2013 CUES Executive Compensation Survey Executive Summary

Transcription

1 2013 CUES Executive Survey Executive Summary Based on a Survey of Credit Union Executive Administered by enetrix, a D i v i s i o n o f G a l l u p I n c. The views of this manual are those of the authors. They do not necessarily represent the views of CUES. 1

2 About the Authors* Scott Dettmann is founder, Partner, and Principal Consultant of Carlson Dettmann Consulting LLC. He holds a Master's degree in business administration from Drake University and a Bachelor's degree in business administration from the University of Wisconsin. Scott's professional background includes human resource and management positions with several nationally known manufacturing and service concerns. He has over 25 years consulting experience in all phases of wage and salary program development, performance appraisal, surveys, individual and group incentives, position evaluation, and employee involvement programs. In his present position, Scott provides compensation counsel to employers throughout the United States, with particular emphasis on executive compensation matters. He also serves as a part-time adjunct professor in the Graduate School of Banking, at the University of Wisconsin, Madison. Bob Cartwright, SPHR is President and CEO of Intelligent, LLC, a compensation and human resource management consulting firm located in the greater Austin, Texas area. His clientele represent a variety of industries located in Texas and throughout the United States. He has over 30 years of diversified experience in compensation and human resource management and he currently serves as a Board member of the Texas State Council for the Society of Human Resource Management (SHRM) and the Texas Association of Business. He holds a Bachelor s Degree from St Edwards University, and he has accumulated a number of post graduate courses in business management. He is extremely active in the community, serving on a number of boards and committees of several business and professional organizations, and is listed among the International Who s Who for Entrepreneurs *CUES is pleased to partner with Carlson Dettman Consulting LLC, Madison, Wis. and Intelligent LLC, Pflugerville, Texas, to offer CUES Consulting. Learn more about this affordable compensation consulting at cues.org/ccs. 2

3 Table of Contents Section 1. Study Overview Introduction & Methodology Publication of Survey Findings Using Data Key Findings 4 Section 2. Comparison of Repeat Participants (Matched Sample) Percent Change Comparisons 5 Table 1. Percentage Change for CEO 5 Table 2. Percentage Change for All Executive Positions 5 Section 3. Comparison of Non-Matched Sample Participants CEO Comparison by Asset Size 6 Table 3. Median Comparison by Asset Size for CEO 6 Table 4. Mean Comparison by Asset Size for CEO for All Executive Positions 7 Table 5. Median Comparison for All Executive Positions 7 Table 6. Mean Comparison for All Executive Positions 8 Section 4. CEO Profile CEO Experience Levels 9 Figure 1. Years in Credit Union Movement 9 Figure 2. Years in Current Position as CEO CEO Education Levels 10 Figure 3. CEO Education Levels Top Performance Measures Utilized for Bonus/Incentive Awards 11 Figure 4. Top Factors for Determining CEO Bonus/Incentive Award CEO Bonus/Incentive as a Percentage of Salary 12 Figure 5. CEO Average Bonus as Percentage of 12 Section 5. Comparison of Credit Union with Banking Pay Patterns - of Select Executive Positions Methodology Comparison of Credit Union with Banking 14 Table 7. Chief Executive Officer (CEO) Comparison 14 Table 8. Chief Operating Officer (COO) Comparison 14 Table 9. Chief Financial Officer (CFO) Comparison 14 Table 10. Chief Lending Officer (CLO) Comparison 14 Table 11. Branch/Member Services Executive Comparison 15 Table 12. Human Resources Executive Comparison 15 3

4 Section 1. Study Overview 1.1 Introduction and Methodology CUES has been a trusted source for information about credit union executive compensation for more than 40 years. This report summarizes the results of the 2013 CUES Executive Survey. This report contains all data submitted between May 1, 2012, and April 30, The findings are based on the responses of 443 CUES member and non-member credit unions. Corporate credit unions are not surveyed or included in the results. All questionnaire data have been handled in the strictest confidence by enetrix. All data used to compile this report and all online reports are the property of CUES. 1.2 Publication of Survey Findings The database for the online report is updated as credit unions add or update salary information throughout the year. Because data is being accepted year-round, current data is always available throughout the year with the online reports. 1.3 Using Data We suggest that the most appropriate way to use the data in this survey is to: 1. Compare your credit union s executive pay practice to the median, average and percentile salaries for the credit union grouping relevant to you. 2. Consider how well your credit union matches the asset size, loan portfolio size, membership size and number of employees of other credit unions included in that particular data cut. 3. Select the target percentile most appropriate to your compensation philosophy. 4. Use the banking industry summaries as a reference point to guide your pay policies. 4

