It definitely does happen much more often at community banks, said Michael Lozoff, chair of the credit union practice group at Miami law firm Shutts and Bowen. Partly, said Lozoff, the reduced incidence is because credit unions are not subject to the hostilities of distressed investors seeking revenge for poor quarterly financial reports. Partly, too, credit union boards incline to stay the course with their CEOs. Powers said that in his experience “directors tend to be longstanding directors, in excess of 10 years. Relationships develop over that time. They often are friends with the CEO. This puts them in a difficult situation. A complacency may develop.”

Steve Cohen, author of Mess Management: Lessons from a Corporate Hit Man and president of the Labor Management Advisory Group, put this issue more bluntly. “Often the board is a lapdog for the CEO. I'd say around 40% of boards are lapdogs.”

It obviously is hard to fire a friend, and it may be even harder to do if one is a volunteer director, suggested multiple experts.

Steve Winninger, retired CEO at Lake Trust, a $1.5 billion credit union in Lansing, Mich., offered his insights into the board vs. CEO boundaries. “The board is ultimately responsible for everything that happens in the credit union, and they have to delegate to the CEO because the board isn't there every day. Delegation with good targets and boundaries goes a long way to ensuring good performance by the CEO because the standards are known and articulated. When this is done, there is clarity of role and purpose and the chances of success are greater.”

Winninger added, “CEO turnover is very costly so setting the stage for success makes more sense.”

Success may be the preferred path, but there are multiple ways a CEO can get him or herself fired, said Lozoff. And these exit routes are detailed in the CEO contracts he writes for his clients. The first route is what might be called moral lapses that bring shame on the institution and this could be anything from a DWI conviction through a sex offense or even filing bankruptcy. Lozoff stressed that committing the offense does not necessarily trigger termination. With a DWI, for instance, the board might instead require the CEO to undergo counseling and possibly join AA.

Credit union governance expert Stuart Levine elaborated that “defalcation and theft are also causes for immediate dismissal.”

Reason two, said Lozoff, is failure to meet specific performance targets. Typically, these are measures such as new account openings or asset growth or overseeing a smooth core system conversion. Rarely, stressed Lozoff, will one bad year result in the board exercising this option, but several successive bad years, coupled with much stronger results at competitors, might.

The third reason written into many CEO contracts is that the board can elect to part ways with the CEO for no reason at all. This usually requires a two-thirds vote of the board and usually involves paying a sizable, predetermined severance to the CEO. What can trigger this are intangibles, including philosophical differences about the institution's mission.

Another prod to terminate the CEO may be pressures from regulators to do so, which some experts said have become clearer and louder.

“We have seen cases where the NCUA has a frank talk with a board. There has been heightened emphasis on the 'M' in CAMEL,” said Lozoff, where 'M' is for management in the NCUA's formula for rating credit union performance.

Clear as the reasons to terminate may be on paper, in practice there may be substantially more murkiness. Henry Wirz, CEO of Safe, the $1.9 billion credit union in Sacramento, Calif., said. “Over the years, we have had the opportunity to merge or conduct due diligence on about 30 credit unions, and we have done through financial analysis on about 50 other credit unions. I believe that most boards do not have a good evaluation process. The failures in the evaluation process run the gamut from not setting measurable goals to not even doing evaluations. When goals are set, they are often not reasonable. So many credit unions operate in isolation without using peer statistics to benchmark their own performance. That fosters unrealistic goal setting.”

How a CEO firing typically plays out in practice, said Lozoff, is that a dissatisfied board will call in a firm such as his and indicate they are thinking about a CEO change due to performance shortfalls. Lozoff then drafts a contract with the CEO that sets out clear targets and from there, the CEO's fate is in his own hands.

Discomfiting as firing the CEO may be, it could be the easy part of the job. That's because actually firing a CEO triggers substantial work for board members. “If you don't have potential successors identified, the process of transitioning from one CEO to another can be complicated and expensive,” warned Matt Fullbrook, manager of the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto and an expert in credit union governance,

Added Bob Hoel, author of the recent Filene Research report, “Boards and CEOs: Who's Really in Charge,” “Replacing a CEO is very stressful for a credit union, Most board members dread the prospect of searching for a new CEO. It's a great deal of work. You don't undertake this casually.”

Levine, however, noted that he has observed a recent deepening of the board's willingness to engage “at a strategic level with the CEO. They are more willing to confront,” a trend he said he expects to see continuing. More activist and vocal boards seem a probable outcome of multiple forces at work in credit unions, said Levine.

That might result in fewer CEO firings, said Hoel, who explained the paradox by pointing out that early discussions, before disharmony hits a permanent sourness, sometimes is key to saving a CEO's relationship with his or her board. “The advice to a board is to express discomfort early. If you let it fester, somebody usually departs,” said Hoel.

“The board has to recognize its responsibility is not to the CEO but to the members,” said Powers. “The board has to be prepared to make the call when it needs to be made.”