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Performance Incentives and Bonuses: Highlights from the 2015 Cornerstone Compensation Survey
Wednesday, October 28, 2015 6:25 AM

By Doug Foister, Director of Research, Cornerstone Credit Union League

Each year, the Cornerstone Credit Union League conducts a survey of its member credit unions to obtain salary and benefit information that will be helpful in making sound compensation decisions. Among other things, we examine the performance incentives and bonuses offered to credit union employees. Here are some of the most recent survey findings regarding these two important benefits.

Performance Incentives

As you may know, a performance incentive is tied to a formula-driven pay plan and is designated to award employees for the accomplishment of specific results. The survey showed that nearly one-half (46 percent) of participants offered performance incentives, and the likelihood of doing so is strongly related to asset size (27 percent of credit unions with assets under $50 million; 73 percent of those in the $50 million – $250 million asset range; and 78 percent of those with assets over $250 million).

In the credit unions that offer performance incentives, lending employees (86 percent) and tellers/MSRs (76 percent) were most likely to be eligible to receive the benefit. However, in the larger asset groups, notable percentages of CEOs may also be eligible. By far, most of the survey respondents award performance incentives based on individual performance, rather than department/cross-function performance or overall credit union performance.

The criteria on which performance incentives are based vary to some extent according to type of position. For example, the most frequently cited criteria for CEOs were loan growth, net worth, net-income growth, and ROA. For other management employees, the most popular criteria were loan growth, membership growth, and delinquency measures. Non-management employees were most often awarded performance incentives based on loan growth, products/services per member, and delinquency measures.

Bonuses

Unlike a performance incentive, a bonus is a reward system NOT based on pre-set goals. We discovered that a little over one-half (53 percent) of survey participants offered bonuses to their CEOs. The percentages ranged from 48 percent in the under $50 million asset group, to 59 percent of those in the $50 million – $250 million asset category, to 61 percent of institutions with assets over $250 million. The median size of the CEO bonuses was $3,500 ($2,800, $6,088, and $14,890 in the three respective asset groups). Forty percent of respondents offered bonuses to EVPs/assistant managers, and the median size of these bonuses was $2,000 ($1,900, $3,683 and $5,000 in the three asset categories).

We hope you have enjoyed this look at performance incentives and bonuses. More detailed data on a full range of credit union salaries and benefits is provided in the 2015 Cornerstone Compensation Survey report. To obtain a copy of this report, please contact Doug Foister at 800-442-5762, ext. 6477.

Source: Credit Union Resources Blog, 09/11/15.