5 1.4 Key Findings Sixty-one percent (61%) of the credit unions that participated in the 2013 survey also participated in the 2012 survey. As a result, this enables us to calculate a true change in salaries of repeat participants. For these credit unions we found the following changes: 6.43% increase in CEO base salary (6.43% in 2012 vs. 4.37% in 2011). For this same time period, the $600 to $999 million asset size group had the largest average increase at 9.41%. Plus Bonus/Incentive Paid 8.40% increase in CEO base salary plus bonus/incentive paid (5.93% in 2012 vs. 5.01% in 2011). For this same time period, the $600 to $999 million asset size group had the largest average increase in salary plus bonus/incentive paid at 13.07%. Total 8.18% increase in CEO total compensation (5.83% in 2012 vs. 5.07% in 2011). For this same time period, the $600 to $999 million asset size had the largest average increase in total compensation at 13.55%. After several years of decline, the percentage increase in base salary has been increasing year to year. Both the percentage increase for base plus bonus/incentive paid and percentage increase in total compensation are slightly higher than last year s findings. Please refer to Table 1 and 2 below on page five. A total of 443 credit unions participated in the survey between May 1, 2012, and April 30, Of those reporting, 427 provided CEO data. Average base plus bonus compensation for CEOs ranged from $85,366 for credit unions with assets less than $30 million to $552,318 for credit unions with assets greater than $1 billion. The average CEO total compensation for all Credit Unions reported was $256,339. Non-CEO executive compensation increases in total compensation ranged from 4.75% to 9.26% for repeat participants. The greatest percentage change was reported for the Branch / Member Services Executive at 9.26% The top factors for determining CEO bonus/incentive awards remain the same as the last few years with earnings, board evaluation, and loan growth rounding out the top three factors. 5

6 Section 2. Comparison of Repeat Participants 2.1 Percent Change Comparisons Percentage Change for CEO The following table shows the average percent change for individual CEO compensation of repeat participants. Table 1. Percent Change for CEO By Asset Size % Change for Base % Change for Base + Bonus % Change for Total Comp All Asset Categories 6.43% 8.40% 8.18% < $30 Million *NMS NMS NMS $30-49 Million 3.82% 3.33% 3.60% $50-69 Million NMS NMS NMS $70-99 Million 5.15% 6.92% 5.05% $ Million 4.07% 5.32% 5.37% $ Million 6.53% 6.67% 5.42% $ Million 8.41% 9.98% 9.77% $ Million 9.41% 13.07% 13.55% $1 Billion or more 7.15% 11.60% 12.16% * NMS No Meaningful Sample, fewer than 10 respondents Percentage Change for All Executive Positions The percentage change in total compensation remains similar to the year-to-year changes for most positions. The exception to this is the Branch/Member Services Executive which is about 7 percentage points higher than last year. Table 2. Percent Change for All Executive Positions % Change for Base + % Change for Total Position % Change for Base Bonus Comp Chief Executive Officer 6.43% 8.40% 8.18% Executive Vice President 5.97% 7.88% 8.16% Second Executive Officer 6.12% 7.90% 8.01% Chief Operations Officer 5.74% 6.64% 7.22% Chief Financial Officer 6.09% 7.53% 7.67% Chief Lending Officer 6.14% 7.55% 7.41% Branch/Member Services Executive 6.51% 9.18% 9.26% Marketing Executive 3.34% 4.68% 4.75% Human Resources Executive 5.99% 7.17% 7.09% Information Systems/E-Commerce Executive 5.66% 7.01% 6.47% Business Development Executive 3.18% 3.96% 4.06% Business Lending Executive 2.37% 6.16% 6.29% Senior CUSO Executive 4.76% 7.10% 6.89% Collections Officer NMS NMS NMS Legal Counsel Executive 6.01% 8.20% 8.25% 6

