Navigating Bank Compensation Trends in August: Key Insights You Need to Know
- elyse500
- Aug 12
- 2 min read
Welcome to the August edition of Bank Compensation Corner, where we bring you sharp, timely compensation insights tailored for banks. This month’s focus spans shifts in pay-for-performance evaluation, legal twists affecting equity forfeiture contracts, and compensation differences between public and private bank directors—essential knowledge for compensation committees and bank leadership.
Glass Lewis Previews Major Overhaul to Pay-for-Performance Model
Glass Lewis is introducing sweeping changes to its pay-for-performance (P4P) framework beginning with the 2026 proxy season. They’re dropping the traditional A–F grading in favor of a 0–100 numeric scorecard, extending the P4P evaluation window from three to five years, and expanding coverage to companies in the UK, EU, and Australia. These updates reflect institutional demand for deeper, longer-term performance alignment. Compensation committees should proactively consider how incentive metrics and peer groups may perform under the upcoming model.
Court Strikes Down Equity Forfeiture Clauses Without Adequate Consideration
A recent Delaware Chancery Court ruling determined that an equity forfeiture clause tied to restrictive covenants is unenforceable if the equity itself was the only consideration for those covenants. In this case, without any additional compensation, promotion, or value exchange, enforcement failed on basic contract law grounds. This serves as a vital reminder for banks to ensure that equity-based agreements are legally sound and include sufficient, valid consideration.
Public Bank Directors Earn ~55–60% More Than Private Peers
Our latest data shows that public bank directors consistently receive significantly higher compensation than those at private banks of comparable size—about 55% more in institutions under $1B and 60% more for those over $1B. The pay premium reflects heightened regulatory visibility, shareholder pressures, and public accountability faced by directors at publicly traded banks. This context is crucial when advising boards on director compensation strategy and benchmarking.
Stay tuned for next month’s Bank Compensation Corner, where we continue to unpack the evolving landscape of pay trends, legal developments, and governance expectations for the banking industry.