In one of last week’s articles, we explored the question, What Is the Member’s Right to Know?. We touched on the most sensitive issue for many CEOs and senior managers, which is the publication of their salaries and benefits, and received from interesting reader feedback. It’s worth it to take a second look at salary disclosures and learn how it could play a role in credit unions’ bigger efforts of sustaining trust with members. In November 2006, the Government Accounting Office (GAO) issued a report (GAO-07-29) to the chairman of the U. S. House Ways and Means Committee. One of the purposes was to “assess the transparency of credit union senior executive compensation.” The Report’s conclusions are blunt: “Credit union executive compensation is not transparent. Federal credit unions, unlike other tax-exempt organizations, do not file information returns which contain data on executive compensation . . . .” This is not true of all state chartered credit unions, however. The 990s filed by credit unions in states such as Oregon, Washington, Arizona and Florida can be reviewed online, showing the required information on compensation. However, disclosure without context could be a troublesome member issue. So a proactive approach might include factors used by the board to evaluate and reward management. These factors might include: ·Critical performance goals ·Key member value enhancements ·Community investment ·Institutional performance versus peers ·Executive compensation benchmarks in the industry When salaries are disclosed as components of the credit union’s strategy and performance, then members can see how the board works on their behalf using key underpinnings of the compensation system. For example, disclosure could help members understand how compensation is tied to performance, as well as the alignment of management and member interests, the relation of their executives’ salaries to market salaries and the focus on long-term versus a short-term orientation. Approaches to Disclosure There are many approaches to salary disclosure. State Employees’ Credit Union’s ($14.6B in Raleigh, NC) is direct and proactive. The salary and benefits of CEO Jim Blaine is linked from the credit union’s home page to its 2006 Annual Report. On page 27, amongst a discussion of employee benefits, it reads, “The salary and benefits of the President totaled $547,465 for the year ending June 30, 2006.” Another approach is through the public media. Two years ago, there was a press controversy surrounding Onpoint Community Credit Union ($2.3B in Portland, OR), formerly Portland Teachers Credit Union. The disclosure of the now retired CEO’s salary of $1.6 million, coupled with one member testimonial of a poor experience, sparked quite a dialogue in a local online news article. Sustaining Trust While salaries draw the attention of members, employees and the press, the real issue is how transparency in all credit union activities can be a vehicle for sustaining the trust that cooperatives bring to the marketplace. In an environment marked by soaring payday loan growth and credit card company visits to Capitol Hill, consumers are increasingly becoming victims of financial manipulation. Credit unions can use proactive disclosure of all activities as a marketplace advantage.