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NAFCU Executive Compensation & Benefits Survey – Initial 2011 Findings (Credit Union Conference Presentation)
The 2011 NAFCU-BFB survey covers executive benefits and compensation across federal credit unions, detailing data from 353 participating credit unions and 930 executives. The survey provides insights into base salaries, bonuses, and overall compensation, revealing varying practices and plans based on asset size. Additionally, it discusses the prevalence of nonqualified benefit plans and compensation review practices among different credit unions.
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NAFCU Executive Compensation & Benefits Survey – Initial 2011 Findings (Credit Union Conference Presentation)
- 1. 1 2011NAFCU-BFB Survey of Federal Credit Union Executive Benefits and Compensation Presented by Jack E. Clark Clark & Chase Research, Inc. June 30, 2011
- 2. 2 Sponsored by: NAFCU NAFCU Services Burns-Fazzi, Brock
- 3. 3 • How we did the survey • Select Findings – Top Executive • Base Salary • Bonus • Total Compensation • Percent Change in Base Salary • Percent of 2010 Bonus Achieved – Reviewing Executive Compensation Plans – Nonqualified Benefit Plans for Top Executives – Cars and Car Allowances
- 4. 4 Things to considerwhen looking at survey results • What a survey is ... and what it is not • What makes a good survey – Sample Size – Representative • Relationship between Asset Size and Compensation • Using more than one source of survey information – why it makes sense & things to consider when comparing them
- 5.
- 6. 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
- 7. 7 2011 NAFCU-BFB Survey Population vs. Sample by U.S. Region FCUs* Survey Northeast 33% 28% Southeast 19% 22% Midwest 31% 31% West 17% 20% *Source: NCUA Data Query, May 23, 2011
- 8. 8 2011 NAFCU-BFB Survey Population vs. Sample by Asset Size Federal CUs* CU’s Sample 4,590 353 <$10M 41% 14% $10M – <20M 15% 14% $20M – <40M 14% 14% $40M – <75M 10% 15% $75M – <150M 8% 12% $150M – <335M 6% 14% $335M – <750M 4% 9% $750M+ 3% 8% *Source: NCUA Data Query, May 23, 2011
- 9. 9 In addition, Data isweighted based on – Total Assets* – Number of Employees* – Region* – NAFCU Membership Result: Sample representing Federal Credit Unions *Source: NCUA Data Query, May 23, 2011
- 10. 10 Definitions What is a Percentile? Lowest Highest Value 25th 75th Value Percentile Percentile 50th Percentile (Median)
- 11. 11 Asset Groups We will review results by asset size Sample Fed CUs Asset Group Size Represented <$10M 48 1,868 $10M – <20M 51 705 $20M – <40M 49 625 $40M – <75M 54 474 $75M – <150M 42 373 $150M – <335M 49 269 $335M – <750M 32 161 $750M+ 28 115
- 12. 12 FederalCU Asset Size Asset Percentiles Expressed in Millions($) $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Percentile 90TH 9 18 36 66 135 289 643 2,550 75TH 8 17 32 58 116 271 609 1,544 60TH 6 15 29 51 109 237 467 1,266 50TH 5 13 29 49 101 225 425 1,030 40TH 5 12 26 44 92 207 420 889 25TH 4 12 24 44 88 188 396 833 10TH 2 11 22 43 78 158 370 803
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- 14. 14 2011 Base Salary forTop Executive
- 15. 15 Top Executive 2011 Base Salary Salary Expressed in Thousands($) $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Percentile 90TH 65 78 103 120 201 230 274 573 75TH 55 67 86 107 161 213 267 416 60TH 52 64 82 100 131 185 247 361 50TH 47 60 80 98 125 175 230 361 40TH 42 57 76 95 125 170 216 350 25TH 37 51 69 90 110 150 202 308 10TH 29 49 63 84 70 140 184 277
- 16. 17 2011 Potential Bonus for Top Executive
