Compensation and Benefits Highlights from the 2017 Annual Surveys

Compensation and Benefits Highlights from
the 2017 Annual Surveys Completed by Johanson Group

 Employee pay adjustments for 2017 will average 3% and merit pay budgets will average between 3.1% and 3.4%.

  • The average employee base pay adjustments for 2018 will increase slightly due to increasing employment demand.
  • Employee average merit pay budgets in 2018 will range from 3.2% to 3.6% but employers are moving forward with increasing variable pay options.
  • National variable pay averages have increased to new levels as employers reward top performers.
  • Employers are beginning to utilize compensation and benefits strategically to attract and retain competent employees.
  • Above average retirement plan matching contributions by employers and profit sharing distributions are effective employee retention tools.
  • Employers will help employees with student loan debt through creative compensation and benefit packages.
  • Health insurance premium increases are partially mitigated by High Deductible Health Plan (HDHP) options with increasing deductibles and out of pocket maximums.
  • Employers are using HSA contributions to help new employees with minimal personal savings to be prepared for unexpected medical expenses.
  • Paid Time Off (PTO) plans are becoming more popular with employers over traditional sick and vacation time off plans.

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Download our free HR Guide to a Compliant, Equitable & Competitive Compensation program on the right or click below to contact us for a free demo!

Executive Compensation

Executive Compensation

Johanson Group’s normal approach to Executive Compensation is one of a long range approach that seeks to recruit, reward, retain and retire key personnel.  When we are working with executive management positions, we determine each base salary’s last five year average figure before retirement at 65 and then use 70% to 80% of these amounts as a basis for retirement planning.   We take these projected figures and subtract out any existing retirement plan funds (at retirement) such as 401(k), social security, etc. and the remaining balance is the amount that is used to create various types of retirement offerings to close the gap.  The following items are common to supplement an executive’s basic retirement plan:

Employee Stock Option Program (ESOP)
Bank Stock Granting
Stock Appreciation Rights or Performance Share Plan
Phantom Stock
Bank-Owned Life Insurance
Variable Life Insurance
Salary Continuation Plan (Pays a flat amount annually at retirement for “X” number of years)

The recruit portion includes a competitive base salary, health insurance, car allowance, club membership, paid time off for vacations, basic life insurance and other common benefits which most all other employees enjoy.

The reward piece typically involves a formalized incentive compensation plan where three to five stretching goals or metrics are established and bonus dollars are paid one to two months after the performance period.  The incentive compensation program that we like includes four payout levels: threshold, target, target plus, and target maximum.  The payout range of the CEO is roughly 30% to 50% of base salary, 25% to 40% of base salary for the CFO, COO and CLO, and 20% to 35% for the next layer of management.

The retain and retire aspects typically include a combination of the items above to close the gap between the 70% to 80% of final average pay and the current projected plan balances an executive would have through their 401(k) and social security.  If a Bank has publicly traded or internal stock, then stock options or stock appreciation rights can be provided to the executive.  If the stock is closely held, then phantom stock is an effective approach to provide an executive with the ability to realize the same return as the real stock.

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Download our free HR Guide to a Compliant, Equitable & Competitive Compensation program on the right or click below to contact us for a free demo!