We need 100 more members and employees to attend tomorrow’s Coast Capital AGM.

We have done all we can. The votes are in, but will they be counted correct. Will this election be fair?

Thousands of members have voted, and we thank you. But we need to ask you to do one last thing: we need members to attend the AGM tomorrow to ensure that member votes are counted and audited by an impartial third party before the ballots are destroyed. We need members to vote with a show-of-hands that we want these ballots recounted and the ballot forms should be reviewed for bias.

Employees and Members who believe that credit unions should be run by members for members, are needed tomorrow to restore member control over our credit union. Please commit to coming. It starts at 5pm, but the important voting will start after 6pm.

Want more details about where the AGM is and when? Click here.

Answer our poll to confirm your attendance. We will let you know if we reach our goal of 100 committed members.

The White Rock Sun Article on our Special Resolution

Don Pitcarn, a feature writer for the White Rock Sun online newspaper, has been a member of Coast Capital Savings for over a quarter of a century. He had not heard about Coast Capital Compensation Watch until the final day of the vote on our Special Resolution where he picked up the information package while waiting in line at his local branch.

With all the tv screens at his branch, he wondered why none of them were alerting members of the current vote on the Special Resolution on Director Pay, and why he had not heard of the campaign until April 16th. He has other questions as well.

To read Don’s article in the White Rock Sun, click here.

FINANCIAL PERFORMANCE FALLS WHILE DIRECTOR PAY SKY ROCKETS AT COAST CAPITAL SAVINGS

Return on Investment decreases by 37.5% for shareholders – Directors increase pay 

RE:  References to the quality of Directors and that we are able to attract them due to the Directors Remuneration Philosophy.  Let’s have a look at how that has worked out since beginning in fiscal 2007.

Net Income as a Percentage of Average Equity is a reference to the Return on Investment shareholders are receiving.  It is the common benchmark for measuring financial performance.

Coast Capital’s return for both 2005 and 2006 was 16%.

Return steadily declined to 10% in 2011.  A 37.5% drop for members.

The economy was not the best during those years but while members’ returns were shrinking and employees were asked to tighten their belts, the Board took huge pay increases. 

 “One of our greatest strengths is the cooperative structure of Coast Capital Savings.  It provides a special balance amongst the interests of our members, our employees and the communities we serve.”

Message from the Board of Directors – 2006 Annual Report – Coast Capital Savings Credit Union Chairman – Bill Wellburn

Do you see a special balance when the Board takes huge increases and members, employees and the communities we serve take less? 

Director Remuneration should be under the control of our members.

Vote FOR the Special Resolution.

Press Release – CREDIT UNION MEMBERS REVOLT OVER DIRECTOR’S PAY

500% Pay Hike Riles Members – Special Resolution Vote Begins March 22nd

For the first time in the 60 year history of Coast Capital Savings, credit union members are forcing a vote to oppose a policy supported by the Directors. The issue is the right of Directors to set their own compensation without reference to the members; a right the members now want rescinded.

In 2007, credit union members approved a resolution allowing the Directors to determine their own remuneration without the approval of the members. Since then, the remuneration of the Chairman of the Board has increased from $33,000 in 2007 to $164,140 in 2011. The members point out that Vancity, a larger credit union operating in the same marketplace, paid their Chairman $60,700 in 2011; a difference of over $100,000 a year.

Dissident credit union members state the remuneration their Board is paying to itself is far in excess of any cooperative association in Canada. They claim other BC credit unions pay their directors much less, pointing to the example of Vancity where the Board was paid $366,382 in 2011 while Coast Capital’s Directors collected $750,517. The dissidents state that on several occasions they have requested the Board justify their compensation by providing an example of even one cooperative with a similar level of Director Compensation but have not received a reply.

The members leading the opposition to the Director’s Compensation believe the situation is so far out of line that a fiduciary issue is a possibility and they have asked the provincial regulator, The Financial Institutions Commission, to review the matter on behalf of the credit union membership.

http://coastcapitalcompensationwatch.com a website set up to bring the matter to the attention of Coast Capital members and employees, was successful in obtaining more than 400 signatures in support of a petition which has forced the Directors to allow a vote on the matter. The vote scheduled from March 22nd to April 16th will take place concurrently with the annual Election of Directors. The results will be announced at the Annual General Meeting to be held on April 30, in Richmond, location to be announced.

EVERY DOLLAR PAID FOR DIRECTOR REMUNERATION IS A DOLLAR NOT AVAILABLE FOR EMPLOYEE SALARIES OR MEMBER SERVICES
If you would like more information about this matter please contact Phil Embley at 604.531.9070

For a PDF version of this press release, click here.

