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2013 NAFCU BFB Survey of Executive Compensation and Benefits (Presentation Slides)

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First introduced in 2007, the NAFCU-BFB Survey of Federal Credit Union Executive Benefits and Compensation was created to better understand the compensation and benefits for the top five executives of Federal credit unions. For more info: www.nafcu.org/bfb

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2013 NAFCU BFB Survey of Executive Compensation and Benefits (Presentation Slides)

  1. 1. 1 2013 NAFCU-BFB Survey of Executive Compensation and Benefits Jack E. Clark Clark & Chase Research Inc. July 11, 2013
  2. 2. 2 NAFCU NAFCU Services Burns-Fazzi, Brock
  3. 3. 3 Using Salary Surveys • What a survey is ... and what it is not • What makes a good survey • Relationship between Asset Size and Compensation • Using more than one survey source 2013 NAFCU-BFB Survey • How we did the survey • Some Findings – Top Executive Compensation – Components Used in Bonus Plans – Nonqualified Benefit Plans – Cars and Car Allowances Q & A 2013 NAFCU-BFB Survey Report
  4. 4. Using Salary Surveys 4
  5. 5. 5 Using Salary Surveys 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 . . .
  6. 6. 6 Using Salary Surveys Is the sample representative? • Did population of interest 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 How sample selected – Methodology section
  7. 7. Sampling error is not based on the size of the population of interest Overall sample size is not the only concern • When looking at results for a certain group of FCUs (ex. asset group)  what matters is the number of survey participants in that group. Very small samples = very unreliable results 7 Sample Size
  8. 8. 8 When Looking at Survey Data 0 50 100 150 200 250 300 350 400 450 500 Sample Size LowSamplingErrorHigh All FCUs (4,271) FCUs w/Assets <$10M (1,597) FCUs w/Assets $40-75M (455) FCUs w/Assets $750M+ (133) Sampling error for very small samples is very high.
  9. 9. 9 When Looking at Survey Data Again . . . . Surveys are estimates of the larger population
  10. 10. <$10M $46,247 $47,162 $48,077 $10M – <20M $68,357 $69,669 $70,981 $20M – <40M $78,912 $80,491 $82,070 $40M – <75M $110,425 $113,220 $116,016 $75M – <150M $136,771 $140,173 $143,574 $150M – <335M $192,030 $197,740 $203,449 $335M – <750M $270,115 $281,668 $293,220 $750M+ $472,805 $502,690 $532,574 *Weighted by total assets, # of employees, region and NAFCU membership 10 Lower Limit Average Upper Limit All FCUs* $100,711 $103,722 $106,733 2013 NAFCU-BFB Survey 95% Confidence Intervals Top Executive Total Compensation
  11. 11. 11 Total Assets # of Employees # of Members Total Loans/Leases Years as Exec Education U.S. Region
  12. 12. 14 How valuable is it to compare compensation by region?
