For a moment, forget about the talk about the death of traditional banking: Executives with particular sets of skills are in demand at U.S. financial institutions. Sixty-one percent of the senior executives and directors responding to Bank Director’s 2015 Compensation Survey, sponsored by Compensation Advisors, report that their bank hired or promoted new executives last year. One-third lost executive personnel.
At the board level, 15 percent say they brought on new directors in 2014, with many seeking board members with particular expertise, or adding those that can help grow their institution.
Lenders continue to be in high demand, particularly at banks with less than $5 billion in assets. Technology/information security, risk management and compliance were other top areas for hires and departures in 2014. Banks aren’t training up the next generation of bankers like they used to, so given a limited (and aging) talent pool, offering the right compensation package is an important strategy for ensuring the bank’s long term sustainability.
The 2015 Compensation Survey tracks what bank chief executive officers and boards were paid in fiscal year 2014, what benefits are currently awarded to executives and directors, and how bank leaders want to be compensated by their organizations. Responses were collected online from 281 directors and senior executives of U.S. banks, including CEOs and human resources officers, beginning March 18 and ending April 7, 2015. Information on board and CEO pay was supplemented using data from 90 bank proxy statements, collected March 16 through March 20.
- Executives responding to the survey say that in addition to a cash salary and bonus, what they want most is a retirement benefit, at 72 percent. Just half desire equity as part of their own compensation. Even the executives of publicly traded banks place less emphasis in holding equity: Just 58 percent indicate it’s of high value.
- Seventy percent report that their bank offers a non-qualified retirement benefit. Half offer it to the bank’s CEO, and 39 percent to the entire management team as well.
- Less than half of all respondents, and two-thirds from publicly traded banks, allocate equity to executives annually. Thirty-one percent offer restricted stock, while 21 percent grant stock options. Just 5 percent give their executives synthetic equity.
- The median salary for a bank CEO was $382,205 in FY 2014, but how much the CEO earns varies widely depending on the size of the bank.
- Twenty-eight percent of respondents plan to increase director compensation in 2015, and more than half increased pay in 2013 or 2014. However, 28 percent report their board hasn’t seen a raise in pay since at least 2010.
- While most bank boards are earning more, directors are also spending more time on bank board activities. The median hours per month devoted to meetings, business development, education and other board obligations rose to 20 hours, up 33 percent from 2014.
- Boards continue to shift from board meeting fees to awarding an annual retainer. The percentage of directors receiving board meeting fees declined 7 points from the 2012 survey, to 77 percent. Directors receiving annual retainers grew 17 points, to 61 percent.
- The median board meeting fee for an independent director was $1,000 in FY 2014, an increase of one-third from FY 2013. The median annual retainer remained level in 2014, at $20,000.