nafcu executive compensation & benefits survey – initial 2011 findings (credit union...

1

2011 NAFCU-BFB Survey of Federal Credit Union

Executive Benefits and Compensation

Presented byPresented by

Jack E. ClarkJack E. ClarkClark & Chase Research, Inc.Clark & Chase Research, Inc.

June 30, 2011 June 30, 2011

2

NAFCU

NAFCU Services

Burns-Fazzi, Brock

Sponsored by:Sponsored by:

3•• How we did the surveyHow we did the survey•• Select FindingsSelect Findings

–– Top ExecutiveTop Executive•• Base SalaryBase Salary•• BonusBonus•• Total CompensationTotal Compensation•• Percent Change in Base SalaryPercent Change in Base Salary•• Percent of 2010 Bonus AchievedPercent of 2010 Bonus Achieved

–– Reviewing Executive Compensation Reviewing Executive Compensation PlansPlans

–– Nonqualified Benefit Plans for Top Nonqualified Benefit Plans for Top ExecutivesExecutives

–– Cars and Car AllowancesCars and Car Allowances

4Things to consider when Things to consider when

looking at survey resultslooking at survey results•• What a survey is ... and what it is not What a survey is ... and what it is not •• What makes a good survey What makes a good survey

–– Sample SizeSample Size–– RepresentativeRepresentative

•• Relationship between Asset Size and Relationship between Asset Size and CompensationCompensation

•• Using more than one source of survey Using more than one source of survey information information –– why it makes sense & why it makes sense & things to consider when comparing things to consider when comparing themthem

5

How We Did It How We Did It

6• In 2011, all Federal Credit Unions

were invited to participate• Survey Completed April 13 - May 5• 353 Credit Unions participated • Information about 930 Executives

• 353 Top Executives• 227 #2 Executives• 160 #3 Executives• 114 #4 Executives• 76 #5 Executives

72011 NAFCU2011 NAFCU--BFB SurveyBFB Survey

Population vs. Sample by U.S. RegionPopulation vs. Sample by U.S. Region

FCUsFCUs** SurveySurvey

NortheastNortheast 33%33% 28%28%SoutheastSoutheast 19%19% 22%22%

MidwestMidwest 31%31% 31%31%WestWest 17%17% 20%20%

*Source: NCUA Data Query, May 23, 2011*Source: NCUA Data Query, May 23, 2011

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Federal CUs*Federal CUs*CUCU’’ss SampleSample

4,5904,590 353353<$10M<$10M 41%41% 14%14%

$10M $10M –– <20M<20M 15%15% 14%14%$20M $20M –– <40M <40M 14%14% 14%14%$40M $40M –– <75M <75M 10%10% 15%15%

$75M $75M –– <150M <150M 8%8% 12%12%$150M $150M –– <335M <335M 6%6% 14%14%$335M $335M –– <750M <750M 4%4% 9%9%

$750M+$750M+ 3%3% 8%8%


2011 NAFCU2011 NAFCU--BFB SurveyBFB Survey Population vs. Sample by Asset SizePopulation vs. Sample by Asset Size

9In addition,In addition,Data is Data is weightedweighted based onbased on

–– Total AssetsTotal Assets**–– Number of EmployeesNumber of Employees**–– RegionRegion**–– NAFCU MembershipNAFCU Membership

Result: Sample representing Result: Sample representing Federal Credit UnionsFederal Credit Unions


10DefinitionsDefinitions What is a Percentile?What is a Percentile?

LowestLowest HighestHighestValueValue ValueValue25th25th

PercentilePercentile

50th50thPercentilePercentile(Median)(Median)

75th75thPercentilePercentile

11Asset GroupsAsset Groups

SampleSample Fed CUsFed CUsAsset GroupAsset Group SizeSize RepresentedRepresented

<$10M<$10M 4848 1,8681,868$10M $10M –– <20M<20M 5151 705705$20M $20M –– <40M<40M 4949 625625$40M $40M –– <75M<75M 5454 474474

$75M $75M –– <150M<150M 4242 373 373 $150M $150M –– <335M<335M 4949 269269$335M $335M –– <750M<750M 3232 161161

$750M+$750M+ 2828 115115

We will review results by asset sizeWe will review results by asset size

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Expressed in Millions($)Expressed in Millions($)$10M $10M $20M$20M $40M$40M $75M $75M $150M $150M $335M $335M $750M $750M

