In my earlier blog about SECU’s October 2022 Annual Meeting, former CEO Jim Blaine made a lengthy statement asking questions about six areas of SECU’s direction. The members’ approved two motions he moved which requested the Board and management respond to the issues and publish SECU’s strategic plan.
SECU’s leadership went into immediate action.
The board and senior management held three “fireside chats” with employees, advisory board members and invited speakers. In January 2023 SECU released an hour and 50 minute video which “pulls clips from speakers across all three days and covers the full content of the event.”
Presenters included CEO Jim Hayes, board members, Dwayne Naylor, CEO of Local Government Employees FCU, the CEO of the North Carolina league and even a SECU manager who explained the reasons for discontinuing the Tax Preparation Service.
In tandem with this video report of the dialogues, Chairman Ayers and CEO Hayes released a six minute video summarizing SECU’s vision, mission and strategic plan. It presented SECU’s four strategies along with the tactics and goals to achieve them. As of January 2023, the video registered 2,912 views.
Blaine continued his daily blog expressing frustration and disagreement with several of responses to the issues he had outlined in the meeting. A reader can skim his posts for examples . He engaged with HB 410 which state-chartered credit unions and the NC League submitted to the state legislature.to create broader authority for North Carolina credit unions.
The most salient issue for Jim at an operational level was the introduction in mid 2023 of risk based lending (RBL). This replaced the uniform pricing approach in which each member paid on the same interest rate for loan products. Now each member’s loan rate would depend on their FICO score.
SECU was the only large credit unions that had not implemented RBL. Multiple blogs laid out his views that this new pricing approach was discriminatory and inconsistent with cooperative purpose.
Changing the CEO
As Blaine’s blog challenges to SECU’s direction continued, one new critique was questioning the hiring of CEO Hayes. He specifically singled out Hayes’ role at WesCorp which was taken over by NCUA in 2009 and liquidated in2010.
Jim’s challenge of this CEO selection prompted SECU’s board to send an extended letter to staff on May 23, 2023 which began:
The SECU Board of Directors writes this letter to address recent conversations and rumors about the leadership and direction of our credit union. We recognize that changes bring questions and uncertainty, and we want to ensure that we provide clarity to you, the people delivering value for our members every day.
The board of Directors fully and unanimously stands behind Jim Hayes as CEO and is excited about his ability to lead SECU through the advancements and improvements our members demand and deserve. .
The New CEO
On June 13, 2023 SECU announced that Hayes had resigned to become CEO of State Department FCU. Leigh Brady was appointed as the new CEO. She is a thirty-five year SECU employee who was Senior VP of Operations. She introduces herself in this two minute video.
She along with board then began a six-city tour meeting with advisory board members, employees to present her views and the need for change. This video summarizes the messaging as: “We Are SECU: On The Road” tour, coming together to discuss progress at SECU, listen, and connect.”
The Board Changes Election Process and Timing
While these public controversies continued, SECU’s board on April 2023 adopted new board nomination and election procedures. Then on June 30 the board adopted new bylaw changes which altered the 2023 Annual Meeting format and order of business. Per Chairman Ayers the reasons for these changes as given in this North Carolina Business article “are designed to ensure the annual meeting remains orderly, respectful and true to our primary purpose” of electing directors.” Blaine opined the changes were meant to stop change.
These two procedural modifications ended the traditional meeting agenda of other business and outlined extensive changes for member-nominated, versus board selected, candidates to fill open positions. Blaine repeatedly asked if these changes required the approval of the North Carolina’s Administrator of Credit Unions.
Jim’s complaint: it is simply illegal for the SECU Board of Directors to exclude any SECU member, who is 18 years old and willing to serve, from independently petitioning to become a candidate for the SECU Board of Directorswent unanswered.
The new election procedures had tight deadlines for “outside” candidates to be nominated if not chosen by the board.
Thursday, July 20 was the deadline for members to apply to run for the SECU Board of Directors and the three open positions. However the nomination committee did not announce its approved slate until August 11, 2023. Their candidates were all current board members.
If not selected to be the official slate of candidates, a member who wishes to self-nominate must obtain the signatures of 500 members to be eligible to run. The “New Election Procedures” added a requirement that those signatures must be obtained on an “Official Nominating Petition,” which the SECU Board did not release publicly until August 11, 2023. These petitions had to be returned by August 21, 2023, a period of just ten days to become “member-nominated.”
Members who shared Blaine’s concerns followed the new member-nomination procedures, submitted petitions with the required number of signatures and placed three candidates to oppose the three incumbents nominated by the Board.
The Campaign and Member Vote
Blaine’s blog then turned into a platform supporting the three member-nominated candidates in September and October. The first post was on August 28, Why Not Vote For The Member Nominated SECU Board Candidates?
In addition to introducing the three challengers Perkins, Stone and Clements, he also took on the positions of the incumbent candidates. Every post included links for how to vote in person or absentee, a process that began on September 1 and extended to the Annual Meeting in October. The campaign’s theme was “Let’s put members back in charge of the credit union.”
The Voting Outcome
I cannot find posted at this time the complete video of the 2023 SECU annual meeting. At minute 1:28 through 2.33 is the member forum with multiple comments about the direction of he credit union.
At the conclusion of the meeting, Ernst and Young provided the results from all absentee and in-person voting for the Board Election. All three member-nominated candidates won.
Democracy Is Hard Work
This account shows the tenacity and effort needed to implement meaningful member involvement in credit union governance, especially at the annual election.
Those in charge, volunteers and senior executives, will pull out all the stops to keep control of the process.
SECU shows that member involvement takes informed commentary, organized and continuous monitoring and most importantly issues or positions that resonate with members. Blaine is not the only former CEO who has opposed a successor’s decisions—most frequently the merging of the credit union.
What is unique is his website platform and skills as an advocate. In a later post I will summarize the state of play in this year’s election to the Board.
However in this public clash of personalities , there is a much deeper issue at play. That fundamental topic is what is a credit union’s purpose and whose interest is it meant to serve.