regional & community banking Articles

SEC Publishes Proposed Rules for the Implementation of the Pay Ratio Disclosure

Among the many executive compensation related items included in the Dodd-Frank Wall Street Reform Act of 2010 (the Dodd-Frank Act), one of the most heavily debated and anticipated was the Pay Ratio Disclosure, or Section 953(b). This ratio, designed to illuminate the relationship between total reported compensation for a CEO and the median employee of the company (not including the CEO), sounds simple in concept, but generates a number of complex challenges. These challenges explain much of the two year delay in moving forward with the rule.

SNL Financial: The New Mandate for Compensation Decision-Making

Publication in SNL Financial: External forces such as legislation, regulatory guidance, and shareholder and media scrutiny have necessitated the largest thought overhaul the banking industry has seen in many years.  The overall message is clear:  Banks will change the way they consider compensation, either voluntarily or by mandate.  This paper discusses concerns, considerations and challenges banking leadership must deal with moving forward in their compensation planning.

Study Results: Market Impact on Incentive Compensation Trends

McLagan conducted an online survey in November and December 2010 regarding current and planned performance metrics and payment vehicles at community and regional banks. The intent was to sample the latest thinking in light of the current economic and legislative environment. Sruvey questions covered 2010 and planned 2011 incentive plans

Study Results: 2011 Salary Incentive Planning

In order to help clients prepare for 2011 salary increases, we conducted a free flash survey in late September and early October of 2010 to get a sense of what banks are planning for their 2011 salary budgets. The 97 banks that participated in the survey were asked if they planned to give salary increases in 2011; and if so, what percentage increase they were budgeting, and how the increase differed from their 2010 increases (greater, less or the same).

Trends in Equity Approaches

This survey examines whether or not banks use equity as part of their overall compensation program. For banks that use equity, we present information regarding what type of equity they grant, the company, individual, etc. performance measures upon which Banks base the equity grants, how frequently grants are made, and vesting.

Dodd-Frank Wall Street Reform & Consumer Protection Act

On July 21, 2010, the Dodd-Frank Wall Street Reform & Consumer Protection Act (the “Act”) was signed into law. This legislation of more than 2,300 pages includes a number of provisions affecting executive compensation and corporate governance. While a majority of the compensation provisions apply to all public companies, a few select provisions apply to all financial institutions (public or private) with assets of $1 billion and more. This client alert summarizes these provisions and the associated effective dates.

Today’s Compensation Environment – 2010

This is the 9th edition of Corporate and Consumer Banking Consulting Practice White Paper on current compensation trends in the banking industry. Since beginning this annual publication (originally published by Amalfi Consulting and sponsored by the American Association of Bank Directors) we have focused on specific trends in compensation with a detailed year-over-year analysis. However, with the industry continuing to face challenges on numerous fronts, we also comment on the state of the banking industry, along with the resulting impact on compensation.

Board of Directors Compensation Practices

Given the state of the banking industry over the past twenty-four months, we felt it was time to examine if and how board of directors’ compensation plans were changing. In this flash survey, we explore the prevalence of increases and decreases in overall board of directors’ compensation, retainer, or meeting attendance compensation as well as committee retainer and attendance compensation.

Final Guidance on Sound Incentive Compensation Policies

On June 21, 2010 the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (collectively, the “Agencies”) issued final guidance on incentive compensation arrangements that apply to all banking organizations. This final guidance replaces the proposed guidance issued by the Federal Reserve on October 22, 2009.

Aon Names Ray Everett Global President of McLagan

Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, today announced it has named Raymond Everett as global president of McLagan. In this role, Everett is responsible for leading a team of experts who provide compensation, performance and talent intelligence to companies in the financial services and insurance industries. He leads the McLagan executive committee and is a member of Aon’s Talent, Rewards & Performance executive committee.

Managing Compensation in a Downturn

It seems like we are in for a rocky ride in 2016. While underlying economies of many countries and the financial performance of many companies still appear solid, numerous firms are preparing for a tough year ahead.

Infographic: Engage Your Employees at Regional and Community Banks

The most successful banks know it takes engaged employees to deliver great results. It's not just about having the best lending rates or branch locations - it's about the people. Talent drives the performance of your bank more than any other investment you make. From competing with Fintech firms to the evolving role of branch personnel, having the best and most motivated people has never been more important.

Banking Observations on the CEO Pay Ratio and New SEC Guidance

The SEC Corporation Finance Staff, on September 21, 2017, issued three forms of guidance on the CEO Pay Ratio Rule: an interpretive release, a press release, and new and revised C&DIs.   

Infographic: Elevate People Performance in Financial Services

It's no secret that times have changed for the financial services industry. When times were good, soaring revenue and profits covered up human capital challenges and issues lurking beneath the surface. Today, firms are emerging from the human capital bubble and need to position themselves to select, engage, and develop their most critical resource - people. In our latest infographic, get key insights and actionable tips your firm needs to rise above.

Tax Reform Impact for Tax-Exempt Organizations

The Tax Cuts and Job Act was signed into law on Friday, December 22nd. The following outlines the implications for "excessive pay" in tax-exempt organizations, effective for employer tax years beginning after 12/31/2017. 

