“There are still credit union boards out there that suffer sticker shock when it comes time to replace long-term CEOs who are retiring,” he explained.

More of those boards will have to face the music in the coming years as the growing number of baby boomer retirees take their toll on credit unions' veteran leadership. Although most candidates won't hum as rich a tune as Maus did, salary and benefit trends are climbing upwards, and top-quality candidates will be facing what, for them, is becoming a sellers' market.

However, savvy boards are responding with pay-for-performance packages that are simpler in design and, many feel, more effective in motivating high-level performance. During the coming years, well-designed incentive packages will be crucial in attracting top talent, according to Sue Mitchell, CEO of executive recruiter Mitchell, Stankovic and Associates in Boulder City, Nev.

“With 46% of the credit union industry eligible for retirement, we're looking at a significant leadership transition period,” Mitchell said. “The need is there, and we have to have better recruiting processes in place and do a better job identifying emerging leaders.”

Even though the credit union industry continues to consolidate, which will lead to fewer top-level positions overall, current demographic trends will mean more opportunities for the right candidates in the near future. The next generation of CEOs will need to be effective strategic and tactical thinkers, and second-tier executives must be given the opportunity to learn the skills they need to step effectively into the C-suite of their current or another credit union, Mitchell said.

“Simply hiring a recruiting firm to do a search is shortsighted,” Mitchell said. “We have some real talent waiting in the wings that isn't being given the chance to develop.”

Marksberry's move to PSCU is a good example of a second-tier executive migrating from a larger credit union to take the reins of a smaller institution. In the coming years, similar scenarios will play out all over the country, various recruiters said, and boards need to understand and develop the proper environment if they want to keep the next generation of leaders at home.

“The next five years will be transitional, and by 2020 we'll be facing a perfect storm of leadership needs and changing conditions,” Mitchell added. “The consolidation of smaller organizations will no longer allow existing CEOs to easily step up the asset ladder to larger credit unions.”

John Andrews, executive vice president for executive recruiting firm D. Hilton Associates Inc. in The Woodlands, Texas, said succession planning has become key for credit unions that want to keep the leadership they have in preparation for the day when their CEOs exit and they are faced with filling what has become an increasingly complex role.

“The last statistic I saw said that 19,000 people are retiring every day,” Andrews said. “As a result, you see a lot of internal hires at the CEO level at the larger credit unions more so than in the past simply because the supply is relatively low right now.”

Read more: Succession plans that allow promotions from within are popular …

Succession plans that allow credit union EVPs to move into the CEOs' roles are becoming more commonplace, Andrews noted. When it comes to compensating those new CEOs, however, some boards still balk at the growing cost of compensation and, in the worst case, try to cut a deal with a newly minted chief executive. Several recruiters advised against that strategy.

“Boards have a fiduciary responsibility to hire the best possible candidate from the marketplace,” Mark Angott, president of Angott Search Group in Rochester, Mich., said. “But some boards that don't do it often don't do it well.”

Andrews agreed. “Some boards think they can get a 'hometown discount' for hiring an internal person, but as soon as you become a CEO, you're in play,” he said. “Get the retirement or retention piece in writing during the first year of the CEO's tenure. New CEOs also make this mistake by not asking for the market rate right up front.”

Compensation rates vary based on the asset size of the credit union and the complexity of the challenges that the institution faces, several recruiters said. But despite popular belief, credit union location plays little or no role in determining CEO compensation, Andrews said.

“It's counterintuitive, but geography only matters at the staff level and doesn't change what credit unions pay their CEOs,” Andrews said. “Try and bargain based on location and it might be the worst $5,000 you'll ever save.”

More and more, compensation packages are being based on performance pay tied to the credit union's strategic plan and may exceed the salary itself, Mitchell said. The recruiter suggested that the base salary be reviewed periodically to make sure it's in line with the marketplace, while performance pay goals can be examined annually.

Performance pay can focus on up to five key ratios, she added. Three of those ratios should be tied to the credit union's financial performance, while two others can link to discretionary goals, like completing an IT conversation or other tasks designed to move the institution forward.

In terms of other perks, recruiters said that relocation, company cars, country club and health club memberships and other common benefits are less prevalent now than they have been in the past. Contracts of three to five years are still fairly common among credit union leaders, they said.

Mitchell noted that many compensation packages include recognition and provisions for the candidate's spouse and provide travel and conference attendance expenses for that person. The concept of being a “virtual CEO” and working only part-time onsite and the rest of the time from a remote location is getting greater attention during negotiations, she added.

As the percentage pay parameters get bigger, however, contracts tend to get simpler, according to Andrews. The days of long, complicated multi-page agreements are over, he added.

“We're seeing much more simplified packages in terms of components,” Andrews said. “Incentive plans have replaced bonuses and boards are willing to pay a premium in the marketplace if they think they are going to get a premium performance.”

In hiring a CEO, either internally or externally, boards must remember that they are making a business decision, not merely answering a human resources question, he added.

“You're looking for the best person to run your credit union, so cast the widest net possible and search every nook and cranny,” Andrews explained. “Then you will have done your due diligence and you'll be able to sleep better at night.”