Deferred compensation plans for C-level executives can create “golden handcuffs” that will prevent them from leaving if a new CEO joins the team, while providing continuity during the transition period.

“Credit union compensation plans can no longer just focus on the CEO,” Albraccio said. “We also need to look out for our C-level executives, those that are likely to be the future CEOs.”

At the same time, existing CEOs are facing a potential compensation gap when they retire. The guidelines illustrated by the Employee Retirement Income Security Act restrict the amount of money highly compensated employees can contribute to their 401K compared to lower-compensated employees.

On average, retiring executives receive 38% of their current income upon retirement, whereas frontline employees receive 60% to 65% of their income.

Albraccio suggested credit unions begin implementing a Supplemental Executive Retirement Plan to eliminate the large disparity and avoid the potentially troublesome guidelines of ERISA.

SERPs put credit unions in a position to maintain continuity of strategic decision making while addressing financial needs of senior executives, so they can focus on long-term strategic goals and financial success on the job, Albraccio said.

He also advised attendees to have a formal CEO succession plan in place that has an executive development component along with financial incentives to retain top talent. Only 63% of credit unions have a formal succession plan in place, he said.

Some have a “real” succession plan while others have what he termed a “Break in Case of Emergency” plan. The latter is an emergency CEO succession plan that prepares the credit union for the death or rapid, unexpected departure of the CEO. It's a short-term disaster recovery plan to keep the institution going until a new, permanent CEO is hired.

“The 'Break in Case of Emergency Plan' is important, but a true succession plan doesn't just choose internal successors to a credit union's top executive positions. It prepares internal successors, which provides more stability and consistency with the organization's strategic plan,” Albraccio said.