Bank Boards Struggle to Add Diverse Members, Despite Recent Improvement

Seventy-seven percent of the directors, chief executive officers and senior executives responding to Bank Director’s 2018 Compensation Survey have at least one female director—up from two-thirds one year ago. The annual survey is sponsored by Compensation Advisors, a member of Meyer-Chatfield Group.

However, in a reflection of the broader corporate landscape, bank boards still have a lot of progress to make when it comes to representing diverse backgrounds. Just 14 percent of survey participants indicate that their board has three or more female members, and given the median size of a bank board, at 10 members, one female director isn’t an adequate representation of gender diversity. Further, boards still struggle to represent diverse ethnic backgrounds—77 percent report that their board doesn’t have a single ethnically diverse member—as well as viewpoints from younger generations, with just 16 percent reporting they have at least one director aged 40 years old or younger.

The 2018 Compensation Survey was conducted in March and April 2018, and surveyed more than 200 chief executive officers, human resources officers, senior executives and board members of both public and privately held U.S. banks to examine the talent challenges faced by the banking industry.

The survey also incorporates data collected from proxy statements to reveal how—and how much—CEOs, directors and chairmen were compensated in fiscal year 2017.

Additional findings include:

Fifty-five percent of respondents say that developing a board succession plan is a top challenge related to board composition, followed by the recruitment of tech-savvy directors, at 44 percent.

Commercial lenders remain in high demand across the industry, cited by 68 percent of respondents as an area where they expect to actively recruit employees in 2018, followed by technology, at 38 percent.

Forty-seven percent indicate their bank has increased salaries over the past three years to attract younger talent.

The median CEO salary in FY 2017 was $370,232, with total compensation at $621,000. The median age of a bank CEO is 58.

Fifty-one percent most recently increased director compensation in 2017 or 2018, and one-quarter raised director pay in 2016.

Seventy percent of non-executive chairmen and outside directors receive a meeting fee, at a median of $1,000 per board meeting in FY 2017. More than three-quarters of non-executive chairmen, and 71 percent of outside directors, receive an annual retainer, at a median of $35,000 and $24,000, respectively.

Full survey results are available online at BankDirector.com and will be featured in the 3rd quarter 2018 issue of Bank Director magazine.

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