  13. 13. 15 Federal Credit Unions Asset Size Varies by Region Region: NE SE Mid W Total Assets 100% 100% 100% 100% <$10M 42% 37% 39% 25% $10M – <20M 15% 14% 16% 14% $20M – <40M 14% 14% 15% 15% $40M – <75M 10% 10% 10% 13% $75M – <150M 8% 8% 9% 13% $150M – <335M 6% 8% 5% 8% $335M – <750M 3% 4% 4% 6% $750M+ 3% 4% 2% 5% FCU Median $16M $18M $18M $35M * April 12, 2013 Query of December, 2012 NCUA 5300 Call Reports 12% 16% 11% 19%
  14. 14. 16 • Most of the time - Results broken down by asset size is more useful • However, when looking at overall results – adjustment needed for asset groups over-or- under represented • Weighting procedure • Otherwise  – Overstated figures – One group unfairly influencing the results Overall Survey Results
  15. 15. 17 • Average and median are different • At times, their value may be similar . . . but sometimes very different. Average vs Median
  16. 16. 18 Number Average Median of FCUs (Million) (Million) All FCUs* 4,271 $130 $18 <$10M 1,597 4 3 $10M – <20M 642 14 14 $20M – <40M 621 29 28 $40M – <75M 455 55 55 $75M – <150M 385 106 102 $150M – <335M 271 221 214 $335M – <750M 167 481 446 $750M+ 133 2,384 1,280 *Query of December, 2012 NCUA 5300 Call Reports Average vs. Median Total Assets
  17. 17. If both surveys are good sources  can add strength to your position. But comparison can be difficult . . . . • Each likely uses different asset ranges – Example: CU with $225M in Assets • 1st survey includes in $200M-$350M range • 2nd survey includes in $100M-$250M range – Considering relationship between asset size and compensation, you have to adjust • Beware of changing Bases (example – Bonus Info: based on all CUs or only those w/ bonus?) • As estimates, figures may be reasonably similar but not the same 19 Comparing Two+ Surveys
  18. 18. 20 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 situation is unique and other factors affect your executive compensation plan
  19. 19. 21 How NAFCU- BFB Survey was done
  20. 20. 22 • All Federal Credit Unions are invited • 425 Credit Unions – 215 NAFCU Members/ 210 Non-members • Completed Survey 2/25 to 3/26 • 1,223 Executives • 425 Top Executives • 311 #2 Executives • 222 #3 Executives • 159 #4 Executives • 106 #5 Executives
  21. 21. 23 2013 NAFCU-BFB Survey Population vs. Sample by U.S. Region FCUs* Survey N= 4,271 425 Northeast 33% 26% Southeast 19% 21% Midwest 32% 31% West 16% 22% * April 12, 2013 Query of December, 2012 NCUA 5300 Call Reports
  22. 22. 24 Federal CUs* *NCUA Sample 4,271 425 <$10M 37% 13% $10M – <20M 15% 15% $20M – <40M 15% 16% $40M – <75M 11% 14% $75M – <150M 9% 14% $150M – <335M 6% 10% $335M – <750M 4% 9% $750M+ 3% 9% 2013 NAFCU-BFB Survey Population vs. Sample by Asset Size * April 12, 2013 Query of December, 2012 NCUA 5300 Call Reports
  23. 23. 25 In addition, Data is weighted based on – Total Assets* – Number of Employees* – Region* – NAFCU Membership Result: Sample represents Federal Credit Unions *Source: 4/12/13 Query of December, 2012 NCUA 5300 Call Reports
  24. 24. 27 Definitions What is a Percentile? Lowest Highest Value Value25th Percentile 50th Percentile (Median) 75th Percentile
  25. 25. 28 Selected Findings
  26. 26. 29 2013 Potential Total Compensation (Base & Bonus) for Top Executive