- 17. 18 Top Executive 2011 Bonus Plans Percent of Top Execs Who Have a Bonus Plan All FCUs 47% <$10M 48% $10M – <20M 30% $20M – <40M 35% $40M – <75M 49% $75M – <150M 61% $150M – <335M 62% $335M – <750M 69% $750M+ 83%
- 18. 19 Top Executive 2011 Bonus Percent 60 Although bonus percentages tend to increase as 50 total assets increase, the relationship is not that strong – the portion of compensation that is at risk can vary quite a lot even among credit unions 40 Bonus Percentage of similar size. 30 20 10 0 0 5 9 13 18 23 32 43 51 72 109 151 225 300 454 1,030 Total Assets in Millions
- 19. 20 TopExecutive 2011 Bonus Percent Expressed as Percent of Base Salary $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Percentile 90TH 3% 10% 10% 16% 10% 30% 25% 50% 75TH 1% 2% 3% 6% 10% 20% 20% 50% 60TH 1% 0% 0% 4% 5% 10% 15% 28% 50TH 0% 0% 0% 0% 5% 9% 10% 20% 40TH 0% 0% 0% 0% 1% 5% 5% 18% 25TH 0% 0% 0% 0% 0% 0% 0% 7% 10TH 0% 0% 0% 0% 0% 0% 0% 0%
- 20. 21 2011 Potential Total Compensation (Base & Bonus) for Top Executive
- 21. 2011 Potential 22 Top Executive Total Compensation Base Salary & Bonus Compensation Expressed in Thousands($) $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Percentile 90TH 65 78 108 129 201 264 315 785 75TH 56 70 87 110 164 237 296 541 60TH 52 64 84 106 142 213 280 528 50TH 47 63 80 104 138 193 259 477 40TH 43 58 78 98 125 175 240 390 25TH 37 51 71 92 116 165 215 350 10TH 30 49 65 86 74 145 198 316
- 22. 2011 Potential 23 Top Executive Total Compensation Base Salary & Bonus Compensation Expressed in Thousands($) $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Percentile 90TH 65 78 108 129 201 264 315 785 75TH 56 70 87 110 164 237 296 541 60TH 52 64 84 106 142 213 280 528 50TH 47 63 80 104 138 193 259 477 40TH 43 58 78 98 125 175 240 390 25TH 37 51 71 92 116 165 215 350 10TH 30 49 65 86 74 145 198 316
- 23. 2011 Potential 24 Top Executive Total Compensation Base Salary & Bonus Compensation Expressed in Thousands($) $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Percentile 90TH 65 78 108 129 201 264 315 785 75TH 56 70 87 110 164 237 296 541 60TH 52 64 84 106 142 213 280 528 50TH 47 63 80 104 138 193 259 477 40TH 43 58 78 98 125 175 240 390 25TH 37 51 71 92 116 165 215 350 10TH 30 49 65 86 74 145 198 316 Inter-quartile Range (IQR)
- 24. 25 2010 to 2011 Percent Change in Base Salary for Top Executive
- 25. 2010 to 2011Change 26 Top Executive in Base Salary Percent Change from 2010 to 2011 $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Percentile 90TH 3% 8% 5% 8% 21% 15% 13% 7% 75TH 3% 5% 4% 5% 5% 5% 4% 5% 60TH 2% 3% 2% 4% 3% 5% 3% 5% 50TH 2% 2% 1% 3% 1% 4% 3% 4% 40TH 0% 2% 0% 2% 0% 4% 2% 3% 25TH 0% 0% 0% 0% 0% 2% 0% 3% 10TH 0% 0% 0% 0% 0% 0% 0% 0%
- 26. 28 Last Year’s (‘10)Bonus for Top Executive Actual as a Percent of Potential Bonus
- 27. Top Executive 29 2010 % of Bonus Plan Received Percentile 2010 90th 151% 75th 114% 60th 100% 50th 100% 40th 96% 25th 80% 10th 27% Average 107%
- 28. Top Executive 30 2010 vs. 2009 % of Bonus Plan Received Percentile 2010 2009 90th 151% 109% 75th 114% 100% 60th 100% 97% 50th 100% 91% 40th 96% 87% 25th 80% 63% 10th 27% 0% Average 107% 79%
- 29. 31 Reviewing Executive Compensation Plans
- 30. Executive 32 Review of Compensation Plan Compensation “Is your credit union planning to review your overall executive compensation plan?” Yes, currently reviewing 4% Yes, planning to review 14%
- 31. Executive 33 Review of Compensation Plan Compensation “Is your credit union planning to review your overall executive compensation plan?” $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Yes, currently reviewing 1% 4% 2% 7% 1% 17% 11% 31% Yes, planning to review 9% 8% 17% 20% 23% 27% 18% 12%
- 32. 34 How manyFederal credit unions have executives with Nonqualified benefits plans?
