Governor Approves Compensation Bills for Board Members at State-Chartered Credit Unions; Effective July 1, 2020

Our compensation bill (companion bills SB296 and HB813) was signed last week by Gov. Ralph Northam.

"Our thanks to Del. Jeion Ward and state Sen. Dave Marsden for carrying the bills in their respective houses," said League President Rick Pillow. "Credit unions approached us years ago noting -- particularly in rural areas -- the difficulty in recruiting and retaining board members with the necessary knowledge, skills and abilities to successfully lead in today's complex and competitive financial services landscape. We're pleased that our state charters will have this new flexibility, adding an important new tool in acquiring and retaining talent."

Once enacted, the new Virginia law will cap compensation at $6,000 annually per director. The law also specifically exempts certain insurance coverage for officials from the compensation calculation, though that exemption has been the case in Virginia for some time. Credit union officials will continue to be reimbursed for expenses incurred while on credit union business, consistent with guidance from the Internal Revenue Service.

It's important to note that compensation authority will be permissive. State-chartered credit unions will decide individually whether or not to offer board compensation. Fifteen other states allow their state-chartered credit unions to compensate board members and committee officials. Federal credit unions are allowed to compensate a single board officer, but are expressly forbidden from paying other directors.

The Virginia Credit Union League is developing a sample policy state-chartered credit unions can use in implementing a board compensation policy.