  27. 27. Potential Bonus Comparison Credit Unions . . . Percentile 2013 Total Compensation (Base & Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of: Members Employees Branches 10th $98,322 $98,322 0% $0 $76 $35 7,876 19 1 25th $118,450 $110,000 0% $0 $82 $43 9,638 26 2 40th $130,000 $123,048 0% $0 $90 $50 10,272 33 3 50th $135,000 $130,000 0% $0 $104 $56 11,248 38 3 60th $140,888 $135,400 4% $5,500 $112 $61 11,842 41 4 75th $154,000 $141,933 10% $14,000 $121 $79 13,608 46 4 90th $186,840 $173,000 20% $26,885 $123 $97 15,718 55 5 Results based on surveying 58 top executives at credit unions in this asset group 33 Top ExecutiveExample Report Table Federal Credit Unions with Total Assets of $75 Million to Less Than $150 Million
  28. 28. Potential Bonus Comparison Credit Unions . . . Percentile 2013 Total Compensation (Base & Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of: Members Employees Branches 10th $22,500 $22,500 0% $0 $2 $1 438 2 0 25th $33,500 $31,200 0% $0 $3 $1 676 2 1 40th $45,000 $45,000 0% $0 $5 $2 865 2 1 50th $49,000 $48,500 0% $0 $5 $2 1,002 3 1 60th $51,940 $51,023 0% $0 $6 $3 1,233 3 1 75th $56,700 $57,148 0% $0 $8 $4 1,433 4 1 90th $70,085 $70,085 4% $1,950 $9 $4 1,961 5 1 Results based on surveying 57 top executives at credit unions in this asset group 34 Top Executive2013 Compensation Federal Credit Unions with Total Assets of Less Than $10 Million
  29. 29. Potential Bonus Comparison Credit Unions . . . Percentile 2013 Total Compensation (Base & Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of: Members Employees Branches 10th $51,327 $51,376 0% $0 $11 $4 1,433 3 0 25th $58,000 $58,000 0% $0 $13 $5 1,602 4 1 40th $63,305 $65,000 0% $0 $14 $6 1,848 4 1 50th $67,931 $67,500 0% $0 $16 $7 1,926 5 1 60th $70,000 $70,000 0% $0 $16 $8 2,025 6 1 75th $79,040 $80,400 0% $0 $18 $9 2,432 6 1 90th $95,282 $90,745 5% $4,537 $19 $11 3,242 10 2 Results based on surveying 63 top executives at credit unions in this asset group 35 Top Executive2013 Compensation Federal Credit Unions with Total Assets of $10 Million to Less Than $20 Million
  30. 30. Potential Bonus Comparison Credit Unions . . . Percentile 2013 Total Compensation (Base & Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of: Members Employees Branches 10th $60,000 $61,000 0% $0 $22 $7 2,077 4 1 25th $70,000 $70,000 0% $0 $24 $10 2,899 7 1 40th $75,750 $75,764 0% $0 $27 $12 3,364 8 1 50th $79,920 $80,000 0% $0 $29 $14 3,808 9 1 60th $83,341 $83,341 0% $0 $31 $15 4,106 10 1 75th $91,670 $88,400 1% $750 $34 $16 4,991 12 2 90th $104,344 $102,000 10% $7,800 $37 $21 5,777 16 3 Results based on surveying 69 top executives at credit unions in this asset group 36 Top Executive2013 Compensation Federal Credit Unions with Total Assets of $20 Million to Less Than $40 Million
  31. 31. Results based on surveying 58 top executives at credit unions in this asset group 37 Top Executive2013 Compensation Federal Credit Unions with Total Assets of $40 Million to Less Than $75 Million Potential Bonus Comparison Credit Unions . . . . Percentile 2013 Potential Total Compensation (Base + Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of Members Employees Branches 10th $80,000 $78,880 0% $0 $44 $17 3,405 8 1 25th $95,014 $92,000 0% $0 $46 $20 4,758 12 1 40th $110,000 $105,000 0% $0 $53 $24 5,239 14 2 50th $113,136 $110,000 0% $0 $57 $26 6,137 17 2 60th $115,504 $115,000 4% $4,500 $59 $30 6,599 18 3 75th $123,616 $115,515 5% $5,350 $61 $33 8,480 23 3 90th $145,000 $145,000 20% $19,600 $68 $42 10,162 28 4
