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CEO compensation in the U.S. banking sector reached new heights in 2025 amid strong performance and a continuing executive talent shortage. However, the sustainability of these increases remains in question, with pay packages vulnerable to economic shocks and investor pushback.
Several developments have been named as drivers of increasing compensation in the U.S. banking sector since 2023 including strong investment and M&A market activity, stable performance in the retail banking sector and a continuing executive talent shortage.
According to DMI Compensation data, median granted compensation in the banking sector reached $2.5 million in 2025, a 14% year-on-year increase.
So far, however, investors have remained supportive, with average “say on pay” support for U.S. banks averaging at 97.9% year-to-date, compared with 97.7% for U.S.-based companies overall, according to DMI’s Voting data.
Meanwhile, total granted pay for CEOs in the Big Four banks, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, hit a new record of approximately $264.6 million in 2025, an average of $66.2 million across the four banks.
"The U.S. banking sector is having a bumper year, it's working on all cylinders," said Farient Advisors CEO Robin Ferracone.
The reset
Todd Leone, partner at Aon, described 2023 as a "low point" in U.S. banking compensation, arguing that a combination of three bank failures and an increase in interest rates led to a reset.
"The U.S. banking market had its more seminal events back in 2023 when you had the bank failures of Silicon Valley, First Republic, Signature and, at the same time, you had a dramatic raise in the federal interest rates which had a material impact on bank profitability, and thus, overall compensation."
Leone attributed some of the rise in overall packages to stabilization and strong performance, with banks finding themselves achieving their budgets in 2024 and then exceeding those benchmarks in 2025.
Ed Steinhoff, a managing director at Pearl Meyer, also saw 2025 as a pivotal year in U.S. banking recovery post-2023, stating that, among its clients, the average payout for annual incentive compensation was well above target levels in 2025.
"Where you see above target payouts on the annual incentives, you often also see above target payouts in long-term incentives as well as a rising stock price driving increased value," he told DMI. "All those elements came together to create a pretty significant uptick in executive pay levels for 2025."
A war for talent
One issue faced by the sector is the relatively small pool of executives who combine the skillsets and experience needed to manage U.S. banks. Relatively few have changed CEO in the last three years. That in turn makes boards focused on retention and can lift pay year-over-year.
"Banks are delicate organizations to manage, a good leader needs to be effective in an environment that can throw a lot of curveballs. Compensation committees and boards really want to hang on to those top executives, and so, it becomes a competitive war for talent," Ferracone said.
Morgan Stanley appointed Edward Pick, its then co-president, to take the reins from James Gorman at the beginning of 2024 and gave him the chairman title a year later. As CEO and chair, Pick was granted total pay of $37.2 million in 2025, up from $24 million in his first year. The committee based its 2025 CEO pay decision on "its assessment of Pick’s performance as outstanding during his second year as CEO and first year as chairman of the board, evidenced by the firm’s exceptional results."
Never a straight line
Yet, although pay may be reaching new heights, its staying power is far from certain. Despite strong performance, the sector remains exposed to external shocks - from geopolitical upheaval to economic downturns.
Those risks, Ferracone said, mean that compensation is unlikely to continue increasing indefinitely.
"It's never a straight line, there's going to be at some point a kink in the economy, we have risks even though right now things are strong. At some point there will be a correction that will create a downward trend in the financials," Ferracone said, while cautioning that "it will be incumbent upon boards to take the pay of executives down when that happens."
Steinhoff also emphasized the importance of long-term incentives and the use of equity in pay packages as a way to link executive and shareholder interests. "Banks want to make sure that if the executives are doing well, it's also at a time when the shareholders are doing well."
JPMorgan Chase CEO and Chair Jamie Dimon's 2025 pay package illustrates this phenomenon. Dimon’s overall $40.6 million compensation package was a 7.4% increase on 2024 and consisted mainly of a $32.5 million stock award, at a time when the bank's stock returned 37.3%.
Average support for "say on pay" at S&P 500 banks has been hovering between 80% and 90% since 2023, with a high of 89.9% reached in the 2023/2024 season and 83.4% the following year.
However, investors are not always supportive of large pay packages. Several U.S. mega-banks faced significant “say on pay” opposition this year according to DMI Voting data. Citigroup, Wells Fargo and Goldman Sachs saw support levels ranging in the 60-70% range at their latest annual meetings, while Bank of New York Mellon had one of the lowest levels of backing at 56%.
Steinhoff ties high support with an overall focus on aligning pay with performance, stating that organizations can use the vote as an opportunity to adjust their pay design and make shareholder friendly changes.
"In general, 'say on pay' results have been very strong and getting stronger over the past few years. I think that's because we are seeing companies with very good executive pay design. We are not seeing the egregious pay practices that we might have seen five, 10 or 20 years ago."
Leone argued that, in the current proxy advisor environment, the power has shifted back to institutional investors, making early engagement increasingly important for banks.
"If a bank is doing anything unusual with their compensation, they have to communicate that with their institutional investors, if they are doing anything that is unique or bespoke, they better have solid rationale relative to long-term performance results, succession or strategic direction of the bank."
