Being a bank director carries a lot of responsibility. Bank directors select management, oversee business performance, ensure compliance with the latest regulations, and make sure the bank is meeting the needs of the community.
Because of this, bank directors need to be compensated.
In this module, we will look at how and why bank directors are compensated, and how banks can establish compensation practices that are based on the principles of safety and soundness.
This course includes an examination.
- Explain why bank directors are compensated
- Discuss the various modes of compensation for bank directors
- Identify the parties that determine compensation levels
- Discuss contemporary issues in bank director compensation
- Why Are Bank Directors Compensated?
- Attracting talent
- Responsibilities of the board
- How Are Bank Directors Compensated?
- Retainers and board fees
- Committee and meeting fees
- Equity income
- Who Determines Compensation Levels?
- Compensation committees
- Board of Directors
- Unilateral determination
- Contemporary Issues in Bank Director Compensation
- Shareholder concerns
- Increases in regulation
- Increases in liability
- Incentive-Based Compensation
- Safety and soundness
- Principles of compensation
- Balanced risk-taking incentives
- Compatibility with effective controls and risk-management
- Strong corporate governance