While many credit unions have a hard enough time just finding people to serve on their boards and recruiting fresh blood, one credit union has a board election coming up with four open seats — and nine candidates vying for them.

Consumers Credit Union (CCU), a $610-million institution based in Waukegan, Ill., will hold an election at its annual meeting March 18 that will be anything but a " rubber stamp."

Incumbents Alice Clements, Kenneth Robinson, John Schwab and Yale Wolk will face off against newcomers Daniel Colbert, Laurence Cornel, Bernard Dost, James Mahnich and Christina Villafuerte.

" While there are many benefits to credit union membership, none is more important than having a voice in credit union governance," said CCU President Sean M. Rathjen in a statement. " These privileges include both the right to run for the board of directors and for all members to vote in the annual election for the board. CCU is extremely fortunate to have nine highly-qualified candidates wishing to serve on our board."

After the voting is certified by Wipfli, Ullrich, Bertelson LLP, a Milwaukee-based accounting firm firm retained by CCU, winners will be notified on March 26.

Rathjen told Credit Union Journal that the board nominees have served in some capacity, usually working on some committees, on behalf of the CCU prior to their nomination. " Potential nominees have to submit an application and explain in 75 words why they want to become a director," he said. " Any member in good standing — that is, those individuals without delinquent loans, for example — are eligible to run for the board."

Elected directors will sit on the board for a three-year term, Rathjen added, although the length of such terms in other credit unions can vary widely and depend upon individual charters and bylaws.

Rathjen also said that contested board elections are typical at CCU, citing that they encourage this kind of interest and participation through " constant recruitment of candidates, active member communication of the notice of board elections and multi-channel access to the election including branches, newsletter, web site and email."

Still, for many credit unions, the election of board directors is tantamount to a " rubber-stamp" because the candidates often run unopposed. It is also tough to recruit candidates for such posts, which usually creates scenarios where individuals face little competition.

"It is not the most glamorous job in that directors — except in a handful of states where compensation is allowed for directors of state-chartered credit unions — are volunteers," said Dennis Dollar, an Alabama-based credit union consultant. " [They are also] required to [spend] a lot of time in [increasingly] complex institutions and are fiduciaries liable for millions, and often billions, of dollars of member deposits, loans and investments."

To help with the search for directors, Dollar noted, most credit unions now have a nominating committee that coordinates the process. " Many have board member development programs," he said. " Directors come from the membership and while, admittedly, the vast majority of credit union members are not interested in running for the position, the reality is that most credit unions only need a cadre of three or four who are interested in serving when openings come or when elections roll around."

Indeed, for many credit unions,the entire board normally comprises about 7 or 9 members, he added." So, they don't need bench strength of several hundred [people]," Dollar said." It is a functioning system that has served the [credit union] industry well."

Ben Rogers, research director of the Filene Research Institute, told Credit Union Journal that while credit unions are mandated to hold elections under their charters, many boards make it hard for outside contenders to make it on the ballot. In a typical arrangement, a candidate is endorsed by the board's nominating committee, he said. " That's the easy route," Rogers stated. " Or a candidate has to collect a lot of signatures and follow an extensive checklist to make it onto the ballot. Even then, it's rare to see more than 2% to 3% of credit union members voting in an election, so usually the endorsed candidate is a shoo-in."

One of the problems related to the recruitment of directors has to do with a lack of " strong culture of board renewal" at credit unions, Rogers indicated.

" If boards put as much effort into recruiting directors as the HR department did into finding good branch managers, most credit unions could find good directors," he advised. " My experience is that most boards recruit from their own social and professional networks rather than actively recruiting."

With respect to compensation for directors, Rogers explained that under the Federal Credit Union Act, one board member may be compensated, which allows for one director of the credit union to be an employee of the CU (most typically the CEO). " But this is still rare, and most board directors are run-of-the-mill members," he said.

Indeed, Mark Lynch, a Michigan-based credit union consultant, noted that, excluding rare exceptions, board members are almost never credit union managers or employees. " That could pose a conflict of interest," he told Credit Union Journal.

Moreover, Lynch pointed out that unpaid directors actually represent a strength of the credit union movement. " If credit union directors started receiving salaries like bank directors do, then regulators and the government might decide to remove the tax-exempt status of credit unions and treat them more like banks," he said. " Of equal importance, the lack of pay would suggest that those people who wish to serve on credit union boards are doing it for more altruistic reasons than money, such as possessing a passion for the philosophy of credit unions as service providers for the public."

Dollaralso asserted that contested board elections at credit unions happen more often than most people realize, noting that such events seldom make the news, but demonstrate that " democracy is alive and well at credit unions."

But, as in many elections for U.S. presidents, senators, governors and mayors, apathy is widespread among the electorate, while incumbents hold a decided advantage, leading to repeat multi-term officeholders.

" While most incumbents get re-elected with little or no opposition that is not a lot unlike the situation in the normal political process where incumbents normally get re-elected and often with no opposition," Dollar commented. " I would say that the incumbent advantage in the credit union nomination and election process is not a lot different than the advantage incumbents have in the American federal, state and local elections. The voters make the ultimate choice, and if they want to re-elect incumbent board members, they do. If they want to make a change, they can."

Dollar further stated that when he served as a CEO of the Gulfport VA Federal Credit Union in Gulfport, Mississippi from 1991-1997, they held contested elections " almost every year" and incumbents were defeated twice during his tenure there.

Rogers would not comment specifically on the impending elections at CCU, but he noted that situations where candidates outnumber available seats is somewhat unusual, but typically happens when the credit union " proactively calls for candidates and/or is going through changes and wants member input. Done correctly, moves like this are good for credit unions."

It is also important to remember that credit union board membership is not merely a ceremonial position. " Quite the contrary," Lynch said. " Credit union directors have as much power as the boards of publicly-listed corporations do. They set the policy, strategy and direction of the credit union, and they can also fire the CEO if they deem it fit. In fact, as in many public companies, the CEOs and the boards of credit unions are often in conflict with each other."

In the past, retirees tended to make up the majority of credit union directors — owing to the fact that retirees had more time to devote to the job. " But that's changing now," Lynch noted. " I see more and more directors who have whole second careers and still make time to work for credit unions."

Subscribe Now

Authoritative analysis and perspective for every segment of the credit union industry

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.