Banking & Financial Services Compensation
At NFP Compensation Consulting, we are honored to partner with and advise some of the most brilliant minds in the banking and financial world. For more than 30 years NFPCC’s leadership and seasoned consulting team has served as experts on strategic compensation and governance matters in both retail and commercial banks and broader financial services firms. Over the last decade, the finance industry has witnessed a tough economic climate and is now experiencing more favorable market conditions. NFPCC has advised banking entities through these challenges and has built a strong reputation for best-in-class data and service.
At NFPCC, building trustworthy relationships with our clients is priority number one. Our purpose is to assist in the development of compensation strategies that are custom tailored to each client’s unique compensation philosophy, corporate vision and strategy. We focus on strategic alignment between pay across all human capital assets – executive level, boards of directors, middle management and professional level employees. NFPCC understands no two clients share the same identity. This is why it is so critical for NFPCC to ensure we understand a client’s competitive profile and how we can best support the achievement of long-term value creation.
NFPCC serves a diverse client base, from small, privately held banks to insurance, investment capital and other diversified financial service segments. Below are some of the clients NFPCC has worked with.
Diverse Service Suite for Banking & Financial Services Entities
- Compensation Philosophy Development
- Peer Group Development
- Executive Compensation Analysis
- Annual and Long-Term Incentive Plan Design
- Board of Director Compensation Analysis and Structure
- All Employee Compensation Analysis and Salary Grade Development
- Severance Benefit Design
- Employment Agreement Design
- Compensation Risk Assessment
- Merger and Acquisition Integration
- Investor Relations, Shareholder Engagement Strategy
- Succession Planning Design
- Retirement Compensation Design
- Compensation Discussion & Analysis Drafting and Review
Banking & Financial Services Market Trends
- The median 2023 projected salary increase budget for all employees is approximately 4%, consistent with 2022 which saw the highest salary budget increase in nearly 20 years.
- Annual incentive payouts are trending below target, while discretionary bonuses are awarding higher payouts.
- The majority of banks have a discretionary component when evaluating executive annual incentive plan performance.
- NFPCC notes that LTI plans continue to be prevalent in executive compensation plans, with that prevalence expanding into other management roles.
- The most common LTI performance metrics are earnings per share and returns-based measures (ROA and ROE).
- Less than half of the banking market utilizes stock options as a long-term incentive vehicle, while there continues to be a steady transition towards heavier weightings of time-based and performance-based restricted stock.
- The industry, and broader public market, has been trending away from the use of options for some time, initially as a result of accounting rule changes. In recent years, as companies have explored ways to increase the efficiencies within their LTI practices, the increased burn rate caused by options has been flagged as a concern.
- The majority of financial institutions report holding bank-owned life insurance (BOLI) assets as a strategic alternative to other investments.