  32. 32. Potential Bonus Comparison Credit Unions . . . Percentile 2013 Total Compensation (Base & Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of: Members Employees Branches 10th $98,322 $98,322 0% $0 $76 $35 7,876 19 1 25th $118,450 $110,000 0% $0 $82 $43 9,638 26 2 40th $130,000 $123,048 0% $0 $90 $50 10,272 33 3 50th $135,000 $130,000 0% $0 $104 $56 11,248 38 3 60th $140,888 $135,400 4% $5,500 $112 $61 11,842 41 4 75th $154,000 $141,933 10% $14,000 $121 $79 13,608 46 4 90th $186,840 $173,000 20% $26,885 $123 $97 15,718 55 5 Results based on surveying 58 top executives at credit unions in this asset group 38 Top ExecutiveExample Report Table Federal Credit Unions with Total Assets of $75 Million to Less Than $150 Million
  33. 33. Potential Bonus Comparison Credit Unions . . . Percentile 2013 Total Compensation (Base & Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of: Members Employees Branches 10th $127,500 $115,000 0% $0 $162 $70 12,466 30 3 25th $177,708 $153,400 0% $0 $189 $97 15,939 45 4 40th $188,000 $169,502 2% $2,500 $199 $110 20,260 64 5 50th $192,000 $186,500 7% $11,500 $225 $119 21,990 65 6 60th $200,000 $188,000 10% $16,200 $232 $135 23,944 70 7 75th $234,240 $205,000 15% $25,425 $258 $163 29,791 92 8 90th $246,738 $236,000 20% $38,950 $322 $182 38,814 112 9 Results based on surveying 44 top executives at credit unions in this asset group 39 Top Executive2013 Compensation Federal Credit Unions with Total Assets of $150 Million to Less Than $335 Million
  34. 34. Results based on surveying 38 top executives at credit unions in this asset group 40 Top Executive2013 Compensation Federal Credit Unions with Total Assets of $335 Million to Less Than $750 Million Potential Bonus Comparison Credit Unions . . . . Total Loans/ % of $ Dollar Assets Leases Number of Percentile 2013 Potential Total Compensation (Base + Bonus) 2013 Base Salary Base Amount (M) (M) Members Employees Branches 10th $190,000 $190,000 0% $0 $366 $167 22,921 78 5 25th $225,000 $195,000 0% $0 $410 $230 39,798 115 6 40th $254,925 $240,000 4% $6,920 $430 $278 43,844 137 8 50th $275,000 $257,000 8% $16,500 $457 $291 46,613 156 10 60th $301,620 $264,000 10% $27,420 $478 $318 52,528 171 11 75th $324,000 $282,460 20% $52,000 $569 $357 57,385 187 15 90th $390,000 $312,000 30% $84,000 $640 $463 74,907 233 18
  35. 35. Potential Bonus Comparison Credit Unions . . . Percentile 2013 Total Compensation (Base & Bonus) 2013 Base Salary % of Base $ Dollar Amount Total Assets (M) Loans/ Leases (M) Number of: Members Employees Branches 10th $323,150 $273,457 0% $0 $841 $369 51,104 138 6 25th $381,770 $310,382 10% $33,000 $916 $498 69,254 186 10 40th $400,000 $368,000 20% $55,500 $1,010 $603 85,086 227 12 50th $442,806 $387,579 20% $67,176 $1,220 $634 98,050 270 15 60th $480,000 $421,720 30% $90,000 $1,363 $686 116,383 330 16 75th $613,288 $470,000 30% $136,675 $1,844 $1,214 161,965 393 19 90th $780,000 $600,000 45% $213,168 $3,368 $2,201 267,446 832 37 Results based on surveying 38 top executives at credit unions in this asset group 41 Top Executive2013 Compensation Federal Credit Unions with Total Assets of $750 Million or More
  36. 36. 42 2013 Bonus Plans for Top Executive
  37. 37. 43 All FCUs 32% <$10M 21% $10M – <20M 20% $20M – <40M 25% $40M – <75M 47% $75M – <150M 44% $150M – <335M 60% $335M – <750M 62% $750M+ 84% 2013 Bonus PlansTop Executive “For 2013, does the top executive have a bonus, incentive or variable pay plan in place?”
