Banking Incentive Compensation Survey
Amidst the mounting pressure to boost revenue, cost management is poised to take center stage for banks. Sluggish revenue growth coupled with attracting and retaining specialized talent is driving an increase in operating and compensation costs. How are banks reevaluating their incentive compensation programs to minimize cost pressures and maximize productivity?
Alexander Group’s 2024 Banking Incentive Compensation Survey Briefing includes responses from over 50 U.S. banks, providing valuable insights into the industry’s best practices for incentive compensation. Key findings include:
- Prevalent compensation measures include revenue, new revenue, cross-sell and regulatory compliance elements.
- Relationship managers (depending on the size of the bank) have an average pay mix of 75/25, and a payout leverage of 2.35X. Production expectations range from $7-10M in revenue/year.
- Customer-facing roles also have a variety (and often too many) of qualitative MBOs (Management by Objectives).
- There is a significant move to drive a more focused pay-for-performance environment, fewer measures and more simplified incentive plans.
Banks with more diversified revenue streams and a strong cost discipline should boost profitability and market valuation.
Schedule a readout today to explore how you can leverage principles and best-in-class guidelines to effectively assess and design your compensation plans.
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