7 Section 3. Comparison of Non-Matched Participants 3.1 CEO Comparison by Asset Size The tables below present a comparison of salaries reported by survey participants from the two past survey years. This is a useful way to compare changes from one year to the next. A word of caution: These tables are not limited to repeat participants. As a result, the sample sizes differ for each year. Some credit unions may have shifted into the next higher range for asset size, which affects the comparisons. Therefore, year-to-year comparisons have limited validity for policy purposes. Table 3. Median Comparison by Asset Size for CEO Median Median + Bonus By Asset Size 2013 Survey 2012 Survey % Change 2013 Survey 2012 Survey % Change All Asset Categories $180,250 $200, % $199,988 $214, % < $30 Million $82,000 $85, % $86,602 $88, % $30-49 Million $95,867 $102, % $97,500 $108, % $50-69 Million $111,250 $103, % $115,078 $111, % $70-99 Million $123,048 $125, % $123,883 $136, % $ Million $149,395 $143, % $161,500 $155, % $ Million $221,369 $212, % $239,357 $230, % $ Million $264,992 $251, % $281,493 $270, % $ Million $325,500 $305, % $378,000 $346, % $1 Billion or more $449,948 $428, % $541,820 $512, % * NMS No Meaningful Sample, fewer than 10 respondents Table 4. Mean Comparison by Asset Size for CEO Mean Mean + Bonus By Asset Size 2013 Survey 2012 Survey % Change 2013 Survey 2012 Survey % Change All Asset Categories $223,760 $228, % $256,339 $260, % < $30 Million $82,632 $83, % $85,366 $86, % $30-49 Million $97,875 $105, % $101,976 $110, % $50-69 Million $115,206 $109, % $120,780 $115, % $70-99 Million $125,315 $128, % $132,949 $137, % $ Million $157,842 $153, % $175,499 $166, % $ Million $230,204 $218, % $255,883 $244, % $ Million $271,222 $254, % $302,725 $282, % $ Million $329,924 $313, % $381,954 $366, % $1 Billion or more $450,464 $434, % $552,318 $523, % * NMS No Meaningful Sample, fewer than 10 respondents 7

8 3.2 for All Executive Positions The tables below present a compensation comparison of all participants in the 2012 and 2013 survey. It is most useful to compare salary increases to credit unions that match yours in asset size rather than comparing credit unions of all sizes in aggregate as shown in the table below. Again, we caution that the sample is not controlled for year-to-year comparisons. Table 5. Median Comparison for All Executive Positions Median Median + Bonus Position 2013 Survey 2012 Survey % Change 2013 Survey 2012 Survey % Change Chief Executive Officer $180,250 $200, % $199,988 $214, % Executive Vice President $130,000 $135, % $151,456 $145, % Second Executive Officer* $125,668 $120, % $135,580 $125, % Chief Operations Officer $118,648 $115, % $126,203 $123, % Chief Financial Officer $124,848 $120, % $132,817 $125, % Chief Lending Officer $102,624 $103, % $108,300 $110, % Branch/Member Services Executive $97,682 $93, % $102,835 $98, % Marketing Executive $100,700 $94, % $108,953 $101, % Human Resources Executive $105,720 $99, % $115,783 $107, % Information Systems/E-Commerce $120,008 $116, % $131,432 $122, % Executive Business Development Executive $89,169 $89, % $90,000 $96, % Business Lending Executive $110,000 $106, % $119,479 $114, % Senior CUSO Executive $147,756 $148, % $178,452 $162, % Collections Officer $61,828 $68, % $63,318 $69, % Legal Counsel Executive $161,460 $150, % $169,091 $156, % Regional Branch Management Executive $87,189 N/A N/A $100,211 N/A N/A Top Mortgage Lending Officer $98,850 N/A N/A $111,087 N/A N/A Top Operations Officer $62,000 N/A N/A $62,000 N/A N/A *The survey does not ask for salary levels of the Second Executive Officer as a stand-alone position. Instead, users are asked to identify which job title (Executive Vice President, CFO, etc.) is identified as the second officer. This means, however, there is some double reporting in the survey results because a position could be reported as both a second officer and as another executive position. **Several positions on the survey were updated or added in 2012 and as a result there are some positions which did not have data from the previous year s report. 8

