Sept 3 , 2014
Compensation in the equipment finance industry mirrors business performance
Washington, DC – Compensation in the equipment finance industry increased modestly in 2013, according to the ‘ 2014 Equipment Leasing and Finance Compensation Survey’ from the Equipment Leasing and Finance Association (ELFA) and McLagan. For the fourth consecutive year, a year-over-year increase in new business volume contributed to increases in compensation, albeit at a slower rate than previous years.
The survey measures compensation rates for the 2013 fiscal year as reported by 60 equipment finance companies representing a cross section of the equipment finance sector, including independent, bank, and captive leasing and finance companies. Firms provide data for more than 90 executive, front-office and support positions, including a breakdown of salary (for 2013 and 2014), incentives (including cash bonuses and commissions), long-term awards and total compensation by company type. The survey is a collaborative initiative between ELFA and McLagan, a performance/reward consulting and benchmarking firm for the financial services industry.
Highlights from the s urvey include:
- Total Compensation: On a ‘same-store’ basis (constant incumbents in multiple survey years), total compensation was flat (+/- one per cent) at median for key originations functions from 2012 to 2013. Infrastructure received marginally larger increases at median, ranging from approximately three to six per cent. Notably, divisional management fared better than most other functions. The team leader / senior role experienced the greatest year-over-year variability, with many individuals receiving decreases of 20+ per cent, while others received increases of 14+ per cent.
- Salary: On a same-store basis, origination roles tended to have slightly lower increases between approximately two to 2.75 per cent. Additionally, more than 25 per cent of incumbents in key origination positions did not receive salary increases year-over-year. Salaries tended to rise between two to four per cent for infrastructure roles.
- Differences by Level: Increases tended to be larger at the more senior levels (particularly in direct origination and infrastructure). Notably, the team leader / senior level for the direct and vendor origination functions was flat (+/- one per cent).
- Differences by Firm Type: Generally, banks awarded higher compensation at median relative to captive and independents, particularly for senior roles. Median total compensation and salary compensation rates tended to be comparable (+/- five per cent) at lower levels for infrastructure and origination roles.
In 2013, new business volume in the U.S. equipment leasing and finance industry increased – for the fourth consecutive year – to levels at or near pre-recession highs. However, the rate of increase slowed in 2013 compared to the significant increases experienced in the previous three years. This trend was not experienced uniformly by all market competitors, as some organizations saw business volume increases while others experienced modest declines. Along with top-line growth, the environment has been marked by heightened competition for deals, which has put pressure on margins. The credit picture, however, remains strong, with low levels of delinquencies and charges offs. The compensation trends in the industry mirror this uneven growth, with compensation linked to industry financial performance over the last year and since the recovery began.