LAS VEGAS — Loan growth was far and away the most commonly used determining factor for credit union top executive bonus pay, according to a new study by Burns-Fazzi Brock and NAFCU, released at the trade group's annual conference here Wednesday.
The BFB study, unveiled annually at this conference in conjunction with NAFCU Services Corp., was researched and presented by Jack Clark of Clark Research Associates, Charlotte, N.C.
The survey of 424 federal credit unions across the U.S. found 70% used loan growth to determine bonus, incentive and/or variable pay for top executives. In a distant second was return on assets (ROA) at 47%, then net worth and membership growth tied at 45%, and net income growth at 43%.
The potential for top executives to earn incentive or variable pay in 2014 was reported by 49% of all credit unions, with wide variances by asset size. Only 32% of FCUs with $10 million of less in assets said their CEOs had potential to earn bonuses, while 90% of FCUs with more than $750 million in assets offer bonuses.
The number of FCUs with "formal" plans for bonuses, which involve the credit unions achieving certain goals to trigger incentives, was significantly smaller. Only 22% of all FCUs said they have a formal bonus plan, ranging from 7% of those with $10 million or less in assets, up to 61% of those at $750 million or higher.
Top Compensation
As usual, the survey found the highest compensation packages tended to be paid by the largest federal credit unions. The results were divided into eight asset classes: FCUs with total assets less than $10 million, $10 million to less than $20 million, $20 million to less than $40 million, $40 million to less than $75 million, $75 million to less than $150 million, $150 million to less than $400 million, $400 million to less than $1 billion, and $1 billion to just under $6 billion.
Clark cautioned against looking at the 10th percentile or the 90th percentile in any presentation, as those "outliers" tend to overlap — the top earners at smaller asset-size FCUs made more than the lowest earners in the next asset size class.
By way of comparison, the 50th percentile 2014 base salary of each FCU asset class was:
- Less than $10 million: $42,000
- $10 million to less than $20 million: $65,000
- $20 million to less than $40 million: $80,000
- $40 million to less than $75 million: $109,961
- $75 million to less than $150 million: $126,263
- $150 million to less than $400 million: $192,905
- $400 million to less than $1 billion: $300,000
- $1 billion to just under $6 billion: $408,000
Total compensation (base + bonus) was different for the higher asset classes. The 50th percentile 2014 total compensation of each FCU asset class was:
- Less than $10 million: $42,000
- $10 million to less than $20 million: $68,432
- $20 million to less than $40 million: $85,000
- $40 million to less than $75 million: $115,000
- $75 million to less than $150 million: $137,500
- $150 million to less than $400 million: $201,250
- $400 million to less than $1 billion: $358,800
- $1 billion to just under $6 billion: $461,000
Can I Get A Raise?
The percent change in base salary also had a strong correlation to asset size. For example, in credit unions $10 million or less, those in the 10th, 25th, 40th and 50th percentile saw a 0% raise from the year before. Not until the 60th percentile (2%) and 75th percentile (3%) were increases reported. The highest percentage increase was experienced by the 90th percentile, which saw base salary go up 7%.
In contrast, virtually all CEOs at larger federal credit unions saw their base salary increase from 2013 to 2014. In the $1 billion to just under $6 billion category, raises were reported from the 10th percentile (3%), through the 50th percentile (6%), up to the 90th percentile (13%).
The largest percentage increase came from the top end of the $400 million to less than $1 billion asset class, where CEOs received a 14% raise from last year.
