Incentive plans are intended to help your financial institution achieve specific performance goals by driving certain behaviors of individuals. This is accomplished through compensating an individual for performance that impacts the success of the financial institution and increases shareholder value.
There are several important considerations when designing an incentive plan. Incentive plans should:
- Be in line with your financial institution’s strategic plan.
- Have a balance between both long-term and short term goals.
- Maintain strong safety and compliance by not encouraging excessive risk.
- Be designed to meet the needs of the institution.
This white paper examines these considerations and the decisions to make when creating an incentive compensation plan for your institution’s executives.