This commentary is by Steven D. Post of Montpelier, former CEO of VSECU; and by M. Jerome Diamond and Kimberly B. Cheney, both former VSECU directors and board chairs.
Members who attended the VSECU 75th annual meeting last week undoubtedly experienced the event in different ways.
Perhaps some saw a well-scripted virtual meeting that suffered from some technology challenges but showcased a strong, successful credit union — which VSECU certainly is. Those members may also have observed a leadership team that was clearly concerned by the growing controversy surrounding the proposed merger of VSECU with NEFCU.
Other members, the undersigned included, had a different experience. The meeting we attended was cleverly planned, tightly scripted and unwelcoming. From our perspective, it sure looks like a bigger credit union will be less forthcoming, less interested in listening to its member-owners and strong-handed.
Let us explain why we see it that way.
First, instructions for participating in the meeting were emailed to registrants just hours before the meeting. If you were alert enough to notice the email, you would have learned that you needed special hardware and software to fully participate in the meeting. Couldn’t members have received a notice sooner? The whole timing leaves the impression it was going to be just fine with a nervous leadership if members had difficulty participating.
Next, almost immediately, “some” members were accused of intentionally spreading false information about the meeting. This seemed particularly disingenuous because there has already been misleading information about the proposed merger plan and it originated with an email from the CEO. That email had a subject line reading, “We are merging with NEFCU.” Presto, every member who mentioned the merger after receiving that email thought it was already a done deal. Never once has it been referred to it as a proposed merger.
Then, the board hired a parliamentarian who read a long, long list of meeting rules describing the terms of engagement for this meeting. Quite frankly, this struck us as sad. A board elected by the members to serve the members was clearly worried about engaging with the members.
Finally, the chair made it perfectly clear that the board was going to allow just 30 minutes for the members to ask questions about the most consequential decision in the credit union’s life. That’s right! They gave the members 30 minutes to challenge the biggest decision ever. The chair even went so far as to set a stopwatch so that he could be sure when enough engagement was enough.
It would have been so much easier to just let the questions be asked and the answers be known. Instead, we got a great example of how not to run a member meeting and how to run from controversy.
In the little time we were given, though, it was amazing how many red flags and perhaps show-stoppers were raised about the merger decision and process.
First we learned that the whole process took less than four months. That seems like a freight train on a greased track for a decision of this magnitude. We’d like to know how many times the VSECU directors actually met together to discuss the merger. We’d like a better understanding of how they could decide to give away our credit union as quickly as they did.
We also learned that the board did not bother to retain an independent adviser, or two, who were directly responsible to the board and only the board, to assist in negotiating and entering into a transaction that would turn control of $1 billion-plus of assets over to a completely different board of directors. Did they rely on the CEO’s consultant only or, worse yet, a consultant that was working for NEFCU?
Then we learn that the board never asked members of the senior management team individually, in executive session without the CEO or other team members present, what he or she thought of the merger plan and if there were any concerns that needed to come to the board’s attention. Keep in mind that this is a senior management team with collectively over 100 years of service to VSECU.
So, it appears the board relied on the CEO to determine that this merger is in the best interest of the members. If that is the case, it relied inappropriately on a conflicted source. Our CEO negotiated for himself a new executive job, with the salary to match, as chief operating officer and president of NEFCU!
We think it’s our turn to say enough is enough.
We need a much better understanding of why our board thinks it fulfilled its fiduciary responsibilities properly. And, we can only get that understanding by getting answers to questions we weren’t given time to ask at members’ annual meeting.
Let’s begin with answers to these questions:
- This is not the first merger proposal the board has contemplated, is it?
- Were other merger candidates in-state or out-of-state credit unions?
- Is VSECU scrubbing opposition comments from its social media sites?
- Does any aspect of the planned merger impact the CEO’s compensation or retirement package?
- Why didn’t the board insist on a new name for the new institution in the merger agreement?
- What is the financial penalty in the merger agreement if VSECU decides to change its mind? If, after the board goes through the next several months of merger planning, how will we know if a director has heard information that changes his or her mind about the merger?
We have more questions and we have time — lots more than 30 minutes.
Concerned members can visit callingallmembers.org to learn how to help and to stay up to date.
Read the story on VTDigger here: Post-Diamond-Cheney: Yes, we need to talk about that VSECU annual meeting.