Compare total compensation paid to Directors of two similar Credit Unions:
$ 750,517 – the total paid to all Coast Capital Directors in 2011.
$ 366,382 – the total paid to all Vancity Directors in 2011.
Until 2006 Vancity and Coast Capital Directors received about the same remuneration. Commencing fiscal 2007, the Board of Directors of Coast Capital asked members to approve a Special Resolution allowing the Board to set their own remuneration within a broad policy framework which includes employing a compensation consultant for assistance. Vancity also employs a compensation consultant.
How do the two organizations operating in exactly the same business and in the same marketplace come up with such different compensation amounts for their Directors?
Vancity makes the consultants’ recommendation known to the members and allow the members to vote, in advance. Every three years Director Remuneration is reviewed and the members vote to accept or reject the amounts for each of the next three years. Very transparent and democratic, everyone knows what is going on.
Coast Capital keeps the consultants’ report a secret and there is no opportunity for members to express their view. Director’s Remuneration is disclosed in a small note in the published Annual Report. It is also available on the web but it takes some clicking to get to the details. We have asked for this to be changed and fully disclosed in the published report. Coast Capital has not agreed stating they already disclose more than other credit unions.
Consultants are independent but they have a conflict.
It is recognized that compensation consultants have a conflict because they have to be attuned to the wishes of the client if they want to be rehired. The number one rule in selecting a consultant is to make certain they are competent. The number two rule is to appreciate that the consultant produces a report based on the client’s instruction. If the client says “as Directors we want to be compared to the Directors of public companies” that is what the report will reflect. The instructions are critical.
How Coast Capital Compares to Remuneration of other Boards:
$750,517 – the total paid to all Coast Capital Directors in 2011.
$245,299 – the total paid to all Westminster Savings Directors in 2011
$183,000 – the total paid to all Mountain Equipment Co-op Directors in 2011
$175,000 – the total paid to all Interior Savings Directors in 2011
How Coast Capital Compares to Remineration of other Board Chairs:
$164,140 – the total paid to Coast Capitals’ Chairman of the Board in 2011
$ 60,780 – the total paid to Vancity’s Chairman of the Board in 2011
Growth in Coast Capital Director Compensation
Year Total Compensation
Conflict of Interest for the Board of Directors
There can be little argument that Directors are in a conflict of interest when they set their own remuneration. This is not to say that something wrong will result, however, it clearly can create problems and it is easily avoidable. We believe BC law will eventually be changed to prohibit Directors of credit unions from setting their own compensation.
Last summer the Board of Directors of Westminster Savings asked members to allow the Board of Directors to set their own remuneration but it was put to a member vote and defeated by an overwhelming majority. The most common reason advanced is that the Board needs to attract better quality Directors but the Westminster Savings members did not agree that they were incapable of determining what was fair. It takes only a minute or two at the Annual General Meeting to avoid a conflict of interest situation.
When a policy is deemed to be reasonable (such as phone attendance at meetings or multiple meetings in one day) then there should be no hesitation in releasing the relevant information if it involves the members’ money. When such information is withheld it gives rise to further concerns and questions.
Coast Capital Savings Credit Union is a member owned organization
Within the cooperative movement it is generally recognized that serving as a Director is, in part, viewed as community service. It is common for cooperative Directors to be paid at levels that are consistent with similar cooperative organizations; not public companies. Coast Capital is paying far in excess of not only similar organizations but also more than many public companies. Throughout the years Coast Capital has made good progress and every year emphasised the strength and experience of the Board. Operating results have been good but they are not much different from other credit unions such as Vancity. The Board deserves to be paid but the appropriate level is in the range of other similar sized cooperatives. Please support our petition requesting an opportunity for member approval of Board Remuneration.
EVERY DOLLAR PAID FOR BOARD REMUNERATION IS A DOLLAR THAT IS NOT AVAILABLE FOR MEMBER SERVICES OR EMPLOYEE COSTS.