Survey describes bank CEO salaries, board compensation and indifferent millennials

If you’re thinking of starting a bank or if you’ve been asked to join a bank’s board of directors, then you should be aware of a recent report commissioned by the banking executive publication Bank Director.

If indeed you’re thinking of starting a bank — entering into the de novo process — now might be a good time, said Rick Riccobono, director of banks at the state Department of Financial Institutions.

The Federal Deposit Insurance Corp., which tightened the spigot on insurance to new banks because of the recession, is now soliciting applications.

No de novo applications are on file in Washington, Riccobono said, but he recalls at least six recent inquiries — two from community bankers and four from would-be bankers focused on the marijuana industry. None of the inquiries reached the application stage.

But Riccobono does expect more inquiries as small banks merge with larger banks and as the bankers who sold out start looking for new adventures.

So if that’s you, or if you’ve got $20 million or so waiting for something to do, or if an old college chum has invited you to join the board, there are a few details in the Bank Director 2016 Compensation Survey that may be of interest.

▪ 60 percent of bank CEOs and senior executives plan to retire within the next five years.

▪ 31 percent of CEOs expect to retire within the next five years.

▪ The average age of CEOs is 58.

▪ 87 percent of bankers at banks with assets above $5 billion say they are prepared both for long-term and emergency succession at the highest leadership level; 45 percent of all bankers agreed.

▪ 34 percent of banks are actively seeking millennial employees; 33 percent say hiring millennials is not a focus.

▪ 60 percent of executives say millennials are not interested in working for banks.

▪ 43 percent of executives say there is a shortage of talented commercial lenders in their market.

▪ 74 percent of CEOs believe that beyond a salary, a cash bonus is “highly valued.”

▪ 36 percent said stock options or equity grants are effective tools that tie together the interests of executives and shareholders.

▪ 100 percent of CEOs received a salary, 64 percent received cash incentives, and 53 percent received equity grants.

▪ The median salary for CEOs at banks in FY 2015 was $345,000, the median cash incentive was $51,732, and the potential cash incentive $231,250; equity grants totaled $227,807, and other benefits and perks, $25,474.

▪ Typically, the larger the bank, the higher the reported median compensation. The salary for CEOs at banks with assets above $5 billion was $808,000, with equity grants at $1.1 million. At banks with less than $250 million in assets, the salary was $148,200 with equity compensation noted at $27,500.

▪ 72 percent of outside bank directors receive a fee for attending board meetings, 65 percent receive an annual cash retainer, and 36 percent receive equity compensation.

▪ Outside directors receive a median fee of $1,000 to attend a board meeting; they receive a median cash retainer of $20,000, and they receive $22,500 in equity compensation. Again, larger banks provide larger returns, with the largest banks paying $35,000 as an annual retainer and the smallest paying $3,000.

▪ 48 percent of banks offer no benefits to outside directors.

▪ The median amount of time spent monthly on bank business is 20 hours, and bank boards met a median of nine times annually.

▪ Members of a board’s risk committee earned the highest per-meeting fee, at $650, while members of the technology committee earned the least, at $150.

▪ 17 percent of boards raised or will raise director pay in 2016, 28 percent raised pay in 2015 and 25 percent in 2014.

▪ 41 percent of banks enforced a mandatory retirement age for board members; the median mandatory retirement age was 72. The majority of bank directors, 54 percent, were between 46 and 55 years old.

▪ 18 percent of banks had no plan in place to identify prospective directors; and 63 percent will “seek to create a more diverse board, on the basis of age, gender or race, in the next two years.”

This story was originally published May 11, 2016 at 3:50 PM with the headline "Survey describes bank CEO salaries, board compensation and indifferent millennials."