CU Assets:CU Assets: <$10M<$10M <20M<20M <40M<40M <75M<75M <150M<150M <335M<335M <750M<750M PlusPlusPercentilePercentile

9090THTH 9 9 18 18 36 36 66 66 135 135 289289 643643 2,5502,5507575THTH 8 8 17 17 32 32 58 58 116116 271271 609609 1,5441,5446060THTH 6 6 15 15 29 29 51 51 109 109 237237 467467 1,2661,2665050THTH 5 5 13 13 29 29 49 49 101101 225225 425425 1,0301,0304040THTH 5 5 12 12 26 26 44 44 9292 207207 420420 889 889 2525THTH 4 4 12 12 24 24 44 44 8888 188188 396396 8338331010THTH 2 2 11 11 22 22 43 43 7878 158158 370370 803803

Asset PercentilesAsset PercentilesFederal CU Asset SizeFederal CU Asset Size

13

SelectedSelected FindingsFindings

14

2011 Base Salary2011 Base Salary for Top Executivefor Top Executive

15Top ExecutiveTop Executive

2011 Base Salary2011 Base SalarySalary Salary Expressed in Thousands($)Expressed in Thousands($)

$10M $10M $20M$20M $40M$40M $75M $75M $150M $150M $335M $335M $750M $750M CU Assets:CU Assets: <$10M<$10M <20M<20M <40M<40M <75M<75M <150M<150M <335M<335M <750M<750M PlusPlusPercentilePercentile

9090THTH 65 65 78 78 103 103 120 120 201 201 230230 274274 5735737575THTH 55 55 67 67 86 86 107 107 161161 213213 267267 4164166060THTH 52 52 64 64 82 82 100 100 131 131 185185 247247 3613615050THTH 47 47 60 60 80 80 98 98 125125 175175 230230 3613614040THTH 42 42 57 57 76 76 95 95 125125 170170 216216 350 350 2525THTH 37 37 51 51 69 69 90 90 110110 150150 202202 3083081010THTH 29 29 49 49 63 63 84 84 7070 140140 184184 277 277

17

2011 2011 Potential BonusPotential Bonus

for Top Executivefor Top Executive

18

All All FCUsFCUs 47%47%<$10M<$10M 48%48%

$10M $10M –– <20M<20M 30%30%$20M $20M –– <40M <40M 35%35%$40M $40M –– <75M <75M 49%49%

$75M $75M –– <150M <150M 61%61%$150M $150M –– <335M <335M 62%62%$335M $335M –– <750M <750M 69%69%

$750M+$750M+ 83%83%

2011 Bonus Plans2011 Bonus PlansTop ExecutiveTop Executive

Percent of Top Execs Who Have a Bonus PlanPercent of Top Execs Who Have a Bonus Plan

192011 Bonus Percent2011 Bonus PercentTop ExecutiveTop Executive

0

10

20

30

40

50

60

0 5 9 13 18 23 32 43 51 72 109 151 225 300 454 1,030

Total Assets in Millions

Bon

us P

erce

ntag

e

Although Although bonus percentages bonus percentages tend to increase as tend to increase as total assets increase, the relationship is not that total assets increase, the relationship is not that strong strong –– the portion of compensation that is at the portion of compensation that is at risk can vary quite a lot even among credit unions risk can vary quite a lot even among credit unions of similar size. of similar size.

20

Expressed as Expressed as PercentPercent of Base Salaryof Base Salary$10M $10M $20M$20M $40M$40M $75M $75M $150M $150M $335M $335M $750M $750M

CU Assets:CU Assets: <$10M<$10M <20M<20M <40M<40M <75M<75M <150M<150M <335M<335M <750M<750M PlusPlusPercentilePercentile

9090THTH 3% 3% 10% 10% 10% 10% 16% 16% 10% 10% 30%30% 25%25% 50%50%7575THTH 1% 1% 2% 2% 3% 3% 6% 6% 10%10% 20%20% 20%20% 50%50%6060THTH 1% 1% 0% 0% 0% 0% 4%4% 5%5% 10%10% 15%15% 28%28%5050THTH 0% 0% 0% 0% 0% 0% 0% 0% 5%5% 9%9% 10%10% 20%20%4040THTH 0% 0% 0% 0% 0% 0% 0% 0% 1%1% 5%5% 5%5% 18% 18% 2525THTH 0% 0% 0% 0% 0% 0% 0% 0% 0%0% 0%0% 0%0% 7%7%1010THTH 0% 0% 0% 0% 0% 0% 0% 0% 0%0% 0%0% 0%0% 0%0%

