BRENTWOOD, TENN., May 10, 2016 – Forty-three percent of the bank executives and board members responding to Bank Director’s 2016 Compensation Survey say there aren’t enough talented commercial lenders in their markets, indicating a troublesome shortage in the people who help drive the bulk of the industry’s revenue. Commercial loans accounted for 38 percent of all loans made by commercial banks and savings institutions in the second half of 2015, according to the Federal Deposit Insurance Corp.
Forty percent of survey respondents indicate that recruiting commercial lenders is a top challenge for 2016, and it’s a position many banks are desperate to fill: Forty-three percent are willing to pay highly for talented commercial lenders.
The 2016 Compensation Survey, sponsored by Compensation Advisors, a member of Meyer-Chatfield Group, examines executive and board compensation trends, including succession planning for executives and directors and the desirability of equity as part of an executive’s compensation package. In March, 262 directors, chief executive officers, human resources officers and other senior executives responded to the online survey. Additionally, fiscal year 2015 compensation data for CEOs and directors was collected from the proxy statements of 105 publicly traded banks.
Thirty-four percent say their bank is actively seeking to hire talented millennial employees, between the ages of 18 and 34 years, but have trouble attracting them. One-third are satisfied with their bank’s plan to attract younger talent, and hiring millennials is not a focus for the remaining one-third of respondents. Culture plays an important role in attracting young talent, according to the survey.
Other key findings include:
- Sixty percent of survey respondents expect their bank’s CEO and/or senior executives to retire within the next five years. Forty-five percent have both a long-term and emergency succession plan in place for the CEO and all senior executives.
- Respondent opinions are mixed on the value of equity as a form of incentive compensation. More than half of executives, at fifty-four percent, indicate that equity is highly valued as part of their own compensation package, but just 36 percent of all respondents say equity on its own, in the form of stock options or grants, is an effective tool to tie executive interests to that of shareholders. Fifty-three percent of CEOs received equity grants in 2015.
- Tying compensation to performance remains the top challenge identified by respondents, at 46 percent.
- Forty-five percent of respondents indicate that their board most recently raised director pay in 2015 or 2016.
- Almost half of respondents indicate that three or more board members will retire from their position in the next five years.
- Sixty-seven percent indicate the bank has a plan in place to identify prospective new directors.
- Sixty-three percent say their bank will actively seek to create a more diverse board in the next two years.
ABOUT BANK DIRECTOR
Since 1991, Bank Director has served as a leading information resource for the directors and officers of financial institutions. Through its quarterly Bank Director magazine, executive-level research, annual conferences, and its website, BankDirector.com, Bank Director reaches the leaders of the institutions that comprise America’s banking industry. Bank Director is headquartered in Brentwood, Tennessee.
ABOUT COMPENSATION ADVISORS
As thought leaders since 2005, Compensation Advisors, a member of Meyer-Chatfield Group, has served the community banking industry providing guidance on the latest compensation and hiring developments. The firm works with financial institutions across the United States delivering executive and director compensation reviews, pay-for-performance incentive plan structures, equity allocation plans, benefit plan design structures, base salary reviews (company-wide), risk assessments, regulatory updates and compensation committee governance. As industry experts Compensation Advisors conveys insightful strategies and solutions tailored for every bank client’s success. For more information, please visit www.compensationadvisors.com.
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