Preparing for the Next Generation of Bank Executives

Compensation_WhitePaperCover_tb.pngIs the banking industry prepared to appropriately and competitively compensate CEOs and senior executives while luring millennials and Gen X’ers to executive level positions?

Examining how bank executives want to be paid reveals volumes about the state of the banking industry. Among the responses of almost 300 CEOs, human resources officers, directors, chairmen and other senior executives, Bank Director’s 2015 Compensation Survey, sponsored by Compensation Advisors, reveals telling signs of aging boardrooms and executive offices. Seventy-two percent of executives indicate they highly value a solid, stable retirement benefit as part of their compensation package, compared to those that highly value equity, 50 percent, or a severance agreement, at 39 percent. (Respondents could choose multiple preferences.) As a result, the number of banks reporting that they offer a nonqualified retirement benefit has grown significantly in the past two years. Now 70 percent of respondents offer a nonqualified retirement benefit to at least the CEO or management team, up by almost one-third since 2013.

An aging leadership means the next generation of bank leaders should be waiting in the wings. This could alter the face of bank compensation over the next few years. But traditional banks have struggled to recruit younger generations who witnessed a crisis that rocked the financial system. Many millennials would rather use nonbanks such as Google or Amazon instead of their local bank. Why would a talented, 20-something business school graduate want to work for a traditional bank? As baby boomers retire and exit the banking world, these struggles will continue to impact C-suites and boardrooms in the coming years.

Perhaps more than ever, compensation plans must appeal to two sizeable generations: Baby boomers and millennials, the oldest of which, in their early to mid-thirties, are coming up through the ranks. Boards should ask: “Are our compensation plans doing what we designed them to do?” says Flynt Gallagher, president of Compensation Advisors.

For more on these considerations, read the white paper.

To view the full results to the survey, click here.


Emily McCormick

Vice President of Editorial & Research

Emily McCormick is Vice President of Editorial & Research for Bank Director. Emily oversees research projects, from in-depth reports to Bank Director’s annual surveys on M&A, risk, compensation, governance and technology. She also manages content for the Bank Services Program. In addition to regularly speaking and moderating discussions at Bank Director’s in-person and virtual events, Emily regularly writes and edits for Bank Director magazine and She started her career in the circulation department at the Knoxville News-Sentinel, and graduated summa cum laude from The University of Tennessee with a bachelor’s degree in Spanish and International Business.