CINCINNATI—As credit unions compete to attract and retain top talent, a growing number are confronting a complex, high-stakes question: how do they fairly and effectively compensate executives in a system that lacks stock options and faces rising financial pressures?
The answer, according to Infineo-Stearns Financial Group, is both evolving and urgent. With nearly $9 to $10 billion already tied up in executive benefit plans—largely structured around collateral assignment split-dollar (CASD) agreements—some of these packages are beginning to weigh heavily on the balance sheets of small to mid-sized credit unions, the company said.
“Credit unions don’t have the same tools as banks and public companies,” reminded Eric Stearns, CEO of Infineo-Stearns Financial Group. “There are no stock options or large-scale deferred comp structures, so when you're trying to retain someone who could easily go to a bank, you need compelling, cost-effective alternatives.”
That’s where supplemental executive retirement plans (SERPs) come in—designed to offer long-term incentives while staying compliant with strict credit union regulations. But as interest rates have risen and the economy has shifted, the structure of many older plans no longer fits today’s financial reality, Stearns said.
“There was a time when CASD was elegant—designed for a low-interest rate world,” added Jay Rogers, Infineo-Stearns chief revenue officer. “But the economics have changed, and now many of those same plans are creating a drag on the institution.”
The Cost Of Long Duration
One of the main culprits is duration—the length of time a credit union must hold onto the investment before recouping funds, Stearns said.
“We’re talking about plans that can last 30, 40, even 50 years,” said Stearns. “If your investment is earning 1% annually and you can’t touch it for decades, that’s a massive opportunity cost.”
This is especially problematic for smaller institutions, Rogers said.
“We’re seeing some of these plans impact merger decisions,” said Rogers. “Larger credit unions are wary of acquiring institutions holding low-yielding assets with no fixed maturity. It’s not attractive to absorb $10 million in liabilities that could linger for decades.”
These benefit plans are not fringe line items. According to Rogers, approximately $9 billion in split-dollar agreements have been executed by credit unions to date. That’s a significant chunk of the 25% of net worth cap allowed under NCUA’s rule on otherwise impermissible investments (Section 701.19).
As Rogers explained, “Every dollar tied up in an underperforming benefit plan is a dollar not available for lending, growth, or technology upgrades. Especially for smaller credit unions, that’s a painful tradeoff.”
An Evolving Approach
Recognizing the limitations of traditional CASD plans, Infineo-Stearns and other firms are now exploring alternative structures that reduce risk and increase financial flexibility.
One of the solutions gaining traction is the LifeNotes Trust—a pooled asset structure that enables credit unions to convert their long-dated promissory notes into certificates with fixed durations, typically between 10 and 15 years.
“Think of it like a mortgage-backed security, but for executive benefit plans,” said Stearns. “We’re pooling the assets, offloading risk, and creating certainty. That’s hugely valuable when you’re managing succession or merger conversations.”
By using the trust, credit unions can shorten the time their capital is locked up while preserving the promised benefit for executives.
“Instead of waiting 40 years to get your money back,” Stearns said, “you might wait 15—and that’s a big win.”
Implications For The Future
The shift in strategy has regulatory and operational appeal as well.
“From an examiner’s perspective, these newer structures are easier to report on and present less concentration risk,” noted Stearns. “They’re also more adaptable—plans can be unwound more cleanly if an executive leaves or a strategy changes.”
Even for credit unions designing new plans, the opportunity to implement LifeNotes-secured split-dollar structures from the outset could lead to more efficient, predictable outcomes, Rogers said.
“This isn’t just about fixing past decisions,” said Rogers. “It’s about making smarter ones moving forward. We’re seeing institutions integrate this into their recruitment strategies, using it to offer more compelling packages to the next generation of leaders.”
Competing With Banks
Joseph Stearns, Infineo-Stearns founder and a longtime advisor in the space, said the industry is now circling back to a challenge that first emerged decades ago.
“As credit unions matured and grew executive teams, they started facing the same deferred comp pressures as banks. But without traditional tools like 401(k) match extensions or equity options, they needed to find new ways to provide competitive retirement benefits,” he explained.
According to Joseph Stearns, many credit unions are simply trying to keep pace.
“This isn’t about overpaying executives—it’s about ensuring your leaders aren’t recruited away,” he said. “The system must support long-term retention if the credit union mission is going to thrive.”
Looking Ahead
Infineo-Stearns is not the only firm offering solutions to this problem, but they’re among those sounding the alarm that the executive comp challenge is more than just a budgeting issue—it’s a structural one.
For credit union boards, the message is clear: the tools that worked in the past may no longer serve today’s needs. Whether reviewing an existing plan or designing a new one, institutions must weigh not only cost, but duration, flexibility, and the true opportunity cost of tying up millions in long-term agreements, Rogers said.
“Executive compensation is no longer just an HR topic,” said Rogers. “It’s a strategic one. And getting it right may determine whether a credit union can stay independent, competitive, and aligned with its mission in the years ahead.”