The bonus tradition on Wall Avenue by no means actually went away. After years of holding a decrease profile underneath regulatory strain, financial institution chiefs are again to gathering large paychecks, and the numbers revealed in early 2026 are laborious to disregard.
Proxy filings printed in January and February 2026 present the CEOs of the six greatest U.S. banks collectively pulled in $258 million in complete compensation for the 2025 fiscal 12 months, a soar of greater than 21% from the prior 12 months. That’s the second-highest mixed improve on document, trailing solely 2021.
The disclosures have reignited a well-known debate: what precisely are banks rewarding, and what dangers include paying this a lot on the high?
Sturdy outcomes give boards the quilt they want
The pay surge doesn’t come out of skinny air. The six largest U.S. banks introduced in almost $600 billion in income final 12 months, greater than any 12 months on document, with earnings rising 8% from the 12 months earlier than.
The earnings increase was pushed by a number of forces directly:
- A surge in dealmaking, with 2025 recording the second-highest merger quantity on document
- Report buying and selling revenues at Goldman Sachs (GS) and Morgan Stanley (MS), fueled by fee and forex volatility
- Larger internet curiosity earnings as mortgage spreads widened
When earnings transfer larger on a number of fronts, compensation formulation tied to return on fairness, earnings per share and complete shareholder return nearly routinely gentle up.
Most financial institution CEOs earn solely a modest base wage. The actual cash comes by means of money bonuses and fairness awards which are tied, at the least on paper, to efficiency targets.
In a powerful 12 months, these incentive plans can produce monumental payouts with none board explicitly deciding to boost pay. That’s exactly what occurred heading into 2026.
Prime financial institution CEOs pay for fiscal 12 months 2025, per SEC filings:
- Goldman Sachs CEO David Solomon:$47 million (+21%)
- Morgan Stanley CEO Ted Decide:$45 million (+32%)
- JPMorgan Chase (JPM) CEO Jamie Dimon: $43 million (+10%)
- Citigroup (C) CEO Jane Fraser:$42 million (+22%)
- Financial institution of America (BAC) CEO Brian Moynihan: $41 million (+17%)
- Wells Fargo (WFC) CEO Charlie Scharf:$40 million (+28%)
Picture by FABRICE COFFRINI on Getty Pictures
“$40 million appears to be the new benchmark for big-bank CEOs,” Shaun Bisman, a companion at Compensation Advisory Companions, informed American Banker in January 2026.
Boards argue pay is about competitors
It isn’t nearly earnings. Boards argue their CEOs compete in opposition to hedge funds, personal fairness and Large Tech for a similar expertise pool, and that hole has by no means been wider.
Senior banking executives who perceive threat, regulation and world markets are briefly provide. No board needs to be the one which loses a high-profile chief over compensation, particularly heading into what may very well be one other robust 12 months for capital markets.
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Supporters additionally level out that right this moment’s financial institution chiefs run much more advanced, extra regulated establishments than their pre-2008 predecessors.
Capital necessities are larger, scrutiny is sharper, and the margin for error is smaller. If the job is tougher and the expertise pool is thinner, the market value ought to replicate that.
So is that this 2007 yet again?
The echoes are laborious to dismiss. Earlier than the monetary disaster, financial institution CEOs have been richly rewarded for returns on fairness that turned out to be constructed on skinny capital and heavy risk-taking. When the cycle turned, shareholders and taxpayers absorbed the losses, whereas a lot of the pay stayed in executives’ pockets.
Banks insist the construction is essentially completely different now:
- A bigger share of pay is available in fairness awards that vest over a number of years
- Clawback provisions permit boards to recoup compensation in instances of misconduct or main losses
- Some bonus elements are actually tied to threat metrics and regulatory suggestions, not simply headline revenue
Skeptics aren’t absolutely satisfied. If efficiency shares are pegged primarily to earnings and inventory value over a three-year window, executives nonetheless have a powerful incentive to favor actions that flatter near-term outcomes. Value cuts, buybacks and aggressive lending can all enhance returns earlier than their penalties grow to be seen.
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True long-term alignment, critics say, calls for extra emphasis on risk-adjusted returns and credit score high quality throughout a full cycle, not only a bull market run.
What traders and employees ought to watch
For peculiar financial institution staff and prospects, the optics are painful. Department closures, back-office job cuts and protracted charges distinction sharply with the eight-figure pay packages being disclosed this February, and the hole between CEO pay and median employee pay has continued to widen.
For traders, the calculation is extra nuanced. Properly-structured incentive plans can encourage administration to put money into expertise and construct sturdy franchises. However overly beneficiant or loosely designed packages can sign a board that’s too near administration or too centered on holding tempo with friends moderately than defending long-term worth.
Shareholders have a direct voice by means of advisory “say on pay” votes being forged at annual conferences this spring. These not often reject plans outright, however significant opposition pushes boards towards larger self-discipline.
Regulators will likely be watching too. If credit score losses climb this 12 months, notably in business actual property or leveraged lending, right this moment’s beneficiant disclosures may intensify scrutiny of threat oversight and board judgment.
For now, Wall Avenue’s message is easy: robust outcomes justify robust rewards. Whether or not that verdict holds up will rely upon what 2026 brings.
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