Top ExecutiveTop Executive 2011 Bonus Percent2011 Bonus Percent

21

2011 2011 Potential Total Potential Total CompensationCompensation

(Base & Bonus)(Base & Bonus) for for

Top ExecutiveTop Executive

22Top ExecutiveTop Executive2011 Potential 2011 Potential

Total CompensationTotal Compensation

Base Salary & BonusBase Salary & BonusCompensation Compensation Expressed in Thousands($)Expressed in Thousands($)





Base Salary & BonusBase Salary & BonusCompensation Expressed in Thousands($)Compensation Expressed in Thousands($)


9090THTH 65 65 78 78 108 108 129 129 201 201 264264 315315 7857857575THTH 56 56 70 70 87 87 110 110 164 164 237237 296296 5415416060THTH 52 52 64 64 84 84 106 106 142 142 213213 280280 5285285050THTH 47 47 63 63 80 80 104 104 138138 193193 259259 4774774040THTH 43 43 58 58 78 78 98 98 125125 175175 240240 390 390 2525THTH 37 37 51 51 71 71 92 92 116 116 165165 215215 3503501010THTH 3030 49 49 65 65 86 86 7474 145145 198198 316 316



Base Salary & BonusBase Salary & BonusCompensation Expressed in Thousands($)Compensation Expressed in Thousands($)



Inter-quartile Range (IQR)

25

2010 to 2011 2010 to 2011 Percent Change inPercent Change in

Base SalaryBase Salary for Top Executivefor Top Executive

26Top ExecutiveTop Executive2010 to 2011 Change 2010 to 2011 Change

in Base Salaryin Base Salary


9090THTH 3% 3% 8% 8% 5% 5% 8% 8% 21% 21% 15% 15% 13% 13% 7%7%7575THTH 3% 3% 5% 5% 4% 4% 5% 5% 5% 5% 5% 5% 4% 4% 5%5%6060THTH 2% 2% 3% 3% 2% 2% 4% 4% 3% 3% 5% 5% 3% 3% 5%5%5050THTH 2% 2% 2% 2% 1% 1% 3% 3% 1% 1% 4% 4% 3% 3% 4%4%4040THTH 0% 0% 2% 2% 0% 0% 2% 2% 0% 0% 4% 4% 2% 2% 3%3%2525THTH 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 0% 0% 3%3%1010THTH 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%0%

Percent Change from 2010 to 2011Percent Change from 2010 to 2011

28

Last YearLast Year’’s (s (‘‘10) Bonus 10) Bonus for Top Executivefor Top Executive

Actual as a PercentActual as a Percent of Potentialof Potential BonusBonus

29

PercentilePercentile 201020109090thth 151%151%7575thth 114%114%6060thth 100%100%5050thth 100%100%4040thth 96%96%2525thth 80%80%1010thth 27%27%AverageAverage 107%107%

Top ExecutiveTop Executive % of Bonus Plan Received% of Bonus Plan Received20102010

30

PercentilePercentile 20102010 200920099090thth 151%151% 109%109%7575thth 114%114% 100%100%6060thth 100%100% 97%97%5050thth 100%100% 91%91%4040thth 96%96% 87%87%2525thth 80%80% 63%63%1010thth 27%27% 0%0%AverageAverage 107%107% 79%79%

Top ExecutiveTop Executive % of Bonus Plan Received% of Bonus Plan Received2010 vs. 20092010 vs. 2009

31

Reviewing Reviewing Executive Executive

CompensationCompensation PlansPlans

32Executive Executive CompensationCompensation Review of Compensation PlanReview of Compensation Plan

4%

14%

Yes, currently reviewing

Yes, planning to review

““Is your credit union planning to review your Is your credit union planning to review your overall executive compensation plan?overall executive compensation plan?””

33

““Is your credit union planning to review your Is your credit union planning to review your overall executive compensation plan?overall executive compensation plan?””

