Supplemental executive compensation plans can have a bad reputation, mostly because of the “golden parachutes” bestowed on some controversial Wall Street executives. But in the credit union world, deferred compensation plans and other supplemental executive retirement/recruitment plans are designed to reward long-term prudent management and good service to members.
Credit unions can’t employ the most lucrative supplemental benefits that banks and other commercial financial institutions use to recruit, retain and reward executives. So, to compete for the best talent, many credit union boards have turned to SERPs. This requires the board’s research and other due diligence to create properly scaled, legally compliant plans.
SERPs: Not Just for Soon-to-Retire Execs
Common SERP elements include 457(b) and 457(f) plans and a variety of split-dollar life insurance plans. The funds backing these plans can be invested in myriad ways, including managed stock and bond funds, mutual funds, exchange-traded funds, insurance policies and many other options. In addition to rewarding retiring executives, SERPs have been designed to give top performers incentives to stay with their credit unions. They can also smooth out the succession process, helping credit unions maintain their momentum through crucial leadership transitions.
continue reading »