9 Table 6. Mean Comparison for All Executive Positions Mean Mean + Bonus Position 2013 Survey 2012 Survey % Change 2013 Survey 2012 Survey % Change Chief Executive Officer $223,760 $228, % $256,339 $260, % Executive Vice President $150,568 $154, % $167,852 $169, % Second Executive Officer* $141,008 $136, % $158,376 $151, % Chief Operations Officer $132,933 $129, % $147,580 $143, % Chief Financial Officer $136,248 $130, % $151,536 $143, % Chief Lending Officer $114,309 $112, % $125,056 $122, % Branch/Member Services Executive $108,654 $102, % $119,898 $112, % Marketing Executive $104,234 $109, % $114,305 $119, % Human Resources Executive $115,870 $102, % $127,904 $111, % Information Systems/E-Commerce Executive $127,437 $108, % $139,619 $118, % Business Development Executive $91,142 $122, % $99,441 $133, % Business Lending Executive $112,965 $96, % $127,362 $106, % Senior CUSO Executive $159,523 $146, % $190,956 $169, % Collections Officer $74,128 $72, % $81,425 $76, % Legal Counsel Executive $148,194 $147, % $157,870 $163, % Regional Branch Management Executive $93,266 N/A** N/A** $103,642 N/A** N/A** Top Mortgage Lending Officer $105,149 N/A** N/A** $127,966 N/A** N/A** Top Operations Officer $72,363 N/A** N/A** $76,864 N/A** N/A** *The survey does not ask for salary levels of the Second Executive Officer as a stand-alone position. Instead, users are asked to identify which job title (Executive Vice President, CFO, etc.) is identified as the second officer. This means, however, there is some double reporting in the survey results because a position could be reported as both a second officer and as another executive position. **Several positions on the survey were updated or added in 2012 and as a result there are some positions which did not have data from the previous year s report. 9

10 Section 4. CEO Profile 4.1 CEO Experience Levels Eighty-six percent (86.1%) of responding CEOs have been involved in the credit union movement for more than 15 years. Approximately 0.9% have been involved in the credit union movement for less than five years. Figure 1. Approximately seventeen percent (16.9%) of credit unions participating in the survey have a CEO who has been in his or her current position for less than five years. Approximately proximately 46.5% of CEOs have been in their current positions between 5 and 15 years and approximately 36.5% of CEOs have been in their current position for 15 years or more. What this shows is that there are a lot of experienced, dedicated and tenured executives working in the credit union movement today. What this graph also indicates is that there will be a strong core base of experienced CEO s in the credit union industry for many years to come with approximately 59.2% of them serving with greater than 5 years of experience and less than 20 years of experience as a CEO. Figure 2. 10

11 4.2 CEO Educational Levels Credit union executives are well educated. The percentage reporting a master s degree or higher is at 31.1%, which is only slightly (0.8%) higher than Adding in those who have bachelor s degrees, the percentage of executives with 4 year college degrees are higher soars to 86.1%. Figure 3. 11

12 4.3 Top Performance Measures Utilized for Bonus/Incentive Awards Respondents were asked to indicate the top three performance measures used to determine the CEO s bonus/incentive award for The measures indicated are typically utilized in a formula that will determine the amount of incentive that will be paid based on recorded performance of the prior year. Interestingly enough, these top three performance measures have remained the same over the last few years. The 2013 top three performance measures reported were: 1. Earnings (59.6%) 2. Board Evaluation (51.6%) 3. Loan growth (43.0%) Other key performance measures utilized by credit unions in 2013 to determine CEO bonus/incentive awards that were reported in the survey included: 4. Membership Growth (21.8%) 5. Other (Define what other is?) (19.6%) 6. Membership Satisfaction (17.6) Figure 4. 12

13 4.4 CEO Bonus/Incentive as Percentage of Salary CEO bonus as a percentage of salary tends to rise as the breadth and scope of the CEO s job becomes bigger and the credit union asset size increases. As we have seen over the last few years, there continues to be an increasing emphasis on variable pay (Bonus/Incentive Pay) for the CEO and other executive positions. This type of variable pay is common in most other industry sectors and they tend to place a higher emphasis on at-risk pay. As for credit union CEOs, variable at risk pay remains relatively modest in 2013 as compared to other industries whose variable pay tends to run significantly higher. Figure 5. 13

14 Section 5. of Select Executive Positions Comparison of Credit Union with Banking Pay Patterns 5.1 Methodology Comparative compensation data for five select executive positions is presented here. Banking industry data was drawn from two current, independent compensation survey sources. These sources are: Independent Community Bankers of America (ICBA) Survey American Bankers Association (ABA) Survey The method of comparison involved the selection of five comparable executive positions included in the above banking surveys as well as the CUES Executive Survey and the development of five asset categories to provide appropriate comparisons. enetrix also conducts the ICBA and ABA surveys as online services for those associations. data was averaged, by position, for the two banking surveys to provide meaningful comparisons to the CUES executive survey data. It is important to note the comparisons made within this section consider only cash compensation (i.e., base salaries and total compensation). Benefits, long-term incentives (i.e., phantom stock and other compensation vehicles) and perquisites are not included in the analysis which will tend to drive the total compensation picture higher for banking executives. 5.2 Comparison of Credit Union with Banking Table. 7. Chief Executive Officer (CEO) Comparison CU Median Bank Median CU Median Total Bank Median Total % Change Asset Size < $100 Million $101,909 $130,866 $106,500 $148, % $100 to $249 Million $153,300 $196,200 $173,605 $221, % $250 to $499 Million $236,125 $221,053 $260,552 $247, % $500 to $999 Million $325,000 $275,206 $366,068 $344, % > $1 Billion $449,948 $383,750 $541,820 $483, % As shown in this graph, credit union CEOs tend to be paid higher in median base pay when the asset size of the organization is $250 Million or higher. 14

