2016 Compensation Survey: Where Are The Lenders?

May 10th, 2016

compensation-survey-5-10-16.pngThe demise of training programs at the nation’s biggest banks, coupled with an aging Baby Boomer population, is resulting in what could be a mini-crisis for the banking industry. There aren’t enough commercial lenders, according to the bank executives and directors responding to Bank Director’s 2016 Compensation Survey. Without skilled lenders, financial institutions will be hard-pressed to grow their revenue, since lending is still how many banks make most of their money.

Forty percent of survey respondents say that recruiting commercial lenders is a top challenge for 2016. When asked to describe their bank’s efforts to attract and retain commercial lenders, 43 percent say there aren’t enough talented commercial lenders. The same number say they’re willing to pay highly to fill these valuable roles within their organization.

Bank Director’s 2016 Compensation Survey is sponsored by Compensation Advisors, a Gulf Breeze, Florida-based member of Meyer-Chatfield Group. In March, Bank Director surveyed online 262 bank directors, chief executive officers, human resources officers and other senior executives. Fiscal year 2015 compensation data for CEOs and directors was also collected from the proxy statements of 105 publicly traded banks.

Twenty-three percent of respondents say that recruiting younger talent is a key challenge this year. Thirty-four percent say they’re actively seeking talented millennial employees, between the ages of 18 and 34 years, but have trouble attracting them. Of these, 60 percent say that millennials aren’t interested in working for a bank. Fifty-four percent consider their bank’s culture to be too traditional.

One-third have a satisfactory plan in place to attract millennials. The majority of these, at 71 percent, credit a culture that millennials feel comfortable in as the reason for their bank’s success, as well as a clear path for advancement (59 percent) and reputation (55 percent).

The remaining third say hiring millennials is not currently a focus for their institution.

Other key findings:

  • Tying compensation to performance remains the top challenge identified by respondents, at 46 percent.
  • Sixty percent expect the bank’s CEO and/or other 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. 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.
  • 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 their 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.

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

emccormick

Emily McCormick is the Director of Research for Bank Director, an information resource for directors and officers of financial companies.You can follow her on Twitter at twitter.com/ehmccormick or get connected on LinkedIn.