$10M $10M $20M$20M $40M$40M $75M $75M $150M $150M $335M $335M $750M $750M CU Assets:CU Assets: <$10M<$10M <20M<20M <40M<40M <75M<75M <150M<150M <335M<335M <750M<750M PlusPlus

Yes, currently reviewingYes, currently reviewing1% 1% 4% 4% 2% 2% 7% 7% 1% 1% 17%17% 11%11% 31%31%

Yes, planning to reviewYes, planning to review9% 9% 8% 8% 17% 17% 20% 20% 23% 23% 27%27% 18%18% 12%12%

Executive Executive CompensationCompensation Review of Compensation PlanReview of Compensation Plan

34

How many Federal credit How many Federal credit unions have executives with unions have executives with Nonqualified benefits plans?Nonqualified benefits plans?

35DefinitionsDefinitions Nonqualified Plan?Nonqualified Plan?

457(b) SERP457(b) SERP•• Section of the IRS CodeSection of the IRS Code•• Government & taxGovernment & tax--exempt executives exempt executives •• Defer income up to a maximum amountDefer income up to a maximum amount•• Employee contributes in addition to qualified Employee contributes in addition to qualified

plans such as a 401(k)plans such as a 401(k)457(f) SERP457(f) SERP•• For select execs of taxFor select execs of tax--exempt organizationsexempt organizations•• No limits on contributionsNo limits on contributions•• Both corporation and employee can contribute Both corporation and employee can contribute

36DefinitionsDefinitions Nonqualified Plan?Nonqualified Plan?

SplitSplit--dollar Insurancedollar Insurance•• Way of paying for Life InsuranceWay of paying for Life Insurance•• Arranged between Employer and ExecutiveArranged between Employer and Executive

•• Split premium, cash values, policy Split premium, cash values, policy ownership and death benefitsownership and death benefits

•• Cash value can be used as supplemental Cash value can be used as supplemental retirement income and death benefit paid to retirement income and death benefit paid to beneficiarybeneficiary

•• Upon death, employer receives total premiums Upon death, employer receives total premiums paid and beneficiary receives the balancepaid and beneficiary receives the balance

Severance PlanSeverance Plan

37

20% 21%31%

71%83%

94%

20%

49%

<$10M $10M -<$20M

$20M -<$40M

$40M -<$75M

$75M -<$150M

$150M -<$335M

$335M -<$750M

$750M+

% o

f Fed

eral

CU

s

By Asset SizeBy Asset Size

Federal Credit UnionsFederal Credit Unions Percent with Nonqualified Percent with Nonqualified Plans (Plans (IncludingIncluding Severance) Severance)

38

11% 10%19%

53%

74%

94%

45%

14%

<$10M $10M -<$20M

$20M -<$40M

$40M -<$75M

$75M -<$150M

$150M -<$335M

$335M -<$750M

$750M+

% o

f Fed

eral

CU

s


Federal Credit UnionsFederal Credit Unions Percent with Nonqualified Percent with Nonqualified Plans (Plans (ExcludingExcluding Severance) Severance)

39

10% 9% 16% 11% 14%35%

10%42%

60%

59%

35%14%

1%<.5%<.5%

4%

<$10M $10M -<$20M

$20M -<$40M

$40M -<$75M

$75M -<$150M

$150M -<$335M

$335M -<$750M

$750M+

% o

f Fed

eral

CU

s

2+One


Federal Credit UnionsFederal Credit Unions How Many Executives Have How Many Executives Have NQ Plans? (NQ Plans? (Excl.Excl. Severance) Severance)

40Types of Nonqualified PlansTypes of Nonqualified PlansTop ExecutiveTop Executive


SERP 457(b)SERP 457(b) 5% 5% 4% 4% 7% 7% 12% 12% 14% 14% 38%38% 44%44% 75%75%SERP 457(f)SERP 457(f) <.5%<.5% 3% 3% <.5%<.5% 15% 15% 16% 16% 15%15% 41%41% 40%40%SplitSplit--DollarDollar <.5% <.5% <.5% <.5% <.5%<.5% 2% 2% 15% 15% 10%10% 6%6% 5%5%SeveranceSeverance 6% 6% 10% 10% 17% 17% 25% 25% **8% 8% 47%47% **34%34% **36%36%

Have, but noneHave, but noneof the aboveof the above 10% 10% 7% 7% <.5% <.5% <.5%<.5% 1% 1% 2%2% <.5%<.5% <.5%<.5%

Do not haveDo not haveNQ plansNQ plans 80% 80% 80% 80% 79% 79% 69% 69% 51% 51% 29%29% 17%17% 6%6%

Base: All Federal Credit UnionsBase: All Federal Credit Unions

** Several of those completing the survey (15% of the overall sampSeveral of those completing the survey (15% of the overall sample) did not know whether or not the le) did not know whether or not the top executive had a severance plan in place. This was especialltop executive had a severance plan in place. This was especially true for these asset groups.y true for these asset groups.

