Compensation in the equipment finance industry rose for the third year in a row in 2012, according to the 2013 Equipment Leasing and Finance Compensation Survey from the Equipment Leasing and Finance Association (ELFA) and McLagan. For the third consecutive year, a year-over-year increase in new business volume drove compensation on an upward trajectory, particularly for origination staff.

The 2013 Equipment Leasing and Finance Compensation Survey measures compensation rates for the 2012 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 2012 and 2013), 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.

Survey highlights include:

Compensation Increases Varied by Position: In 2012, the median increase in compensation rose more quickly for origination than it did for portfolio management or remarketing. For the middle and back office (e.g., underwriting, collections, operations and technology), changes in total compensation were smaller. Compensation increases were directed more at the professional levels than at the manager levels.

Compensation Levels Varied by Firm: The increases in total compensation were not felt by all organizations or by every individual at each organization equally. On a “same-store” basis, 68% of firms increased their incentive pools, with increases ranging from 10% to 40%. Pool increases varied by firm type, with bank-owned leasing groups increasing their incentive pools more frequently (65% of banks) relative to captive leasing groups (50% of captives).

Originators Saw More Volatility: Although year-over-year pay increases for front-office staff were greater than for middle- and back-office support, originators were subject to more volatility in compensation, with 35% receiving less compensation in 2012 than 2011, compared to 10% to 20% in middle- and back-office roles. In the middle and back office, the decreases tended to occur more often at the management levels than at the professional levels.

Differentiation Occurred: Not all originators were rewarded equally. Analysis of the compensation data indicates that the high quartile and top decile compensation levels were as much as 40% and 100% higher, respectively, than the median compensation levels, particularly for senior producers within direct origination.

To order a copy of the 2013 Equipment Leasing and Finance Compensation Survey contact Bill Choi at [email protected] or 202-238-3413 or click here.