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Crowe survey finds financial institution CEOs see 1 percent annual compensation increase
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By: Crowe Horwath
As the economy has declined, so have the compensation increases for bank CEOs. According to the Crowe Horwath LLP’s 2009 Comprehensive Financial Institution Compensation Survey, financial institution CEOs saw an increase of only 1 percent in total cash compensation during the past year, compared to a 4.7 percent increase in 2008.
The survey, which compiled data from more than 320 U.S. financial institutions, is conducted annually by Crowe Horwath LLP, one of the largest public accounting and consulting firms in the U.S. Now in its 28th year, the survey found that base salaries for all financial institution positions increased an average of 2.2 percent in 2009.
According to Timothy Reimink, a senior consultant in Crowe’s performance group, the small increase in total compensation for CEOs masks a trend: in recent years, base salaries for CEOs have increased at rates faster than most other employees, while bonuses as a percentage of salary have declined. This year, independent bank CEOs received an average of $260,047 in total compensation.
In addition to CEOs, several other job titles at financial institutions experienced either no growth or decreases in compensation for the same one-year period. Chief credit managers saw compensation shrink by 6.4 percent, branch managers saw a decrease of 5.8 percent and commercial loan officers saw no increase in compensation. According to Reimink, this trend in total compensation is partly due to the decline of bonuses in recent years.
On the other end of the spectrum, overall compensation increased during 2009 nearly 20 percent for loan workout officers, 13.9 percent for top retail banking officers, 12.4 percent for top human resource officers and 10 percent for top loan managers.
According to Reimink, these increases correspond to the current priorities of financial institutions. “It’s not that surprising that the position most responsible for restructuring loans saw the largest rise in compensation as its responsibilities rose during the economic crisis. These results also show that financial institutions continue to highly value the executives, like top retail and loan managers, with the highest level of responsibility for driving business revenues,” he said.
Additional survey findings include:
* From 2005 to 2008, financial institutions established annual budgets for salary increases of 4 percent for all employees. While it was projected that 2009 would follow the same pattern, the dramatic changes in the market caused financial institutions to reduce their actual base salary increases to about 2 percent. They’re expected to remain at the 2 percent level for 2010.
· In 2009, chief internal auditors for financial institutions saw an increase of 8 percent in their average compensation. According to Reimink, above-average compensation increases for the position most responsible for ensuring compliance is likely to continue during this time of heightened scrutiny.
* The percentage of financial institutions planning on maintaining, rather than growing, staff levels grew to 60 percent in 2009, compared to approximately 45 percent in 2008.
* Non-officer turnover declined to about 11 percent in 2009, from 15 percent in 2008.
* Retaining and motivating the right employees continues to be the highest-ranked human resources priority for the third year in a row. Developing employees is now ranked second, while finding and hiring the right employees has fallen to third. Reimink noted that this switch in priorities makes sense as more institutions plan to maintain current staff levels.
“The survey data provides critical information to bank management and boards, to help ensure their compensation remains at fair and competitive levels,” said Pat Cole, a senior manager in Crowe’s performance group, who specializes in human resources consulting for financial institutions. “Right now, when motivating and retaining employees continues to be a top priority, competitive compensation is particularly important.”
In addition to the national survey, Crowe prepared regional compensation reports for the Midwest and Southeast, as well as state reports for Florida, Illinois, Indiana, Michigan, New Jersey and Ohio. To purchase the survey results, please visit http://www.crowehorwath.com/crowe/lp/compSurvey.cfm.
About the 2009 Crowe Financial Institution Compensation Survey
The 2009 Crowe Financial Institution Compensation Survey was completed by 322 financial institutions. Using data from April 1, 2009, the participant breakdown is as follows: 36 percent had less than $250 million in total assets, 27 percent had between $250 million and $500 million in total assets, 16 percent had between $500 million and $1 billion in total assets and 21 percent had more than $1 billion in total assets. Of the participants, 242 of the financial institutions were located in towns with populations of less than 100,000, while 80 were located in cities of more than 100,000.
About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting and consulting firms in the United States. Under its core purpose of “Building Value with Values®,” Crowe assists public and private company clients in reaching their goals through audit, tax, risk and consulting services. With 25 offices and 2,500 personnel, Crowe is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest networks in the world, consisting of more than 140 independent accounting and management consulting firms with offices in more than 400 cities around the world.
