Board Due Diligence: Executive Pay and Benefits. NAFCU Volunteers Conference 2010. Presented by: Chris Burns-Fazzi (BFB) and Loretta Dodgen (HCSGroup). Board Due Diligence.
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Chris Burns-Fazzi (BFB) and Loretta Dodgen (HCSGroup)
“The board, CEO, CFO and senior human resources executive need to ensure alignment of organizational systems (work design and accountability, performance measurement, pay for performance, and talent management) to create the leadership selection and development plans that will drive sustainable growth… and capital-efficient business results in the long term. This organizational capability is the underlying driver of growth in (member) value and the board needs to ensure this capability is in place.”
Mark Van Cliafe
Traditional HR Metrics
• Turnover Rate
• Average time to fill positions
• Compensation Costs/employee
• Benefits as % of Compensation
Human Capital Metrics
• Operating Income/employee
• Comp and Market Ratios
• Human Capital Efficiency Ratio
• Human Capital ROI
• Total Realized Value
Society of Human Resource Management (2007)
Michael Fryzel, NCUA Board Member
Credit Union Times (September 2009)
According to financial planners employees will need about 70-80 percent of pre-retirement income to enjoy a comfortable retirement. Typically retirement income sources include Social Security and qualified retirement plans. For employees with higher salaries a gap is created due to IRS limitations on qualified plans and annual exempt amounts with Social Security.
The graph below shows the income replacement at retirement provided by Social Security and qualified plans for different income levels.
Years to Retirement 20 years
Annual Salary Increase 5%
Current 401k Balance 50% of Current Salary
Employee 401k Contribution 10% of Salary
401K Interest Rate 6%
Social Security Full Benefit in Future $
* Subject to qualified plan limits
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Board Due Diligence & Administration