  38. 38. 44 2013 Bonus PlansTop Executive “Which components are used to determine this bonus/ incentive/ variable pay plan for the top executive?” Loan Growth . . . . . . . . . . . . 52% Net Worth . . . . . . . . . . . . . . . 22% Return on Assets (ROA) . . . 45% Asset Growth . . . . . . . . . . . . 20% Membership Growth . . . . . . 42% Savings/Checking Growth . . 20% Net Income Growth . . . . . . . 34% Expense Ratios . . . . . . . . . . 19% Delinquency Measures . . . . 32% Membership Satisfaction . . . 16% Strategic Initiatives . . . . . . . 23% Products/Svcs per Member . 14% Discretionary Board Eval. . . 23% Employee Satisfaction . . . . . 10% Other components not listed but mentioned by 1% or more: Compliance (4%), Balanced Scorecard (4%), Net Interest Margin (1%), Leadership (1%), Loans-to-shares Ratio (1%)
  39. 39. 45 2013 Bonus PlansTop Executive Executives w/Formal Bonus Structure: Components used to determine bonus/ incentive/ variable pay plan All Execs $40M- w/Plan <$335M $335M+ Loan Growth 52% 62% 58% Return on Assets (ROA) 45% 57% 58% Membership Growth 42% 36% 60% Net Income Growth 34% 30% 25% Delinquency Measures 32% 48% 39% Strategic Initiatives 23% 34% 27% Discretionary Board Eval. 23% 29% 25% Net Worth 22% 27% 30% Asset Growth 20% 22% 22% Savings/Checking Growth 20% 22% 15% Expense Ratios 19% 29% 25% Membership Satisfaction 16% 17% 40% Products/Svcs per Member 14% 20% 17% Employee Satisfaction 10% 11% 19% Note: Credit Unions w/ assets under $40 million are not shown – insufficient sample size
  40. 40. 46 2013 Bonus PlansTop Executive Most Frequently Used Components For Those with Component in Plan . . . Percent of Bonus Plan Determined by Component 25th 75th Median Percentile Percentile Loan Growth 20% 10% 25% Return on Assets (ROA) 20% 10% 25% Membership Growth 15% 10% 25% Net Income Growth 40% 20% 100% Delinquency Measures 15% 10% 20% Strategic Initiatives 20% 10% 40% Discretionary Board Eval. 20% 20% 30% Net Worth 15% 10% 25% Among the more frequently used bonus plan components, Net Income Growth tends to have more weight than other components.
  41. 41. 47 How many Federal credit unions have executives with Nonqualified benefits plans?
  42. 42. 48 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
  43. 43. 49 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
  44. 44. 50 6% 12% 41% 54% 78% 90% 7% 58% <$10M $10M - <$20M $20M - <$40M $40M - <$75M $75M - <$150M $150M - <$335M $335M - <$750M $750M+ %ofFederalCUs By Asset Size Federal Credit Unions Percent with Nonqualified Plans (Including Severance)
  45. 45. 51 6% 7% 35% 43% 71% 77% 51% 7% <$10M $10M - <$20M $20M - <$40M $40M - <$75M $75M - <$150M $150M - <$335M $335M - <$750M $750M+ %ofFederalCUs By Asset Size Federal Credit Unions Percent with Nonqualified Plans (Excluding Severance)
  46. 46. 52 7% 6% 5% 22% 34% 22% 13% 11% 66% 57% 21% 17% 13% <.5% <.5% 2% <$10M $10M - <$20M $20M - <$40M $40M - <$75M $75M - <$150M $150M - <$335M $335M - <$750M $750M+ %ofFederalCUs 2+ One By Asset Size Federal Credit Unions How Many Executives Have NQ Plans? (Excl. Severance)
  47. 47. 53 Types of Nonqualified PlansTop Executive $10M $20M $40M $75M $150M $335M $750M FCU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus SERP 457(b) 4% 5% 1% 19% 23% 25% 47% 46% SERP 457(f) <.5% 2% 3% 9% 16% 18% 30% 45% Split-Dollar <.5% 1% 2% 7% 16% 6% 15% 18% Severance 3% 2% 9% 17% 23% 31% 43% 39% Have, but none of the above 2% - 1% 2% - - - - Not have NQ plans/ Not eligible 93% 94% 88% 59% 42% 46% 25% 13%
