HOUSTON–The nearly $5-billion Texas Dow Employees CU (TDECU) plans to change its name to that of a much smaller CU it is seeking to merge in, should members vote in favor, in a deal that proposes paying a total of $6.75 million to three top execs.
In the member disclosure form filed with NCUA related to the merger, the $134-million Space City Credit Union told its approximately 12,000 members that among the benefits of the merger is that, unlike most mergers, TDECU will be changing its name to that of Space City.
Members are to vote on the Wednesday, May 14.
In addition to the name change, Space City is offering members a distribution from the net worth of the credit union if the merger is approved, although the amount to be paid is less than that being paid to three members of managment who will receive 57% of the equity being distributed.
Space City said a $5 million member dividend will be distributed, with payouts to range between $100 and $1,000. It said balances between $289.27 and $2,892.69 will receive a dividend equal to 34.57% of their balance.
It also listed more branches, more resources, and expanded product offerings as benefits of the combination.
Financial Arrangements
Space City said six people will receive financial benefits tied to the merger, including:
- CEO Craig B. Rhoden, who has been in the position since 1994: $3.5 million lump sum payable by Space City, plus $500,000 lump sum payable by TDECU following closing under a transition and two-year non-compete agreement
The credit union said in its disclosure form to members that the payout to Rhoden was for 30 years of “visionary leadership” and for overseeing growth from $4 million in assets to $142 million in assets.
“Mr. Rhoden will not be employed post-merger with TDECU, and will receive a lump sum of $3.5-million, which is the estimated amount of compensation had he remained with Space City until retirement,” the disclosure reads. “In addition, TDECU will pay a lump sum of $250,000 per year for a total of $500,000 in consideration for a two-year non-compete, non-solicit agreement aligned with his compensation.”
- SVP/COO Nikki Moore-Owens, who has been with SCCU since 2008, who is to receive a lump sum payout from Space City of $1.9 million, a lump sum payout from TDECU under a transition, retention and two-year non-compete agreement of $350,000, and a $55,000 annual salary increase based on similarly situated employees at TDECU.
Space City said the payment to Moore-Owens was in “appreciation of her long-tenure and outstanding performance in assisting the credit union’s growth and performance.” The $1.9 million payment reflects $118,750 for each year of employment. “In addition, TDECU will pay a lump sum of $175,000 per year for a total of $350,000 in consideration of a two-year non-compete, non-solicit, retention agreement aligned with her compensation,” SCCU stated, adding that Moore-Owens will continue with TDECU as senior vice president.
- VP Paula Newkirk, who has been with the credit union since 2007, who is to receive a lump sum payout from Space City of $500,000 and an annual salary increase based on similarly situated employees of TDECU of $100,751
- VP Michelle Williams, who has been with SCCU since 2022, who is to receive an annual salary increase of $24,867 based on similarly situated employees at TDECU
- Accounting Manager Tifini Abshire, who has been with SCCU since 2018, who is to receive an annual salary increase of $24,432 based on similarly situated employees of TDECU
Space City reported net income of $145,102 as of March 31, with net worth of 14.66%. TDECU posted a loss of $35,476 and net worth of 9.91% at the end of the first quarter. TDECU had net income of $6.62 million at year-end 2023.