Looking Back at Compensation for Regional and Community Banks in 2017

As we kick off another year, it is important to reflect upon the evolving environment of the banking industry. From the continuing shift towards technology and the specific roles that have arisen as a result, to increased regulatory and shareholder pressures, and the emergence of tech startups, there are many variables to consider. Here’s what regional and community banks need to know to prepare for regulatory updates and the future of executive, director, and staff compensation.

Corporate Titles at Credit Unions

Corporate titles, such as EVP, SVP, VP, and AVP are widely used at both credit unions and banks. Historically, banks tend to make more extensive use of corporate titles across the employee population. As credit unions increasingly compete with banks for talent and business, their title structures and approach to title management may also need to change.

A Backward Glance and Forward Look at Board of Director Compensation

Across the banking industry, director compensation remains subject to regulatory and shareholder scrutiny. While increases in director pay have continued in recent years, the mix of pay has also continued to shift.

Should Your Credit Union Think About Long-Term Incentives?

In today’s fiercely competitive market, credit unions are increasingly competing with the broader financial services market for top talent. This results in the need for new compensation plan design for credit union executives and key leaders. We’re beginning to see a rise in prevalence of long-term incentive plans (LTIPs) driven by three main factors:

  • Market trend towards performance-based compensation
  • Risk best practices
  • Tax law changes

Five Questions for Banks to Consider When Setting Executive Annual Incentive Plan Goals

With such a substantial percentage of executive pay delivered through incentive programs, it’s no wonder that incentive plan discussions comprise a significant portion of the compensation committee’s agenda for many banks. However, through our experience of serving as advisors in over 300 compensation committee meetings per year, we are surprised by how little dialogue exists around the specific topic of annual incentive plan performance goal selection and goal setting. 

Bank Compensation Trends: What You Need to Know

The end of the year is just around the bend and many firms are already knee-deep in their year-end planning. However, before fully diving in, it’s important to evaluate all the changes and resulting outcomes that occurred in 2018 to ensure you have the right reward plans and practices in place. To help this process along, we've used our 2018 Regional & Community Banking Compensation Survey and McLagan proxy database results to share an overview of the major topics and trends that are shaping the sector today and in the future.

Credit Union Compensation Philosophy: Going Beyond “Attract, Retain, and Motivate”

What is your credit union’s compensation philosophy? When they’re well thought through, compensation philosophies can help provide an important framework for pay decisions throughout a firm. But far too often, these philosophies are antiquated, and include general phrases like “we strive to provide competitive compensation” and “the goal of our compensation structure is to attract, retain, and motivate.” While few can disagree with these types of platitudes, they are rarely helpful when making actual decisions.

What Public Companies Should Know About New Standards for ESG Disclosure

The standards recently issued by the Sustainability Accounting Standards Board have gained traction with some institutional investors, proxy advisory firms, and even public companies.

ISS Policy Changes May Make It Harder for Some Companies to Obtain Equity Share Approval

ISS’ decision to raise its scoring allocation towards the share pool duration factor and add a dilution threshold will likely lead to the most impactful changes for companies seeking shares in 2019.

How the SEC’s Hedging Rule Will Impact Public Companies

In December 2018, the SEC was able to close the books on a pending provision from the Dodd-Frank Act by finalizing a long-awaited hedging disclosure rule. The new disclosure requires most public companies to disclose any practices or policies regarding the ability of employees and corporate directors to hedge their company’s equity securities by adding a new paragraph to the corporate governance disclosure requirements in Item 407 of Regulation S-K. The final rule is generally consistent with the rule the SEC proposed back in February 2015.

The Spotlight: Gayle Appelbaum, Partner, Regional and Community Banking

Gayle Appelbaum is a Partner in McLagan’s regional and community banking consulting practice. She specializes in developing compensation plans that balance short and long-term risk while building shareholder value. Gayle focuses on the full spectrum of compensation and benefits issues, including corporate governance, pay-for-performance, risk assessment, taxation, regulatory compliance, M&A, and compensation agreement provisions.

The Latest Salary Provisions and Their Impact on Employee Rewards

As reported in the Aon Washington Report, the last couple of weeks have seen two significant developments in the area of broad based compensation. This article summarizes proposed provisions and what employers should do next.

Fighting the War for Digital Talent

What should financial services firms keep in mind as they design their employee value propositions and total reward strategies to compete for top tech talent? This article discusses the evolution of financial services in the digital age, compares the industry practices of financial services and technology, and offers food for thought when adapting your firm’s talent and rewards strategies to the new digital world.

Benchmarking 101: How to Benchmark, and Why It Matters

To recruit top talent in today’s competitive market, it’s important to know what your peers are paying and compare your compensation strategy against this data. Regularly benchmarking your firm’s positions to survey matches is the best place to start. This article delves into the ins and outs of benchmarking and provides a quick guide for making the process as seamless and effective as possible.
 

Staying Ahead of the Curve: Tech Convergence in Financial Services Q&A

How are financial services firms responding to the changing digital landscape? This article answers some of your most pressing questions as they relate to tech convergence, and how firms are adapting to an ever-changing business environment.

 

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