BOSTON — Massachusetts state-chartered credit unions will be able to compensate members of their boards of directors under legislation signed by Gov. Maura Healey, ending a state prohibition that required directors to serve without pay.
The new law, “An Act Allowing Fair Compensation of Massachusetts Credit Union Directors,” changes state law to give individual credit unions the option of paying directors for their service on boards and board committees.
The legislation does not establish a salary, stipend or maximum amount that directors may receive. Instead, the amount of compensation must be determined by the credit union’s members at an annual meeting.
Decision Up to Members
That provision puts the decision over both whether directors should be compensated and how much they should receive in the hands of each credit union’s membership rather than its board.
Previously, the law in Massachusetts law–which was the first state to create credit union enabling legislation–prohibited members of a state-chartered credit union’s board from receiving compensation for serving as a director or committee member. Directors could be reimbursed for actual expenses incurred in carrying out their duties.
The legislation replaces that prohibition with language permitting credit unions to compensate directors for their service.
The measure had the support of the Cooperative Credit Union Association, the regional trade organization representing credit unions in Massachusetts, Delaware, New Hampshire and Rhode Island.
What Supporters Say
Supporters have argued that allowing compensation can help credit unions recruit and retain qualified directors as the responsibilities of governing financial institutions become increasingly complex.
The House legislation, H.1338, was sponsored by Democratic Rep. Andres X. Vargas of Haverhill. A companion Senate measure, S.821, was sponsored by Democratic Sen. Pavel Payano of Lawrence.
The change applies to Massachusetts state-chartered credit unions. Federally chartered credit unions remain subject to federal law and National Credit Union Administration regulations governing director compensation.
Under federal law, most federal credit union directors generally serve without compensation, although one board officer may be compensated if permitted by the credit union’s bylaws.
