Pub. 7 2017-2018 Issue 4

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S January • February 2018 9 Possibly the most significant challenge after a transaction is the combination and/or intro- duction of incentive-based pay methodologies. Most likely there are some differences in place between the two organizations. One may have a completely discretionary systemand the other a true performance-based system. These differences often lead to cultural challenges, because formal systems generally emphasize the importance of pay for performance more heavily than discretionary systems. If both banks have formal performance-based incentives in place, then the challenge will be combining the plans and identi- fying the key differences that need to be resolved. Examples of differences would be the award opportunity levels, partic- ipants included in the various tiers and plans, types of goals used, documenta- tion of the plans, and the award tracking systems in place. Someone will need to review the various incentive plans and determine how to best mesh the current practices for the future. There are a number of com- pensation related challenges that can impact a successful merger. The challenges spread beyond the exec- utive related severance payments, and continue well after the change-in-con- trol event occurs. Careful consideration and planning should be used to har- monize differing compensation philos - ophies and practices through the compensation landscape of the com- bined entities. Compensation philos- ophies need to be reviewed, salary structures and market benchmark methodologies may need adjustment, and incentive plans will need to be com- bined or revamped. Finally, a timeline and communication strategy will need to be developed to ensure a successful com- pensation environment going forward. n Kristen Kostner is a Senior Compensation Consultant at Blanchard Consulting Group and focuses on regional and community banks in the Mountain States Region. Kristen can be reached directly at 314-394-3374 or at kristen@blanchardc.com. Matt Brei is the President of Blanchard Consult- ing Group ( www.blanchardc.com ). He works ex- clusively with regional and community banks providing independent compensation consulting services, and can be reached at 952-496-2221 or matt@blanchardc.com. Once the transaction is complete and the executive related compensation payouts have been settled, there is a combined organization that needs to operate successfully. 800 318 4142 • INSURANCE BIA.INSURANCE • WWW.BIA.INSURANCE Proudly endorsed by the Texas, Oklahoma and Colorado Bankers Association Financial Institution Bond Directors and Officers Liability Policy Cyber Liability/Privacy Breach Response Commercial Property, Auto, Worker’s Compensation Lender Placed Insurance Mortgage E&O and Impairment Debit and Credit Card Fraud Insurance Coverage Review Group Health Insurance Insurance for Your Bank Commercial Customers PROVIDING INSURANCE PROTECTION FOR MORE THAN 30 YEARS 2017 BIA Mag ad.qxp_BIA-CO Mag half pg 9/21/17 2:09 PM Page 1