43Nonqualified PlansNonqualified Plans Reviewing/Considering Them?Reviewing/Considering Them?

““Is your credit union reviewing your current Nonqualified benefitIs your credit union reviewing your current Nonqualified benefit plans for executives or considering offering them in the future?plans for executives or considering offering them in the future?””


Yes, reviewing existing NQ PlansYes, reviewing existing NQ Plans4% 4% 2% 2% 1% 1% 4% 4% 2% 2% 19%19% 8%8% 7%7%

Yes, considering offering NQ PlansYes, considering offering NQ Plans3% 3% <.5%<.5% 3% 3% 7% 7% 4% 4% 11%11% 14%14% 3%3%

44

Cars and Car Cars and Car AllowanceAllowance

for for Federal Credit Federal Credit

Union Top Union Top ExecutivesExecutives

45Top ExecutiveTop Executive Car/ Car AllowanceCar/ Car Allowance


CarCar * * 1% 1% 4% 4% 13% 13% 32% 32% 31%31% 34%34% 28%28%AllowanceAllowance * * 3% 3% 10% 10% 15% 15% 19% 19% 17%17% 34%34% 44%44%

BothBoth * * 3% 3% 6% 6% 2% 2% 2% 2% 5%5% 17%17% 7%7%NeitherNeither 99%+ 99%+ 94% 94% 79% 79% 70% 70% 47%47% 47%47% 14%14% 22%22%

* Less than .5%

46Car/Car AllowanceCar/Car Allowance

PercentilePercentile MonthlyMonthly YearlyYearly9090thth $1,000$1,000 $12,000$12,0007575thth $850$850 $10,200$10,2006060thth $700$700 $8,400$8,4005050thth $542$542 $6,504$6,5044040thth $500$500 $6,000$6,0002525thth $325$325 $3,900$3,9001010thth $200$200 $2,400$2,400

Base: Those with a car or car allowance (n=122)Base: Those with a car or car allowance (n=122)

Top ExecutivesTop Executives

48

Looking atLooking at

Survey Results Survey Results

49When Looking at Survey DataWhen Looking at Survey Data

Surveys are Surveys are estimatesestimates of the larger of the larger population (Federal Credit Unions)population (Federal Credit Unions)

•• Otherwise Otherwise –– guessing or guessing or anecdotal information anecdotal information

How good these estimates are is How good these estimates are is based on a few things . . .based on a few things . . .

50When Looking at Survey DataWhen Looking at Survey Data

Is the sample representative?Is the sample representative?•• All Federal CUs have an All Federal CUs have an equalequal

chance of being included?chance of being included?•• Random vs. subjective selection? Random vs. subjective selection? •• SelfSelf--selectionselection –– Are those who Are those who

participate markedly different from participate markedly different from those who donthose who don’’t participate? t participate?

True for most salary surveysTrue for most salary surveys

If how the sample was selected is If how the sample was selected is not in surveynot in survey’’s methodology, ask. s methodology, ask.

51Sample SizeSample Size

The sample size of the overall study is The sample size of the overall study is not the only sample size of concern not the only sample size of concern

•• When looking at results for FCUs When looking at results for FCUs within a certain group (those with within a certain group (those with $40M$40M--$75M in assets, for example) $75M in assets, for example) the size of that sample is what the size of that sample is what matters. matters.

Very small samples provide very Very small samples provide very unreliable resultsunreliable results

52Effect of Sample Size on Margin of Error

5 50 100 150 200 250 300 350 400 450 500Sample Size

Lo

wer

M

argi

n of

Err

or

Hig

her

FCUs w/Assets $750M+ (n=115)FCUs w/Assets $40M to <$75M (n=474)FCUs w/Assets <$10M (n=1,868)All FCUs (N=4,590)

Whether the population of interest is all 4,590 FCUs or the 115 FCUs with $750M+ in assets, the margin of error for very small samples is similarly very high.

