Coast Capital Board elects a new Chair

The announcement that the Board of Governor’s of Coast Capital Savings has elected a new Chair is good news for the credit union and it’s members. Bill Wellburn’s compensation became the focal point of our campaign to reform Coast Capital. Now that he is no longer in the driver’s seat perhaps we will see some movement towards a more democratic, member oriented credit union.

The recent election was a wakeup call for the Board. An institution can ‘t survive when leadership is able to convince only 50% of voters to support the policies it advocates. The future of Coast Capital was endangered and that is obviously what the Board concluded. By electing a new Chair, it has bought itself some time to convince the dissatisfied membership that there are better days ahead.

For the many members that have told us that they are leaving Coast Capital, we urge patience, let’s give the Board a chance to show the members that they recognize that with policy changes our credit union can be more successful than ever.

How the Board decides to proceed with a process that returns control of Director Remuneration to members will be watched very closely. We want to work with the Board so it is imperative that they recognize that it is unreasonable for the Directors to press for the right to set their own compensation. Paying lip service to a solution and then rigging the outcome (such as a show of hands vote at AGM’s) won’t work.

We have received several suggestions from members on the subject of the Director’s Remuneration that might be worth putting to the new Board. Even if they are not accepted, they demonstrate good faith.

Our campaign was well worth it and may have set the stage for a turn in direction.

We can all hope that will be the result.

7 thoughts on “Coast Capital Board elects a new Chair

  1. While I certainly agree that the work of CC Compensation Watch has had some real influence, in that the board is now watching its back, I think it will probably make them just that much more covert in their operations. This is the same thing they did after the first resolution was passed… a stealth compensation committee which had no real power and which basically was manipulated to do their bidding. Coast Capital has the board they always wanted. It took them years to get there, but with the use of devious methods like the “recommended candidates”, forcing a vote of all open seats or spoiling the ballot, the fake resolutions, removing regional weighted voting, and amassing $750 million in retained earnings that originally mainly went back to members or to community charities, they have managed to usurp the control from the members.

    The board is all empowering now, and has become very homogeneous. While I do not know the new directors at all, I honestly don’t trust anyone the nomination committee recommended, and I certainly do not trust any of the current board members who were obviously behind and supporting Mr. Wellburn’s leadership for years. This move, to me, is cosmetic, and again meant to make us believe some change is afoot. We are the ones who best watch OUR backs.

    Coast Capital plans to become a national entity, now that the laws and regulations have changed. If you think the membership has no say now, just wait until they merge with a dozen more credit unions and have their AGM and head office in Toronto. They are a hydra headed machine now, which will engage in the minimum amount of democracy as they can get away with. They have no objecting forces left on the board to represent the members, and quite honestly, as long as Mr. Wellburn sits on that board, he will continue to be the major force within it. The best thing that could happen is if Mr. Wellburn were to leave due to his salary cut, but if I were a betting man, I would put my wager on that this was planned during the compensation committee process, and is why they made sure the non-chair director’s salaries remained so high. Also, with the extra committee and meeting payouts, he could end up with not that much less take home from Coast Capital. Not bad for a part time job, eh?

    While I will remain a member, just so I can vote, I decided a long time ago not to place my major assets with Coast Capital, and am considering paring that down even further. Van City is looking better all the time.

  2. Just for fun, I just did some math on the voting results. Hey, I’m a mathematician so can’t help it.
    There were a huge number of spoiled ballots = 1,525. Expected numbers (such as on the 2013 unambiguous special resolution vote about directors pay) would be in the range of 1%. So the expected count would have been less than 200.
    So what caused this abnormally high number of spoiled ballots? Too complicated/confusing process? (That appeared to be the Board’s intent with the shadow resolutions.) Protests by outraged members at the over-the-top propaganda? Perhaps some answers could be discovered if the spoiled ballots were scrutinized by independent examiners.
    Unless that happens, we can only speculate, so I will do just that.
    I can’t imagine anyone spoiling their ballot in support of the Board, though that’s a possibility. So let’s imagine ALL those spoiled ballots were protests, and see what the tallies would be. Then you have the Phil’s directors compensation vote becoming 10,874 versus 10,039 for the Board’s version. Neither resolution would have achieved 2/3, but the Board couldn’t have boasted that all their resolutions got more votes. (They would have “lost” also on Scott’s resolution about executive compensation. I put “lost” in quotemarks since the real loser is the Credit Union’s credibility.)
    Guess the large spoiled vote situation is simply more reason for the new Chair to reach out to members – logically including members of Compensation Watch – to work out a solution, and promptly put the resulting new pay scale into effect. Of course this will be a real test of statesmanship ‘cuz the new chair might face a trimming of his new salary…

  3. You have done a good job. I hope you will also focus your attention to the fact that credit unions are supposed to be different than banks and that senior management, and the board of directors have not fulfilled their moral duty, if not their fiduciary duty they owe to their employers, the member/owners of the credit union.

  4. The reality is, Bill Wellburn is just getting out before the you know what hits the fan. The reality is, the board and the senior management know full well that Canada is about to be hit by the second wave of the financial crisis that will see the popping of it’s own housing/credit bubble.

    The fact that Coast Capital has chosen to not pass on to the member/owners of the credit union, the information I have shared with them, is a huge failure in fiduciary duty as far as I am concerned. There should be lawsuits but I wonder if that would not be self-defeating because all the costs and liabilities of the senior management and the board would most likely be paid for by the credit union anyways, and the guilty parties will walk away unscathed (and plenty rich).

    I can’t believe that there is a strong likelihood that B.C. credit union senior management is going to be a part of the “I’ll be gone, you’ll be gone” crowd. As, Bill Black said, “The best way to rob a bank is to own one.” And that is pretty much the situation that exists in B.C.’s credit unions today. And there is nothing that the member/owners can do about it until it’s too late. And even then, most won’t care because they see their investment in the credit union as limited to the $5 they have in shares. And this is the reality that the senior management takes full advantage of.

    In addition to my website, I also try to post a lot of information on my Facebook page. I hope people will visit both.


  5. An interesting read (from the pdf linked below):

    “Credit unions have a comparatively weak governance structure compared to shareholder-owned financial institutions in the sense that no private individual or small group of individuals has the financial incentive to intervene strongly to discipline the management when the credit union’s policies or performance go astray (Rasmusen, 1988, p. 397). This is because a one-person, one-vote governance structure quickly leads to free-riding incentives as the number of members increases.

    Reinforcing this tendency of monitoring incentives to weaken in larger credit unions is the lack of a disciplining role for takeovers since building a controlling controlling coalition of credit-union members may be difficult.

    One implication of its weak governance structure is likely to be that a credit union’s management becomes the de facto residual claimant to the institution’s surplus. That is, even though a credit-union manager cannot profit by paying excessive dividends to large stockholders (including perhaps himself) or through gains on underpriced stock options, he may be able to convince the board of directors to pay him a large salary
    and grant him other nonwage perquisites of control, such as a luxurious office, extra staff, generous travel allowances, or simply a “quiet life.”

    Hence, agency problems may be of the first order of importance in credit union management and performance.”

    Click to access 9903we.pdf

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