular have one of the hardest jobs in retail banking:
- The member value proposition requires the highest dividend rates and lowest loan rates;
- Credit unions must minimize margin rather than maximizing it;
- Yet credit unions are still expected to grow at the same rate as competitors; and
- This is all without access to secondary capital.
And CEO salary sets a precedent for the other EVP and C-Suite compensation packages. A rising tide lifts all boats. And if boards don’t raise other executive compensation as well—or if they feel confident that the CEO will stick around—they risk seeing their talent leave for greener pastures.
This is one of the most exciting times to talk about credit union executive compensation. The experience and decisions made today are extremely complex, and the right people must be at the helm to ensure the continued success of growing institutions.
Catch the podcast here for finer points, more numbers, and good conversation: https://kirkk.net/money-talks-episode-3/