When Looking at Survey DataWhen Looking at Survey Data

53

Total AssetsTotal Assets# of Employees# of Employees

# of Members# of Members Total Loans/LeasesTotal Loans/Leases

Years as Exec Years as Exec EducationEducation

U.S. RegionU.S. Region

54Top ExecutiveTop Executive

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

0 5 9 13 18 23 32 43 51 72 109 151 225 300 454 1,030

Total Assets in Millions

Tot

al C

ompe

nsat

ion

Total Compensation (Base+Bonus)Total Compensation (Base+Bonus)

Asset sizeAsset size and and total compensationtotal compensation are are highly correlated. Therefore, as asset highly correlated. Therefore, as asset size increases, total compensation size increases, total compensation also tends to increase. also tends to increase.

55Relationship Between Total Relationship Between Total Compensation and Other VariablesCompensation and Other Variables

Correlation to Correlation to Top ExecutiveTop Executive’’ss

Total Total Compensation*Compensation*

Total Assets Total Assets .86.86 # of Members# of Members .83.83

Total LoansTotal Loans .82.82 # of Employees# of Employees .81.81

EducationEducation .36.36 Years as an ExecYears as an Exec .14.14

* Correlations based on analysis of 2011 NAFCU/BFB Survey * Correlations based on analysis of 2011 NAFCU/BFB Survey of Federal Credit Union Executive Benefits & Compensationof Federal Credit Union Executive Benefits & Compensation

Highly related to each other – all measure of credit union’s size

56

How valuable is it to How valuable is it to compare compensation compare compensation

by region?by region?

57Federal Credit UnionFederal Credit Union

Asset Size Varies by RegionAsset Size Varies by Region

Region:Region: NENE SESE MidMid WWTotal AssetsTotal Assets 100%100% 100%100% 100%100% 100%100%

<$10M<$10M 45%45% 40% 40% 43% 43% 29%29%$10M $10M –– <20M<20M 15%15% 15% 15% 16% 16% 16%16%$20M $20M –– <40M <40M 13%13% 14% 14% 14% 14% 14%14%$40M $40M –– <75M <75M 10%10% 9% 9% 10% 10% 14%14%

$75M $75M –– <150M <150M 7%7% 8% 8% 8% 8% 11%11%$150M $150M –– <335M <335M 6%6% 7% 7% 5%5% 7%7%$335M $335M –– <750M <750M 2%2% 4% 4% 3%3% 6%6%

$750M+$750M+ 2%2% 4% 4% 2%2% 4%4%

FCU MedianFCU Median $12M$12M $18M$18M $12M$12M $30M$30MFCU AverageFCU Average $73M$73M $108M$108M $60M$60M $131M$131M

Source: NCUA Data Query, May 23, 2011Source: NCUA Data Query, May 23, 2011

58

Is the Is the CostCost--ofof--living Indexliving Index for a market considered for a market considered when making decisions when making decisions

regarding compensation?regarding compensation?

http://www.kiplinger.com/tools/bestcities_sort/http://www.kiplinger.com/tools/bestcities_sort/

59

•• Most of the timeMost of the time -- Results by more Results by more specific groups (by asset size, for specific groups (by asset size, for example) are going to be more useful example) are going to be more useful than the overall results.than the overall results.

•• However, when looking at overall However, when looking at overall results results -- important there is an important there is an adjustment (weighting) for asset groups adjustment (weighting) for asset groups that are overthat are over--oror--underrepresentedunderrepresented

•• Otherwise Otherwise -- end up with overstated end up with overstated figuresfigures–– OverOver--represented group unfairly influences the represented group unfairly influences the

resultsresults

Overall Survey ResultsOverall Survey Results

60

Comparing the Results From Comparing the Results From Two or More SurveysTwo or More Surveys

61

•• More than one resource can strengthen More than one resource can strengthen your position and the decisionyour position and the decision–– If both are valid, reliable & similar in focusIf both are valid, reliable & similar in focus

•• What are differences? How might that What are differences? How might that affect the results? affect the results?

•• Even then Even then -- difficult to do an applesdifficult to do an apples--toto-- apples comparison apples comparison

Comparing Two+ SourcesComparing Two+ Sources

62

Even if both surveys are good sources, Even if both surveys are good sources, comparison can be difficult . . . .comparison can be difficult . . . .

