Variables That Impact CEO Pay

D. Hilton Associates conducted a study to identify and quantify the best determinant of CEO compensation in the credit union industry.

D. Hilton Associates’ experience in the industry suggests many factors that are associated with variations in CEO compensation; these include credit union asset size, employees, members, city population, and cost of living. One might assume that each of the factors affects compensation in a “linear” fashion.

To explore the causal relationships of such factors, D. Hilton Associates assembled data on the underlying variables of interest. A database was created for the independent variables by gathering information from the NCUA for asset size, employees, and membership of all credit unions, population estimates of all MSAs from the American Community Survey, and the Cost of Living (COL) index numbers from The Council for Community and Economic Research. D. Hilton Associates used internal compensation data for the dependent variable in creating a sample of 422 credit unions with an asset size of greater than $500 million to run in the analysis. Next, simple regression was employed to estimate the quantitative effect of each independent variable upon the dependent variable. D. Hilton Associates also assessed the “statistical significance” or degree of confidence of the estimated relationships.