Retain Your Top Talent

By Mark Wilson, Sr. Executive Benefits Specialist, CUNA Mutual Group

Recruiting and developing a top executive is a major investment. Losing that talent to a competitor can be a serious, long-term blow to morale, productivity, and financials.

Supplemental executive retirement plans can protect a credit union’s investment in top talent and help recruit the best leaders. In fact, the “R” in SERP could easily stand for “retention” and “recruitment” in addition to “retirement” — but only if the SERP is designed carefully. A good SERP protects the CU’s interests while providing a meaningful incentive for executives.

Maybe that sounds like a tall order. But as the average CU asset size continues to grow, and as competition increases for leadership talent, more and more CU boards are looking to SERPs as an essential element of executive compensation packages.

A Top Executive’s Abrupt Departure Can Cause a Domino Effect

Unfortunately, CUs often wait to engage an executive benefits firm to help set up SERPs for their leadership team until the difficult aftermath of an executive’s departure. The damage I’ve witnessed in these situations often goes beyond simply losing the executive’s day-to-day leadership and expertise.

The damage I’ve witnessed in these situations often goes beyond simply losing the executive’s day-to-day leadership and expertise.

Sometimes, for example, other executives will take their eyes off the ball, turning their focus away from the CU’s operations and instead wondering what happened and whether they should be polishing up their resumes, too. And sometimes, departing executives even bring top performers along with them, sooner or later.

The most common SERPs for CEOs:

According to a CUNA survey* of 301 credit unions conducted between February and June 2017, nearly 60% of credit unions offer some form of SERP to their CEO, with 457(b) plans being more common than 457(f) plans.

  • 72%: 457(b)
  • 56%: 457 (f)
  • $250,810: Median total compensation
  • 87.2%: Median base salary as % of total compensation
  • 95%: Total cash compensation

A host of other complications can follow an effective and popular executive’s vanishing act. To mitigate this risk, give your leadership continuity program more retention power with these four SERP best practices:

1. Don’t just be sold—be informed.

Creating an effective SERP should be a process: a conversation with your executive benefits specialist, rather than just hearing a sales pitch for a specific executive compensation instrument, such as a 457(b) or 457(f) plan, or split-dollar life insurance.

CU boards or compensation committees should be open minded going into the SERP process, with a desire to explore as many plan design options as they can. This means that if a vendor specializes in selling a single product, be sure to find other vendors to present a full array of possibilities. Ask about tradeoffs for certain products, such as assuming additional risk for a potentially higher return.

You should never feel you’re being pushed to settle on a product merely because it hits your target price point.

2. Customize SERPs based on each executive’s unique situation

Put meaningful benefits in place by customizing SERPs based on each executive’s life stage/events, and on your CU’s strategic goals. An executive compensation program will be only as effective as it is meaningful to the individuals receiving it.

For example, a SERP designed to reward a long-term CEO five years from retirement age shouldn’t have the same features as a “golden handcuffs” SERP for a CFO in his or her late 30s or early 40s. If that younger executive has children who might be heading to college in 10 years, for example, create a SERP designed to generate a significant payout near that milestone.

SERP vendors should start with a thorough assessment of each executive’s financial profile.

The most common SERPs for Senior Executives:

According to a CUNA survey* of 220 credit unions conducted between February and June 2016, 45% to 55% of credit unions provide some form of SERP to their senior executives, depending on the position.

SERPs offered to the EVP

  • 46%: 457(b)
  • 21%: 457 (f)

SERPs offered to the CFO

  • 37%: 457(b)
  • 22%: 457 (f)

SERPs offered to the COO

  • 35%: 457(b)
  • 23%: 457 (f)

SERPs offered to the CIO

  • 37%: 457(b)
  • 14%: 457 (f)

3. Put as much effort into the SERP agreements as the SERP plans themselves.

Financial products are only half the SERP equation—they are the funding mechanism. The other half is the agreement; a contract that details the conditions under which SERP proceeds will or will not be paid, among other components. You need an attorney experienced in these agreements to act on your CU’s behalf in executing these documents.

4. Review all SERPs regularly.

Ongoing oversight is critical. At least annually, you and your SERP provider should review investment performance, regulatory changes that may affect your plans, changes in the SERP recipient’s work status, personal financial needs, etc.

A properly designed SERP is a personal reward. You’re spending time working with each executive on their specific financial needs and responding with a personalized plan to meet those needs. You’re showing them—not just telling them—how much you value their leadership, loyalty, and potential.

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Use this seven-point checklist to design prudent supplemental executive retirement plans

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Non-Qualified Executive Benefits: A Guide for Credit Union Leadership

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*CUNA’s 2017-2018 CEO Total Compensation Report
*CUNA’s 2017-2018 Senior Executive Total Compensation Report

Proprietary insurance is underwritten by CMFG Life Insurance Company. Proprietary and brokered insurance is sold by CUNA Mutual Insurance Agency, Inc., a wholly owned subsidiary. This insurance is not a deposit and is not federally insured or guaranteed by your credit union. For more information, contact your Executive Benefits Specialist at 800.356.2644. Representatives are registered through, and securities are sold through, CUNA Brokerage Services, Inc. (CBSI), member, FINRA/SIPC, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 866.512.6109. Insurance and annuity products are sold through CMFG Life Insurance Company. Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the credit union.