15 Table 8. Chief Operating Officer (COO) Comparison CU Median Bank Median CU Median Total Bank Median Total % Change Asset Size < $100 Million $62,000 $94,923 $66,500 $115, % $100 to $249 Million $93,636 $116,622 $101,500 $146, % $250 to $499 Million $124,405 $148,000 $138,324 $154, % $500 to $999 Million $160,800 $184,150 $175,413 $207, % > $1 Billion $219,571 $261,000 $239,893 $317, % Table 9. Chief Financial Officer (CFO) Comparison CU Median Bank Median CU Median Total Bank Median Total % Change Asset Size < $100 Million $71,000 $110,000 $73,470 $120, % $100 to $249 Million $90,076 $113,500 $97,600 $146, % $250 to $499 Million $125,000 $132,896 $138,106 $154, % $500 to $999 Million $162,723 $163,674 $182,125 $198, % > $1 Billion $210,225 $226,248 $236,900 $258, % Table 10. Chief Lending Officer (CLO) Comparison CU Median Bank Median CU Median Total Bank Median Total % Change Asset Size < $100 Million $57,414 $99,326 $60,165 $103, % $100 to $249 Million $82,360 $114,301 $86,171 $122, % $250 to $499 Million $103,560 $127,559 $104,380 $137, % $500 to $999 Million $141,200 $160,000 $150,609 $178, % > $1 Billion $172,781 $192,313 $195,218 $215, % Table 11. Branch/Member Services Executive Comparison CU Median Bank Median CU Median Total Bank Median Total % Change Asset Size < $100 Million $49,125 NMS $50,040 NMS NMS $100 to $249 Million $69,000 NMS $72,080 NMS NMS $250 to $499 Million $86,715 $95,000 $91,633 $95, % $500 to $999 Million $121,555 $83,281 $136,300 $88, % > $1 Billion $152,906 $129,223 $172,761 $149, % * NMS No Meaningful Sample 15

16 Table 12. Human Resources Executive Comparison CU Median Bank Median CU Median Total Bank Median Total % Change Asset Size < $100 Million $55,900 NMS $57,576 NMS NMS $100 to $249 Million $74,011 $78,450 $76,453 $78, % $250 to $499 Million $94,092 $83,500 $99,548 $83, % $500 to $999 Million $119,826 $97,725 $125,492 $105, % > $1 Billion $154,000 $137,350 $174,525 $145, % * NMS No Meaningful Sample, fewer than 10 respondents As the above graph indicate, certain credit union executives tend to be paid similarly or higher in median base pay when the asset size of the organization is $250 Million or higher. Conclusion The need for objective survey data and the review of executive pay based on the size and scope of the organization and the need for key performance measurements for use in determining atrisk pay in executive compensation pay decisions is very important today and is underscored by recent changes in executive compensation reporting requirements for non-profit organizations such as credit unions. The upshot of those changes is that it is incumbent on credit union board of directors to ensure that their executives are fairly and reasonably paid, but not overpaid. By utilizing survey data found in the CUES Executive Survey to conduct a total cash compensation review of your highest paid employees, by utilizing a third party compensation consulting firm to conduct a study you can avoid conflict of interest issues. A systematic review process to determine those salaries, bonuses, and other benefits, credit unions and their respective boards take a giant step to support the rebuttable presumption of reasonableness when they strategically review the compensation paid to their executives. 16

17 The survey is accessed through the web at An annual subscription provides many useful features including: Salary information on a wide range of positions and asset size Ability to customize results, using criteria that is important to you Offer unlimited access to vital data, reports and customer support Tools for year round assistance such as: o Planning Report helping you to plan for the future o Philosophy Toolkit to help establish the goals and objectives of your compensation program. CUES Job Write - A tool which enables you to create job descriptions using the job titles and descriptions in the CUES Employee Salary Survey as a foundation Any questions, comments or suggestions regarding the survey may be directed to Dana Murn, CUES Products and Services Coordinator at or [email protected] 17