Goldilocks and executive pay
Discover how to benchmark executive pay for optimal retention and recruitment.
Whether you view Goldilocks (of fairy tale fame) as a juvenile delinquent guilty of breaking and entering, or a precocious bon vivant, there’s something to be said for getting it “just right.” When it comes to executive pay, is it possible to get it just right? Yes, and no.
The process of getting it just right begins with understanding where you are today. Assessing executive pay starts with benchmarking total compensation against the market and peer group. Total compensation includes four important elements: base salary, annual bonus or incentive, strategic long-term incentive, and perquisites. These elements reflect the board’s values and act as levers to achieve the balance between the retention needs of the credit union and the compensation needs of their executives. Benchmarking helps a board understand if their executive is underpaid or overpaid, and what it would cost to replace that executive in today’s market. In other words, is your porridge too hot, too cold, or just right?
Executive pay is an investment
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