March 03, 2011

Delegation allowed in fiduciary duties reg

March 3, 2011 – Federal credit union boards can still delegate the authority to hire, fire, discipline and set compensation for employees under NCUA's recent final rule on fiduciary duties, agency General Counsel Robert Fenner said in a letter late last month to NAFCU General Counsel Carrie Hunt.

Hunt wrote seeking clarification regarding information on page 4 of NCUA Letter 11-FCU-02, which provides guidance on the final rule. In his response, Fenner said hiring and compensation authorities can continue to be exercised in accordance with the federal credit union standard bylaws.

Page 4 of the Letter to FCUs says the board can delegate execution of operational functions to management but that the board retains ultimate responsibility for the institution's direction.

In response to Hunt's specific questions, Fenner said this doesn't change existing NCUA policy. The full board may delegate to its executive committee the authority to hire, fire, determine duties of, set compensation for and discipline senior management, he said. It can also, within limits, delegate to the chief executive officer the authority to hire, fire and compensate subordinate employees, including other management personnel.

Fenner noted that "if a board determines to delegate to the CEO the authority to hire, fire, fix the compensation of, or discipline other senior managers," appropriate standards and controls should be put in place.