  48. 48. 54 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 2% 3% 6% 7% 9% 10% 20% 34% Yes, considering offering NQ Plans 4% 6% 11% 13% 19% 19% 21% 10%
  49. 49. 55 Cars and Car Allowance for Federal Credit Union Top Executives
  50. 50. 56 Top Executive Car/ Car Allowance $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Yes, receive company car/car allowance 4% 11% 16% 30% 39% 50% 70% 69% **Pay for/ Reimburse for: Purchase/Lease * 4% 1% 17% 18% 22% 34% 32% Gas & Maintenance * 5% 1% 15% 16% 21% 36% 23% Vehicle Insurance * 4% 1% 14% 18% 21% 29% 27% All 3 - Purchase/lease, gas/maint., & insurance * 4% * 12% 16% 17% 23% 21% Flat Monthly Fee 2% 5% 12% 9% 21% 25% 36% 37% Mileage 4% 3% 2% 4% 1% 5% * 3% No Car/ Car Allowance 96% 89% 84% 70% 61% 50% 30% 31% * Less than .5% ** Multiple responses allowed
  51. 51. 57 Car/Car Allowance Percentile Monthly Yearly 90th $1,000 $12,000 75th $700 $8,400 60th $560 $6,720 50th $500 $6,000 40th $350 $4,200 25th $250 $3,000 10th $100 $1,200 Base: Those with a car or car allowance (n=141) Top Executives
  52. 52. 58 Fringe Benefits Provided @ No Cost Top Exec All All Total Only Execs Employees Electronic Devices 34% 14% 19% 1% Wireless/Cell Phone 33% 10% 23% * Education 26% 1% 2% 23% Preferred Loan Rates 19% 1% 1% 17% Spouse Travel 13% 5% 6% 1% Reserved Parking 13% 5% 4% 4% Financial Counseling 12% * 1% 12% Physical Exam 9% 2% 1% 6% Personal Liability Insurance 7% 1% 3% 3% Long-term Care 7% * 2% 4% Executive Coaching 6% 2% 4% na Health/Fitness Club 4% 1% * 3% Legal Counseling 4% * 1% 3% 1st Class Air Travel 3% 1% 1% 1% Estate Planning 3% * 1% 2% Country Club 3% 2% 1% na Mortgage Assistance 3% 1% * 2% Income Tax Preparation * * * * * Less than .5%
  53. 53. 59Top Executive Fringe Benefits Provided @ No Cost $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Electronic Devices 16% 23% 31% 39% 59% 78% 81% 79% Wireless Phone 2% 26% 37% 53% 74% 75% 81% 84% Education 11% 25% 22% 24% 60% 42% 62% 66% Preferred Loans 12% 10% 22% 27% 26% 33% 38% 45% Reserved Parking 8% 13% 14% 17% 5% 14% 42% 36% Spouse Travel 1% 14% 11% 25% 20% 28% 34% 45% Finance Counsel 6% 11% 7% 11% 19% 26% 37% 36% Physical Exam 2% 5% 6% 18% 12% 28% 27% 29% Exec Coaching 2% 10% 1% 11% 17% 12% 20% 23% Slide 1 of 2
  54. 54. 60Top Executive Fringe Benefits Provided @ No Cost $10M $20M $40M $75M $150M $335M $750M CU Assets: <$10M <20M <40M <75M <150M <335M <750M Plus Long-term Care * 11% 6% 11% 6% 22% 14% 9% Pers Liability Ins 4% 5% 6% 9% 5% 19% 22% 15% Health/Fitness Club * * 2% 3% 19% 11% 14% 18% Legal Counseling 2% 1% * 6% 16% 5% 12% 3% 1st Class Air Travel 3% 2% 1% 4% 2% 3% 7% 24% Country Club * * 3% 8% 1% 5% 19% 23% Mortgage Assist * * * 6% 11% 5% 11% 13% Estate Planning * 4% 3% 7% 6% 4% 6% 8% Income Tax Prep * * * * 2% * * 3% * Less than .5% Slide 1 of 2
  55. 55. 61 Benefits Provided to Board of Directors
  56. 56. 60% 55% 47% 26% 17% 5% 4% 2% 27% 1% Travel Expenses Conference Expenses Meeting Expenses Educational Expenses Travel Expenses for Spouse Life Insurance Emeritus Board Status Disability Insurance Medical/Wellness None 62 Board Members Benefits/Expenses Covered
  57. 57. 63 $10M $20M $40M $75M $150M $335M <$10M <20M <40M <75M <150M <335M <750M $750M+ Travel Expenses 35% 56% 70% 80% 86% 87% 95% 84% Conference Exp 35% 51% 59% 74% 70% 88% 87% 84% Meeting Expenses 34% 43% 51% 53% 62% 73% 74% 49% Educational Exp 17% 34% 25% 32% 38% 26% 32% 34% Spouse/Partner Travel 2% 17% 8% 35% 28% 37% 50% 68% Life Insurance 2% 7% 9% 5% 3% 6% 10% 8% Emeritus Status * * 3% 11% 8% 12% 17% 23% Disability Insurance * * 2% 6% 1% * 2% 8% Medical/Wellness * * 1% * 1% 4% 7% 13% None 47% 27% 23% 7% 11% 4% 2% 6% Board Members Benefits/Expenses Covered * Less than .5%
