The irony, said many experts, is that those cases are the exact opposite of the industry norm.

Scrimping on CEO pay may be more typical, insisted John McKechnie, a onetime NCUA staffer now managing director at Total Spectrum, a Washington lobbying firm. “Credit union professionals are in no way compensated as well as their bank counterparts,” he said.

Hefty pay packets for CEOs are not necessarily a bad thing at all, stressed Birmingham, Ala.- based industry expert Dennis Dollar.

“CEO salaries at credit unions have grown because credit unions have grown. The position requires a much more sophisticated set of professional abilities than it did even 20 years ago,” Dollar said. “As that expectation of a much higher qualification mix has been enhanced with larger and more complex credit unions, there is sometimes controversy when the CEO salary becomes public knowledge because of the fact that many members still look at their credit union like they did in the 1960s. But, to paraphrase the old Oldsmobile commercial, this isn't just your daddy's credit union anymore,” he added. “The market has changed. The competitors have changed. The regulations have changed. The expectations have changed. So, naturally, the salaries have changed as well.”

Overpaying CEOs may not be much of a problem at credit unions, but there is a big–more common and delicate–executive pay problem at most credit unions, and that is reaching agreement on pay that is sufficient to retain talented executives, said Scott Dettman, a compensation consultant who works with many credit unions and also with CUES, which regularly surveys credit union executive pay. (In June, CUES reported that the average CEO pay at institutions with assets over $1 billion amounted to $523,694.)

“There is a law of supply and demand that applies to CEO pay,” said Dettman. His point is that the talent pool of individuals capable of running complex financial institutions is not infinite and, besides credit unions, community banks also are competing for the same individuals.

“We have to get beyond our own circumstances in seeing what is adequate pay,” added Dettman, who elaborated that at traditional credit unions with defined membership fields of, say, blue-collar factory workers or public school teachers–occupations with caps on upper tier incomes–there frequently is resistance to opening the purse.

“The best pay plan is the one you get people to agree to. Getting board-level agreement can be a challenge,” said Dettman. “Whatever they make will be seen as a good day's wage. Talk to an educator about paying a CEO $300,000 a year and their eyes float to the back of their head.”

As for how to get realistic numbers on the negotiating table, Sundie Seefried, CEO of Partner Colorado Credit Union, a $227 million institution based in Arvada, said, “The board's best option is to discuss the salary with a third-party professional that knows the credit union industry. Using a third party keeps the process less personal and more objective.” 

Dettman elaborated that a starting place is for the board, or a subcommittee on compensation, to gather data on CEO salaries at competitive institutions. Although pay at federally chartered institutions is not publicly available ample data, with individual identifying aspects removed, is available in salary surveys sold by CUES and CUNA. Survey data, said Dettman, has enabled CEO pay discussions to become, if not exactly scientific. “much more exact. This still is an art, but we have gotten more precise,” said Dettman.

Another crucial starting point: “The credit union has to decide how well it wants to pay,” said Dettman, who indicated most institutions appear comfortable aiming to pay at around the 50 percentile, meaning half the competitive set might pay more, half less. “But some want to be at the 75th percentile.”

The choice is entirely up to the board and how it elects to position the credit union, stressed Dettman.

He added that salary is just one part of what can become a multifaceted pay packet involving perks (a country club membership, for instance), enhanced employee benefits, enriched retirement plans and many more variables that typically enter into the negotiation.

“Once there is agreement on the board about its philosophy of CEO pay, arriving at a pay package gets easy,” said Dettman. He added that  board discussions can get animated, but most remain collegial.

Attorney Lozoff added that, important as competitive set and pay philosophy are in setting an initial compensation plan, different criteria assume bigger importance in the years that follow. “Increases in compensation in subsequent years, and bonus pay, are increasingly based on satisfactory achievement of objective goals previously set by the board in consultation with the executive and the financial condition of the credit union.“

And just when it appears there is a formula for determining CEO pay, setting a compensation philosophy and surveying the competitive set, a wild card emerges. That is the compensation approach at the nation's second biggest credit union, the $25 billion State Employees' based in Raleigh, N.C. CEO Jim Blaine wrote in an email that at SECU CEO compensation is easier to grasp and that is because he gets no bonuses, no incentives, no perks and exactly the same benefits as every other SECU employee.

He added that at SECU, his pay is set not by reviewing what the competitive set pays, but by attempting to adhere to a policy Blaine attributed to management guru Peter Drucker -that the CEO's pay should not exceed 20 times the average pay in the institution.

That works for Blaine, but consultant Umholtz stressed that what works at SECU might not work elsewhere. “Imposing that kind of formula on other institutions would be disservice to the industry.” 

He added: “What the board decides is fair pay for its CEO is, by definition, fair. It's that simple.”