IRS tax examiner Satinder Arora says he has tried at least three times to get on the board of directors of the Denver-based Public Service Credit Union, only to be rejected.

His theory: The credit union doesn’t want board members who ask difficult questions and challenge management.

“The board’s nominating committee is becoming a rubber stamp of the management,” said Arora, who has served on other credit-union boards and committees. “They will interview you, but they have their own candidates lined up.”

PSCU board members counter that Arora could petition the membership to gain a seat and that the nominating process succeeds in finding qualified candidates.

The board has come under fire for awarding PSCU chief executive David Maus an industry record $9.3 million retirement package in 2010, on top of a base salary just shy of $500,000.

That payout, combined with sharply rising compensation levels at credit unions across the country, has raised questions about whether volunteer credit union boards, drawn from the membership, can hold their own in negotiating pay packages.

“This whole question of what is the appropriate board role in determining executives’ compensation is a hot-ticket item,” said Charlie Carlson of Carlson Consulting in Middleton, Wis., who has advised credit union managers and directors on compensation issues.

“If you have had a highly successful executive and organization, the reality is that the advantage goes to the executive,” he said.

Over the past five years, credit union CEO pay has risen at nearly triple the rate of overall salary increases. At credit unions with $1 billion or more in assets, salaries are approaching $500,000 a year, a tad shy of what bankers overseeing comparable amounts make.

The growing complexity of managing a large credit union, along with competition with banks for top talent, are cited as justifications for multimillion dollar payouts to executives.

Those higher salaries have outstripped traditional retirement plans, leaving credit union boards scrambling to fill the gap with complicated deferred compensation plans.

Maus’ 2010 payout was negotiated as part of his 2005 contract. Among the PSCU directors who negotiated the contract were an Xcel Energy purchasing consultant, an Xcel accountant, an H&R Block employee, a military supply officer and the executive director of the Colorado Retail Council.

After Maus came to the board with his desire for a deferred compensation plan, directors took about 18 months to work on an agreement and used an outside counsel and consultant to negotiate.

The board agreed to provide 70 percent of his salary in retirement, not unlike a traditional pension plan. But unlike a traditional pension, Maus received control of the money, along with extra funds to cover the taxes.

Board member and past chairwoman JoAnn Groff said Maus didn’t outmaneuver the board.

“We are absolutely capable of partnering with our staff leadership and not being overrun by them,” she said. “I believe we have a very competent, devoted and diverse board who work very hard on the issues of the credit union and on governance issues.”

Seven directors contacted for this story either didn’t return calls and e-mails or declined interview requests, including one who referred questions to Maus.

Raymond Lopez, a professor of finance who has done research on credit union board and management issues at Pace University in New York, called the contract “over the top” and “ridiculous.”

Federal rules prohibit credit union boards from having other industry executives serving as directors, unlike public companies, which often populate their boards with other CEOs. While that can raise questions of cronyism, it also provides expertise.

At private banks, investors with significant money invested will sometimes get a spot on the board. But as cooperatives, credit unions have no equity to offer, and directors have less of their personal wealth on the line.

In February 2011, the National Credit Union Association sent out a letter to federal credit unions reminding them about the duties directors have and listing the basic financial skills they needed to master, including the ability to read a balance sheet.

It also reminded directors that growth for growth’s sake or making the highest return possible on assets shouldn’t be primary goals, but rather providing quality, low-cost financial services to members.

“Manager” used to be the title of choice for credit union chiefs, before the industry started adopting corporate titles such as president and CEO.

That emphasized that the board and members called the shots, said Lopez, who chairs the board of a university credit union where the manager isn’t given a seat.

Maus, by contrast, has served on the PSCU board three decades, making him its longest tenured member.

Lopez said it is important to get beyond the idea that a credit union can’t survive or thrive without its current management team.

But achieving that mind-set can prove difficult at credit unions that have grown rapidly under a charismatic leader. Under Maus’ tenure, PSCU grew from a $15 million institution to one holding $1.15 billion.

Robert Wilson, an attorney with Berenbaum Weinshienk in Denver who has advised PSCU and other credit unions, defended the expertise of volunteer boards.

“The directors in the big credit unions are sophisticated. They have to be,” Wilson said. “There is no difference between bank and credit union boards as far as knowledge.”

Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or twitter.com/aldosvaldi

Credit union contract

In 2004, volunteer directors at the Public Service Credit Union began hammering out a five-year employment contract with chief executive David Maus, above, that would pay him $9.3 million in 2010 for his retirement. The board members and their backgrounds:

Scott Aaronson: Accountant at Xcel, firefighter

Justin Doster: Navy supply officer

JoAnn Groff: President, Colorado Retail Council

Price Hatcher: Structured purchase consultant, Xcel Energy Services

Mark Kuta: Technology sales, author

Andrea Landes: H&R Block

Dave McKinley: Security services

Phil Showalter: Not available