3 minutes
The 2016 CUES Executive Compensation Survey shows healthy gains, positioning credit unions to recruit and retain executive talent.
Pay and bonus increases for CEOs over the year ending in May averaged 7.1 percent, with the average base plus bonus across all asset ranges increasing to $382,175 in 2016, up from $356,900 in 2015 in the same-sample survey (CUs participating in both years to more clearly indicate trends).
In addition, check out these survey snapshots:
CEOs are well-educated and experienced: 93.7 percent of chief executives responding to the survey had 16 years or more experience in the financial services industry; 85.5 percent had at least a four-year college degree; and 18 percent had earned their CCE designation from attending CUES’ CEO Institute.
Earnings are the top performance metric: 61.8 percent of credit unions in the survey rely on earnings as a key indicator in determining bonus/incentive awards for CEOs. Other common factors are board evaluations (56.1 percent), loan growth (49.1 percent), and membership growth (26.9 percent). The least reported factor in assessing bonus pay was regulatory compliance, at 4.7 percent.
Bonuses vary widely, based on asset size: Continuing a longstanding trend, the range of bonuses as a percentage of base pay, among credit unions awarding incentive compensation, increases with asset size and organizational complexity. CEOs of credit unions with less than $30 million in assets earned an average 5.7 percent bonuses, while leaders of $1 billion-plus credit unions earned 22.2 percent bonuses. Among the 83 percent of CEOs who earned a bonus, the average paid over the past year was 15.6 percent.
Bonus eligibility varies for other positions, ranging from 85.7 percent of executive vice presidents and 85.1 percent of branch executives to 76 percent of business development executives and 76.7 percent of top mortgage lending officers.
Four key variables figure most prominently into salary calculations: Statistical modeling by Industry Insights (www.industryinsights.com), Dublin, Ohio, CUES’ survey partner, indicates that 81 percent of the variation in CEO compensation owes to four factors: asset size, number of years on the job in financial services, highest level of education and CCE designation.
The survey summary reports the impact of this modeling in detail. For example, “a CEO working at a credit union that is 1 percent larger than another credit union would typically make 0.42 percent more in total compensation.” These factors have varying impact across executive ranks, with the salaries of chief financial officers, executive vice presidents and chief lending officers receiving the biggest boosts based on years in the industry. Along the same lines, a CFO with the CCE designation typically earns a 23 percent premium and a COO, 14.8 percent, in comparison to peers without the designation. CEOs with the CCE designation earn a 6.3 percent premium in total compensation, on average, all else being equal.
Karen Bankston is a longtime contributor to Credit Union Management and writes about credit unions, membership growth, marketing, operations and technology. She is the proprietor of Precision Prose, Portland, Ore.
