Equipment finance pay rates continue to rise

Compensation in the equipment finance industry increased modestly in 2015, according to research from the Equipment Leasing and Finance Association (ELFA) which suggests pay rates rose for the sixth year in a row, but at a slower rate than previously.

The association’s 2016 Equipment Leasing and Finance Compensation Survey, measures compensation rates for the 2015 fiscal year as reported by more than 70 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 2015 and 2016), 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.

The results show that for the sixth consecutive year, a year-over-year increase in new business volume contributed to an increase in overall compensation, even though increases were more modest relative to recent years

Total compensation was up slightly on a year-over-year basis for most functions and levels. On a “same-store” basis (constant incumbents in multiple survey years), total compensation was up slightly (~3% – 5%) at median for key revenue generating functions from 2014 to 2015. Infrastructure functions received comparable, albeit slightly lower, increases at median (~2%).

Salaries were up slightly on a year-over-year basis, comprising most of the increase observed in total compensation. On a “same store” basis, origination roles tended to have increases around 2% at the median and 2%–3 % for infrastructure roles. Firms did not grant salary increases to all employees during 2015. Within origination, for example, more than 25% of incumbents did not receive a salary increase at all.The research found differences in pay rates according to levels of seniority and type of institution. Increases tended to be larger at the junior and intermediate levels across both the infrastructure and revenue generating functions. Generally, banks and independents tended to award higher increases in total compensation relative to captives.

The majority of firms in the study had long-term award (LTA) programs (e.g., restricted stock, deferred cash) in addition to annual cash incentives. This type of compensation is typically only awarded to management positions. For example, ~15% of senior producers received LTA whereas ~80% of group managers received LTA at firms that awarded this type of compensation. On a firm-by-firm basis, ~75% of banks paid long-term incentives, significantly higher than ~40% of captives and ~60% of independent firms.