After a year of rising interest rates and robust earnings, many banks are rewarding their leaders with revamped pay packages. At the same time, boards must maintain investor confidence and heed calls for course correction on pay practices shaped by regulations, removal of the bonus cap in the UK, and stakeholder scrutiny. From London to Zurich, CEOs are seeing big shifts in how, how much and why they're paid.
The 2025 AGM season has been eventful on the pay front, with many major European banks adjusting executive compensation to reflect strong recent performance and, in some cases, new regulatory freedoms. Broadly, 2024 was a banner year for bank profitability – record net profits and rising returns on tangible equity (RoTE) gave boards the cover to propose bolder pay packages. Total shareholder returns also climbed (helped by hefty dividends and buybacks), bolstering the argument that higher executive incentives were "earned" by exceptional results. But the story differs by region:
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