  58. 58. 64 When looking at survey results . . . • Is the survey representative? • An adequate sample size for your asset group? • 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 In Conclusion
  59. 59. 65 • Surveyed the top five executives • Additional information in written report – Executives #2 thru #5 – Reviewing overall Executive Compensation Plans? – Paid Time Off – Top Executive – Health & Welfare Benefits Provided at No-cost – Qualified Plans – 401(k), Defined Benefit, etc. – Demographic - years as exec, age, gender, education In Conclusion
  60. 60. 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 Asset Size: Summary of Comparison Credit Unions # Surveyed: 30 Size of Comparison Credit Unions (See Note Below) Percentile Total Assets (in Millions) Total Loans/Leases (in Millions) Current Members Number of Branches Employees (Full & Part Time) 90th $681.2 $445.4 76,636 19 270 75th $609.0 $396.3 66,277 16 204 60th $575.0 $336.0 58,115 12 182 Median - 50th $545.5 $322.5 54,836 11 176 40th $485.6 $291.4 52,067 9 167 25th $459.0 $248.5 44,735 6 141 10th $428.7 $202.9 38,730 6 126 Qualified Plans for All Employees Percent of comparison credit unions with plan: Exec Compensation Defined Profit a) Currently Reviewing 401(k) Benefit Sharing 100% 23% 30% 20% 5.60 =Average 401(k) Match - % of Total Compensation b) Plan to Review Field of Membership Single SEG Multi SEG Community 23% 13% 30% 57% Benefits Provided to Board Members Nonqualified Benefits Conference Expense Meeting Expense Travel Expense a) Reviewing 83% 60% 87% Existing Plans Medical/Wellness Disability Ins Life Insurance 13% 3% 13% 27% None Provided 0% b) Considering to Offer U.S. Regions Represented Northeast Southeast Mid 13% 13% 17% 37% 40% 0% Purchase Plan Association 0% Education Expense Money ABC Credit Union Review of Plans $537 Million Anywhere, USA Source - 2012 NAFCU-BFB Survey of Federal Credit Union Executive Benefits & Compensation Conducted by Clark & Chase Research, Inc. Long Term Care 3% Percentile - is the percentage who are less than or equal to that figure. For example, if total compensation is $90,000 at the 25th percentile, then 25% of the executives’ total compensation are at or below $90,000. West Note - Each variable shown by percentiles is independently calculated . The above results do not mean that any specific credit union with total assets at a certain percentile will have a loans/lease, membership or employees at the same percentile. AK, CA(3), CO, FL, HI, IN(2), MA, MD, MI, MN, NC, NE(2), NM(2), NV, NY, OK, PA, SC, TN(2), TX(4), UT 33% States represented (number in brackets for states with 2+ credit unions):
  61. 61. 67 Top Executive • Base, Bonus Percent and Total Compensation • Direct Responsibilities • Fringe Benefits • Nonqualified Plans Example BFB Report . . . Asset Size: Top Executive # Surveyed: 30 Responsibilities and Compensation (See Note Below) Percentile Direct Responsibility - Number of Functions 2012 Base 2012 Bonus % 2012 Total Salary (Base & Potential Bonus) 90th 2.1 $287,182 30.5 $355,875 75th 1.0 $269,206 19.2 $298,404 60th 1.0 $250,800 12.6 $291,423 Median - 50th 1.0 $242,250 10.1 $279,685 40th 1.0 $234,400 10.0 $265,800 25th 1.0 $215,573 4.3 $233,532 