Many community and regional banks have invested the time and energy to establish a carefully chosen group of comparator companies against which their executive compensation practices can be benchmarked.
The selection of this executive compensation “peer group” is important work! But too often, the full potential benefits of the peer group are not realized by the banking organization. We present four key uses of peer group information that will help banks elevate the benchmarking process to an analysis that can inform and advance their unique business and leadership strategies.
- Test relative pay-performance alignment
- Challenge short-term incentive (STI) design practices
- Inform decisions regarding long-term incentive (LTI) strategy
- Go beyond direct compensation comparisons (i.e. cash and equity components) to understand the total compensation perspective, including retirement arrangements and perquisites