•• Each likely uses different asset ranges Each likely uses different asset ranges –– Example:Example: CU with $400M in Assets CU with $400M in Assets –– One survey One survey

shows compensation figures for credit unions in shows compensation figures for credit unions in the $300Mthe $300M--$500M range and other shows them for $500M range and other shows them for those in the $400Mthose in the $400M--$600M range$600M range

–– Considering relationship between asset size and Considering relationship between asset size and compensation, you have to adjust compensation, you have to adjust

•• As estimates, figures are often similar As estimates, figures are often similar but but notnot the samethe same

Comparing Two+ SourcesComparing Two+ Sources

63

* Correlations based on analysis of 2011 NAFCU/BFB Survey * Correlations based on analysis of 2011 NAFCU/BFB Survey of Federal Credit Union Executive Benefits & Compensationof Federal Credit Union Executive Benefits & Compensation

Keeping Your PerspectiveKeeping Your PerspectiveOur goal is to give you a good sense Our goal is to give you a good sense

of what other Federal credit of what other Federal credit unions do, unions do, as a groupas a group, re: , re: compensation and benefitscompensation and benefits–– Not tell you what to do in your situation Not tell you what to do in your situation

Every specific situation is unique Every specific situation is unique and many factors will also affect and many factors will also affect your executive compensation planyour executive compensation plan

64

When looking at survey results . . .When looking at survey results . . .•• Is the survey representative?Is the survey representative?•• Is there an adequate sample size for subgroup Is there an adequate sample size for subgroup

of interest?of interest?•• Strong relationship between asset size and Strong relationship between asset size and

compensationcompensation•• When using two+ survey sources . . . When using two+ survey sources . . .

–– Make adjustment for differences in asset rangesMake adjustment for differences in asset ranges–– Estimates should be similar, not the sameEstimates should be similar, not the same

•• SurveySurvey’’s intent is to give a sense of what other s intent is to give a sense of what other credit unions do credit unions do –– cannot make the decision re: cannot make the decision re: your specific situationyour specific situation–– Other factors have to be accounted forOther factors have to be accounted for

In ConclusionIn Conclusion

65

•• Surveyed theSurveyed the top five top five executives executives •• Additional information in written reportAdditional information in written report

–– Executives #2 thru #5 Executives #2 thru #5 –– Estimate release inEstimate release in late Julylate July

•• Information specific to your credit Information specific to your credit union union –– similar asset size, etc. similar asset size, etc. –– is is valuablevaluable–– BurnsBurns--Fazzi, Brock (BFB) for 15Fazzi, Brock (BFB) for 15--15 Report15 Report–– Puts your credit union in the middle by Puts your credit union in the middle by

looking at 15 CUs just above and 15 CUs looking at 15 CUs just above and 15 CUs just below your credit union based on asset just below your credit union based on asset size. size.

In ConclusionIn Conclusion

66BFB 15BFB 15--15 Report . . .15 Report . . .

Summary of Comparison Credit Unions

• Size - Assets, Loans/ Leases, Members, # of Employees

• Regions represented• Qualified Plans for

Employees• Field of Membership• Board Member Benefits• Review of Exec Compen-

sation & Nonqualified Benefits

67

Top Executive• Base, Bonus

Percent and Total Compensation

• Direct Responsibilities

• Fringe Benefits

• Nonqualified Plans

Example BFB Report . . .Example BFB Report . . .

68

Executives #2-5• Same Information

as Top Executive

• Provided For Each Executive

Example BFB Report . . .Example BFB Report . . .

69

Pilar PerottiPilar PerottiAssoc. Director of MarketingAssoc. Director of MarketingBurnsBurns--Fazzi, BrockFazzi, Brock704 332704 332--2265 Ext. 2062265 Ext. [email protected]@bfbbenefit.com

For More Information . . .For More Information . . .

David FrankilDavid FrankilPresidentPresidentNAFCU Services CorporationNAFCU Services Corporation800 336800 336--4644 4644 •• 703 842703 [email protected]@nafcu.org

70

Thank YouThank You

Jack E. Clark, PhDJack E. Clark, PhDClark & Chase Research, Inc.Clark & Chase Research, Inc.

4600 Lebanon Road 4600 Lebanon Road –– Suite ASuite ACharlotte, NC 28227Charlotte, NC 28227

[email protected]@clarkandchase.com

nafcu executive compensation & benefits survey – initial 2011 findings (credit union...

Economy & Finance