10th 1.0 $199,493 0.0 $213,576 Percent Who Have Direct Responsibility for Function Exec Mgmt Operations Branch Mgmt Lending 97% 3% 3% 3% HR IS/IT Audit Compliance 7% 3% 7% 0% Member Svcs Collections Marketing Finance 3% 3% 7% 0% Percent Who Have Fringe Benefit Phys Exam Car/Car Allowance Average/Month Financial Counsel 7% 67% $661 3% Income Tax Prep 1st Class Travel Country Club Estate Planning 0% 3% 17% 0% Pers Liability Ins Spouse Travel Reserve Parking Cell Phone 0% 43% 17% 77% Legal Counsel Low Intrst Loans Education Long Term Care 0% 10% 17% 10% Nonqualified Benefits - Percent with Benefit SERP 457(b) SERP 457(f) Split Dollar Severance 43% 47% 7% 30% ABC Credit Union $537 Million Anywhere, USA Source: 2012 NAFCU-BFB Survey of Federal Credit Union Executive Benefits & Compensation Percentile - is the percentage who are less than or equal to that figure. For example, if total compensation is $90,000 at the 25th percentile, then 25% of the executives’ total compensation are at or below $90,000. Note - Each variable shown by percentiles is independently calculated . The above results do not mean, for example, that a person with a base salary at the 75th percentile has a bonus or total compensation at the same percentile. Conducted by Clark & Chase Research, Inc.
  62. 62. 68 Executives #2-5 • Same Information as Top Executive • Provided For Each Executive Example BFB Report . . . Asset Size: #2 Executive # Surveyed: 29 Responsibilities and Compensation (See Note Below) Percentile Direct Responsibility - Number of Functions 2012 Base 2012 Bonus % 2012 Total Salary (Base & Potential Bonus) 90th 5.2 $176,800 16.0 $201,760 75th 4.0 $170,976 12.5 $183,598 60th 3.0 $153,946 10.0 $171,626 Median - 50th 3.0 $149,339 10.0 $159,000 40th 2.0 $142,585 6.0 $149,724 25th 2.0 $137,514 4.0 $145,600 10th 1.0 $113,640 0.0 $128,216 Percent Who Have Direct Responsibility for Function Exec Mgmt Operations Branch Mgmt Lending 17% 45% 24% 21% HR IS/IT Audit Compliance 21% 28% 7% 28% Member Svcs Collections Marketing Finance 24% 17% 14% 45% Percent Who Have Fringe Benefit Phys Exam Car/Car Allowance Average/Month Financial Counsel 0% 17% $486 3% Income Tax Prep 1st Class Travel Country Club Estate Planning 0% 0% 3% 0% Pers Liability Ins Spouse Travel Reserve Parking Cell Phone 0% 17% 14% 76% Legal Counsel Low Intrst Loans Education Long Term Care 0% 10% 17% 7% Nonqualified Benefits - Percent with Benefit SERP 457(b) SERP 457(f) Split Dollar Severance 34% 28% 7% 7% Anywhere, USA ABC Credit Union $537 Million Source: 2012 NAFCU-BFB Survey of Federal Credit Union Executive Benefits & Compensation Percentile - is the percentage who are less than or equal to that figure. For example, if total compensation is $90,000 at the 25th percentile, then 25% of the executives’ total compensation are at or below $90,000. Note - Each variable shown by percentiles is independently calculated . The above results do not mean, for example, that a person with a base salary at the 75th percentile has a bonus or total compensation at the same percentile. Conducted by Clark & Chase Research, Inc.
  63. 63. 69 Tyler Quigley National Director of Marketing Burns-Fazzi, Brock 888 494-8911 Ext. 206 tquigley@bfbbenefit.com For More Information . . . David Frankil President NAFCU Services Corporation 800 336-4644 • 703 842-2226 dfrankil@nafcu.org
  64. 64. 70 Thank You Jack E. Clark, PhD 704-998-9661 jclark@clarkandchase.com

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