- 33. 35 Definitions Nonqualified Plan? 457(b) SERP • Section of the IRS Code • Government & tax-exempt executives • Defer income up to a maximum amount • Employee contributes in addition to qualified plans such as a 401(k) 457(f) SERP • For select execs of tax-exempt organizations • No limits on contributions • Both corporation and employee can contribute
- 34. 36 Definitions Nonqualified Plan? Split-dollar Insurance • Way of paying for Life Insurance • Arranged between Employer and Executive • Split premium, cash values, policy ownership and death benefits • Cash value can be used as supplemental retirement income and death benefit paid to beneficiary • Upon death, employer receives total premiums paid and beneficiary receives the balance Severance Plan
- 35. 37 Federal Credit Unions Percent with Nonqualified Plans (Including Severance) 94% By Asset Size 83% 71% % of Federal CUs 49% 31% 20% 20% 21% <$10M $10M - $20M - $40M - $75M - $150M - $335M - $750M+ <$20M <$40M <$75M <$150M <$335M <$750M
- 36. 38 Federal Credit Unions Percent with Nonqualified Plans (Excluding Severance) 94% By Asset Size 74% % of Federal CUs 53% 45% 19% 14% 11% 10% <$10M $10M - $20M - $40M - $75M - $150M - $335M - $750M+ <$20M <$40M <$75M <$150M <$335M <$750M
- 37. 39 Federal Credit Unions How Many Executives Have NQ Plans? (Excl. Severance) By Asset Size % of Federal CUs 59% 2+ 60% One 10% 42% 4% <.5% 35% 35% <.5% 1% 14% 10% 16% 11% 14% 9% <$10M $10M - $20M - $40M - $75M - $150M - $335M - $750M+ <$20M <$40M <$75M <$150M <$335M <$750M
- 38. 40 Top Executive Types of Nonqualified Plans $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus SERP 457(b) 5% 4% 7% 12% 14% 38% 44% 75% SERP 457(f) <.5% 3% <.5% 15% 16% 15% 41% 40% Split-Dollar <.5% <.5% <.5% 2% 15% 10% 6% 5% Severance 6% 10% 17% 25% *8% 47% *34% *36% Have, but none of the above 10% 7% <.5% <.5% 1% 2% <.5% <.5% Do not have NQ plans 80% 80% 79% 69% 51% 29% 17% 6% Base: All Federal Credit Unions * Several of those completing the survey (15% of the overall sample) did not know whether or not the sample) top executive had a severance plan in place. This was especially true for these asset groups. especially
- 39. 43 Nonqualified Plans Reviewing/Considering Them? “Is your credit union reviewing your current Nonqualified benefit plans for executives or considering offering them in the future?” $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Yes, reviewing existing NQ Plans 4% 2% 1% 4% 2% 19% 8% 7% Yes, considering offering NQ Plans 3% <.5% 3% 7% 4% 11% 14% 3%
- 40. 44 Cars andCar Allowance for Federal Credit Union Top Executives
- 41. 45 Top Executive Car/ Car Allowance $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Car * 1% 4% 13% 32% 31% 34% 28% Allowance * 3% 10% 15% 19% 17% 34% 44% Both * 3% 6% 2% 2% 5% 17% 7% Neither 99%+ 94% 79% 70% 47% 47% 14% 22% * Less than .5%
- 42. 46 Car/Car Allowance Top Executives Percentile Monthly Yearly 90th $1,000 $12,000 75th $850 $10,200 60th $700 $8,400 50th $542 $6,504 40th $500 $6,000 25th $325 $3,900 10th $200 $2,400 Base: Those with a car or car allowance (n=122)
- 43. 48 Lookingat Survey Results
- 44. 49 When Looking at Survey Data Surveys are estimates of the larger population (Federal Credit Unions) • Otherwise – guessing or anecdotal information How good these estimates are is based on a few things . . .
- 45. 50 When Looking at Survey Data Is the sample representative? • All Federal CUs have an equal chance of being included? • Random vs. subjective selection? • Self-selection – Are those who participate markedly different from those who don’t participate? True for most salary surveys If how the sample was selected is not in survey’s methodology, ask.
