Change Coming in Executive Compensation
When the CEO of Home Depot was dumped in 2007, he walked away with a $210 million severance package, a pay-for-failure approach that drew disparaging headlines and a barrage of criticism.
By December that year the nation was officially headed into a major recession, further inflating the attention paid to salaries and bonuses of CEOs and other executives.
However, Collins offers some cautions on bonuses.
“If you’re looking to motivate your executives with bonuses, you may have hired the wrong executive team,” he stated. “A good executive typically doesn’t need motivation, but does need targets and direction. They do need to be told what the credit union wants to accomplish. When structured with an aligned compensation plan, the incentive targets go hand-in-hand with the bonuses. It clearly lets the executive team know what the organization wants accomplished.”
GTE FCU uses a consultant to assess all positions every year and establish an appropriate salary range.
“We’re very much focused on having a balanced plan in place,” Brancucci said. “We also have to manage cost, so we’ve done a lot of things to manage the cost of the benefit package. We have a lot more variable pay and variable benefits, for example a variable 401(k) contribution from the organization.