Eighty percent of the directors and senior executives responding to Bank Director's 2019 Compensation Survey say their bank ties the chief executive's pay to performance indicators—representing a five point increase from 2015.  

The annual survey is sponsored by Compensation Advisors.

But rather than adhering to a particular metric, most, at 59 percent, say CEO compensation is tied to the bank's strategic plan or corporate goals.

The metrics banks prefer vary according to their ownership structure. Public banks are more apt to tie pay to performance, and favor goals established in the strategic plan (72 percent) as well as metrics such as return on assets (58 percent), return on equity (53 percent) and efficiency (40 percent).

Among private banks, net income is the preferred metric (55 percent).

The 2019 Compensation Survey was conducted in April, and captures the perspectives of more than 300 bank directors and executives, including chief executives and human resources officers. The survey also incorporates data collected from proxy statements to reveal pay trends for CEOs, directors and chairmen in fiscal year 2018.

In addition to compensation trends, the survey focuses on succession planning for the CEO and the recruitment of younger directors for bank boards.

Additional findings include:

Forty-three percent say that tying compensation to performance is a top compensation challenge facing their institution, followed by managing compensation and benefit costs (37 percent) and recruiting commercial lenders (36 percent).

The median CEO salary for public and privately-held banks was $325,000 in FY 2018. Median total compensation was $515,728.

When asked how compensation for the CEO could be improved, 36 percent point to offering non-equity, long-term incentive compensation. Twenty-three percent believe the bank should offer equity at greater levels, and 21 percent say their bank should offer some form of ownership. Twenty-two percent believe the CEO should receive a higher salary.

The median age of a bank CEO is 58. Seventy percent are baby boomers, between the ages of 55 and 73.

Twenty-one percent believe it's time for their CEO to announce his or her retirement.

Thirty-seven percent of respondents say their bank has not designated a successor or identified potential successors for their CEO.

Forty-one percent have a mandatory retirement policy in place for directors, at a median of 75 years of age.

Forty-seven percent say their board is working to recruit younger directors. The median age of the youngest director serving on responding boards is 48.