- 46. 51 Sample Size The sample size of the overall study is not the only sample size of concern • When looking at results for FCUs within a certain group (those with $40M-$75M in assets, for example) the size of that sample is what matters. Very small samples provide very unreliable results
- 47. 52 When Looking at Survey Data Lower Margin of Error Higher Effect of Sample Size on Margin of Error 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. 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) 5 50 100 150 200 250 300 350 400 450 500 Sample Size
- 48. 53 Total Assets # of Employees # of Members Total Loans/Leases Years as Exec Education U.S. Region
- 49. Top Executive 54 Total Compensation (Base+Bonus) $900,000 $800,000 $700,000 Asset size and total compensation are highly correlated. Therefore, as asset Total Compensation $600,000 size increases, total compensation $500,000 also tends to increase. $400,000 $300,000 $200,000 $100,000 $0 0 5 9 13 18 23 32 43 51 72 109 151 225 300 454 1,030 Total Assets in Millions
- 50. 55 RelationshipBetween Total Compensation and Other Variables Correlation to Top Executive’s Total Compensation* Total Assets .86 Highly related to each other # of Members .83 – all measure of Total Loans .82 credit union’s # of Employees .81 size Education .36 Years as an Exec .14 * Correlations based on analysis of 2011 NAFCU/BFB Survey of Federal Credit Union Executive Benefits & Compensation
- 51. 56 How valuableis it to compare compensation by region?
- 52. 57 Federal Credit Union Asset Size Varies by Region Region: NE SE Mid W Total Assets 100% 100% 100% 100% <$10M 45% 40% 43% 29% $10M – <20M 15% 15% 16% 16% $20M – <40M 13% 14% 14% 14% $40M – <75M 10% 9% 10% 14% $75M – <150M 7% 8% 8% 11% $150M – <335M 6% 7% 5% 7% $335M – <750M 2% 4% 3% 6% $750M+ 2% 4% 2% 4% FCU Median $12M $18M $12M $30M FCU Average $73M $108M $60M $131M Source: NCUA Data Query, May 23, 2011
- 53. 58 Is the Cost-of-livingIndex for a market considered when making decisions regarding compensation? http://www.kiplinger.com/tools/bestcities_sort/
- 54. 59 Overall Survey Results • Most of the time - Results by more specific groups (by asset size, for example) are going to be more useful than the overall results. • However, when looking at overall results - important there is an adjustment (weighting) for asset groups that are over-or-underrepresented • Otherwise - end up with overstated figures – Over-represented group unfairly influences the results
- 55. 60 Comparing the ResultsFrom Two or More Surveys
- 56. 61 Comparing Two+ Sources • More than one resource can strengthen your position and the decision – If both are valid, reliable & similar in focus • What are differences? How might that affect the results? • Even then - difficult to do an apples-to- apples comparison
- 57. 62 Comparing Two+ Sources Even if both surveys are good sources, comparison can be difficult . . . . • Each likely uses different asset ranges – Example: CU with $400M in Assets – One survey shows compensation figures for credit unions in the $300M-$500M range and other shows them for those in the $400M-$600M range – Considering relationship between asset size and compensation, you have to adjust • As estimates, figures are often similar but not the same
- 58. 63 Keeping Your Perspective Our goal is to give you a good sense of what other Federal credit unions do, as a group, re: compensation and benefits – Not tell you what to do in your situation Every specific situation is unique and many factors will also affect your executive compensation plan * Correlations based on analysis of 2011 NAFCU/BFB Survey of Federal Credit Union Executive Benefits & Compensation
- 59. 64 In Conclusion When looking at survey results . . . • Is the survey representative? • Is there an adequate sample size for subgroup of interest? • Strong relationship between asset size and compensation • When using two+ survey sources . . . – Make adjustment for differences in asset ranges – Estimates should be similar, not the same • Survey’s intent is to give a sense of what other credit unions do – cannot make the decision re: your specific situation – Other factors have to be accounted for
- 60. 65 In Conclusion • Surveyed the top five executives • Additional information in written report – Executives #2 thru #5 – Estimate release in late July • Information specific to your credit union – similar asset size, etc. – is valuable – Burns-Fazzi, Brock (BFB) for 15-15 Report – Puts your credit union in the middle by looking at 15 CUs just above and 15 CUs just below your credit union based on asset size.
- 61. 66 BFB 15-15 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
- 62. 67 Example BFB Report. . . Top Executive • Base, Bonus Percent and Total Compensation • Direct Responsibilities • Fringe Benefits • Nonqualified Plans
- 63. 68 Example BFB Report. . . Executives #2-5 • Same Information as Top Executive • Provided For Each Executive
- 64. 69 For More Information. . . Pilar Perotti Assoc. Director of Marketing Burns-Fazzi, Brock 704 332-2265 Ext. 206 [email protected] David Frankil President NAFCU Services Corporation 800 336-4644 • 703 842-2226 [email protected]
- 65. 70 Thank You Jack E. Clark, PhD Clark & Chase Research, Inc. 4600 Lebanon Road – Suite A Charlotte, NC 28227 704-998-9661 [email protected]