How does Director Pay compare to Executive Pay at Coast Capital?

Good question.  We don’t know because the disclosure of Executive Pay is minimal so no real comparison can be made.  The Board does not see Executive Pay disclosure as a priority.  At the 2008 AGM the Chairman of the Board in responding to a member question about greater disclosure of executive compensation said “we are working on it – expect something next year”.

In November 2012, in response to a suggestion for greater transparency, we received this response from Coast Capital:

“Regarding executive compensation, we believe that our current level of disclosure appropriately balances the interests of the members in transparency with the privacy interests of our employees.  Our current practices exceed what is required by the laws applicable to us.  We comply with International Financial Reporting Standards and disclose the aggregate compensation of our executives in our financial statements.   We have also voluntarily disclosed our executive compensation philosophy in our annual report.  Further while the Board continues to consider enhanced compensation transparency, British Columbia’s privacy legislation remains an obstacle to the disclosure of individual executive compensation.

Both director and executive compensation is established through the use of independent consultants who use appropriate market-based comparators in making recommendations to the Board. The Board is accountable to members for its decision-making through the director election process.” (my emphasis)

In other words, the Board is meeting the minimum requirements of the laws and reporting standards applicable to Coast Capital.  We believe a cooperative should be leading in good governance practices; not waiting to be forced to disclose information that commons sense says should be available to the owners who happen to be the members.

According to the BC Privacy Commissioner’s office there is no privacy breach if the compensation of the, say, top three executives is disclosed as one total amount. That is not an ideal solution but telling members how much they are paying, in total, to the top three executives, would be a big improvement.  Coast Capital says no, we won’t do that – go get the law changed and we will comply. 

The ideal solution is for the executives to waive their privacy on this matter so the level of disclosure complies with the minimum required of public companies.

Regulators around the world are pushing very hard on the disclosure issue – why are we lagging?

Next Steps: Together we can fix this!

Pay for the board of Directors at Coast Capital has skyrocketed by as much as 500% in 5 years since 2007 when Members lost control over their pay increases. This is wrong and you can help fix it if you are a Member of Coast Capital Savings Credit Union.

We believe that we now have enough signed petitions thanks to you all to force a vote on restoring Member control to Board of Director pay increases. We expect our resolution will be tabled for a vote as part of this years AGM in a couple of months time. Look for our resolution in the mail and be sure to vote to restore Member Control over Board of Director pay!

Please tell your friends to vote on this upcoming resolution as well. And tell them about our Facebook page at facebook.com/CoastCapitalCompensationWatch, and of course tell them to visit our website www.CoastCapitalCompensationWatch.com

It’s your money! Every dollar paid for Board remuneration is a dollar not available for member services or employee costs.

We achieved our goal and received enough signed petitions!

Thank you everyone for your support!

On Tuesday, the 29th, we delivered 438 petitions to the Head Office of Coast Capital as required by the Rules of the Credit union and the Credit Union Incorporation Act. Now we wait for Coast Capital to validate the petitions and advise us as to whether or not we met the minimum 300 requirement (we don’t know that everyone that sent us a petition is a member). They have 21 days (February 19th) to get back to us with their decision.
Coast Capital has been very quiet since the launch of our campaign and it is difficult to determine their strategy. Perhaps they believed we could not get 300 signatures and were advised to not comment as that would only increase member awareness.

On the assumption that a vote will be required, we see these possibilities:

  1. The Board adopts a policy of favouring a member vote (almost certain)
  2. The Board digs in and provides rationale for their compensation continuing as is (unlikely)
  3. The Board promotes some third alternative that limits member approval. (possibility)

Voting on the Special Resolution will take place around the same time as the 2013 Election of Directors. Due to the concurrent possibilities it is obvious that the Special Resolution campaign will have an election impact with the likelihood that any (all) Directors standing for re-election could be facing an uphill battle. The Nominating Committee (composed of 3 Board members not standing for election this year) could get around this by determining there are no other suitable candidates. That would put everyone back on the Board but will raise cries of FIX!! FIX!!.
What we should see is the Nominating Committee recognizing that now more than ever it is critical to give the members a full choice so that the three vacancies could be filled by other candidates. If the three incumbents decide to stand for re-election, the Nominating Committee should field at least 6 candidates. We will see how independent the Nominating Committee is from the Board “think” that has prevailed and allowed this situation to develop.

Stay tuned….
and get ready to raise your voice in protest if things don’t proceed democratically.