Bank Compensation Corner: November Insights
- elyse500
- Nov 10
- 3 min read
Updated: Nov 11
Welcome to the November edition of Bank Compensation Corner. As we approach year-end, compensation committees and HR leaders in the banking industry are looking ahead to 2026 while reflecting on the trends that are shaping executive and director pay. This month’s Bank Compensation Corner highlights three emerging themes from recent governance and pay research: how companies can utilize Pay versus Performance (PvP) data for self-assessment, the notable rise in private company board compensation, and shifting investor views on compensation practices, as per the latest ISS survey.
1. Pay Versus Performance: A Lens for Self-Assessment
The recent Compensation Standards article, “PvP: A Lens for Self-Assessment?,” suggests that the SEC’s Pay versus Performance disclosure is more than a compliance exercise—it’s a powerful tool for compensation committees to evaluate whether their programs are truly working.
Key points from the analysis include:
PvP disclosures reveal how pay and performance align over time, using standardized data across peers.
Research shows that only about 15% of companies demonstrate the intended correlation between relative pay and total shareholder return.
Committees should consider adjusting target pay for trailing relative performance, not simply benchmark to “market pay.”
Vesting designs may need to evolve to eliminate industry return leverage and focus on excess company performance.
For banks, this means looking beyond compliance and using PvP data to validate alignment. With heightened scrutiny on executive pay within the financial sector, leveraging these disclosures to benchmark performance and improve program design can strengthen both governance and investor confidence.
Action items:
Conduct a “mark to market” analysis comparing executive pay and performance to peer banks.
Evaluate vesting schedules and incentive structures to ensure they track true relative performance.
Craft disclosure narratives that tell a clear story about pay alignment, not just numbers.
2. Director Compensation: Private Boards See 25% Increases
According to the Compensation Standards post “Director Compensation: 25% Increase for Private Company Boards,” the latest Private Company Board Compensation & Governance Survey found that private company board pay increased by approximately 25% over the past year.
The growth reflects higher demands on directors, competitive talent markets, and the increasing complexity of governance. While pay for private company boards remains lower than that for public boards, many are adopting similar structures, including annual retainers, equity incentives, and additional compensation for committee leadership.
For banks, these trends offer insight into evolving expectations for director pay. As the responsibilities of financial institution boards expand, banks may face upward pressure to remain competitive, particularly when recruiting directors with specialized expertise in risk, technology, or regulation.
Action items:
Benchmark your bank’s board pay against both peer banks and similarly sized private financial institutions.
Review board structures and retainers to ensure alignment with governance responsibilities and ensure adequate oversight.
Prepare to communicate to shareholders how board pay supports strong oversight and effective risk management.
3. Investor Sentiment: Key Takeaways from ISS Policy Survey
The ISS Policy Survey Results, summarized in “Investor Views on Compensation Topics,” highlight how investors are sharpening their focus on pay design and the quality of disclosure.
Among investors surveyed:
34% flagged inadequate disclosure of director pay rationales as a concern.
46% expect at least five years of vesting or post-vesting retention for long-term equity awards.
76% disapprove of removing ESG or DEI metrics mid-award without a strong justification.
80% said program improvements can demonstrate responsiveness even without formal investor outreach.
For banking organizations, this reinforces that investors and proxy advisors are increasingly intolerant of weak disclosure or one-size-fits-all incentive plans. Transparent communication around program changes, ESG metrics, and board rationale is now essential.
Action items:
Review your compensation disclosure for clarity and rationale.
Align long-term award structures with investor expectations on vesting and retention.
Maintain consistency and transparency around ESG and DEI metrics in incentive design.
Final Thoughts
Heading into 2026, banks face rising expectations from investors, regulators, and the market. Using PvP data for self-assessment, benchmarking director pay strategically, and aligning disclosure practices with investor sentiment can help compensation committees stay ahead of scrutiny while reinforcing sound governance.
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