CEO pay went down at most banks last year. These five were outliers.

June 4, 2024 10:15 PM

While chief executives at most large and midsize banks took a pay cut in 2023, a few companies bucked the trend, rewarding their top leaders for strong performance.

As last spring's bank failures and high interest rates put pressure on financial results, the median annual bonuses for CEOs, which are typically benchmarked to performance, took about a 30% hit, according to a recent study from Compensation Advisory Partners. On the flip side, companies that showed strong earnings growth in 2023 increased their top leaders' total compensation.

"We tell our clients pay and performance must be aligned," said Shaun Bisman, a partner at Compensation Advisory Partners. "The companies that had the double-digit increases had strong profitability."

Compensation Advisory Partners reviewed salaries, bonuses and other compensation data from 53 regional and national banks based on 2023 performance. Of those institutions, only about a dozen paid their CEOs more year over year.

Bisman said that CEO pay could have been even lower at many companies, but boards used qualitative factors or discretion to exclude events outside of management's control, like the negative impacts from the collapses of Silicon Valley Bank, Signature Bank and First Republic Bank.

Kelly Malafis, a founding partner of Compensation Advisory Partners, said there's been a lot of "noise" in the system the past few years — not only last year's turbulence, but also the upheaval at the start of the pandemic, the industry's strong financial performance in 2021 and challenges in attracting and retaining talent.

Wells Fargo increased CEO Charlie Scharf's pay by a relatively dramatic 18% last year.. Major banks were also a landing spot for many consumers after last spring's musical chairs for deposits, Malafis noted.

Wells' board approved Scharf's $29 million total 2023 compensation, outlining the benefits of his leadership, including pushing the bank to be "a source of strength" amid last year's crisis. The bank's stock price rose 18.2% last year, parallel to the pay increase for its CEO.

What follows is a look at some other banks that departed from the industry trend last year by increasing their chief executives' total compensation.

Jamie Kelter Davis/Bloomberg

PNC Financial Services Group

CEO: Bill Demchak
2022 total compensation: $18.7 million
2023 total compensation: $17 million
Increase: 10%

Demchak got a pay hike of $1.7 million last year. The increase came after a 15% drop in 2022, which made Demchak an outlier in the industry at the time. In its latest proxy statement, PNC said its compensation committee determined that Demchak's 2023 compensation was appropriate due to his "proven ability to build long-term value for the benefit of all stakeholders and through all phases of the economic cycle."

During the crisis last spring, PNC was one of the banks to reel in new customers and grow market share, despite high deposit costs. The Pittsburgh-based bank also took advantage of the bank failures by purchasing a $16.6 billion portfolio of capital commitments from Signature Bridge Bank to help grow its fund banking business.

PNC managed to end 2023 with its stock price fairly close to where it started the year, at $154.85 per share. The $566 billion-asset bank has maintained a consistent strategy of focusing on middle-market businesses, and is steadily expanding across the country. Although PNC did lay off 4% of its staff, its proxy statement said that Demchak has led expense reduction efforts and helped raise capital to strong levels.

"Bank failures in the first half of 2023 created a crisis of confidence in regional banks that altered the competitive landscape across the industry," the proxy said. "Against that backdrop, the committee believed Mr. Demchak's leadership and execution of PNC's strategy resulted in PNC's successful navigation of challenging market conditions and industry uncertainty during 2023."

Liam Kennedy/Bloomberg

First Horizon Corp.

CEO: Bryan Jordan
2022 total compensation: $7.1 million
2023 total compensation: $7.8 million
Increase: 9%

First Horizon in Memphis had its own problems last year, in addition to the industry-wide issues. The bank's planned acquisition by TD Bank Group fell through when the Canadian company couldn't meet regulatory requirements. For manning the helm, and staying there, First Horizon rewarded CEO Bryan Jordan with a 9% increase in compensation.

First Horizon's latest proxy said that the company's compensation committee reviewed Jordan's "significant contributions to our financial results and competitive position when making decisions about his pay for 2023."

Although First Horizon's stock got pummeled when the TD deal fell through, the $81.7 billion-asset company adjusted Jordan's employment agreement in August. The bank increased Jordan''s salary, long-term incentives and bonus options to keep its 61-year-old leader on for another five years.

"Early each year, the CEO develops a personal plan that contains financial and strategic goals aligned with the Board-approved company plan for the year," the bank said in its proxy statement. "In each of the past five years, Mr. Jordan has met or exceeded his personal goals. He continues to provide consistent, critical leadership."

The bank shuffled its strategy after missing out on the TD deal, and another transaction doesn't look likely in the near future, amid a tepid M&A environment. Jordan said earlier this year that First Horizon will "tread water" to build out "the power of this franchise."

United Bank Building in Wilmington, North Carolina, USA

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United Bankshares

CEO: Richard (Rick) Adams, Jr.
2022 total compensation: $3.7 million
2023 total compensation: $4.6 million
Increase: 26%

Rick Adams, Jr. completed his first full calendar year as CEO of United Bankshares, getting a 26% increase in total direct compensation. The company's compensation committee gave Adams an "overall excellent" performance rating for 2023, noting that despite the industry-wide banking crisis, United increased its dividend for the 50th consecutive year.

In addition to a slight bump in the CEO's salary and bonus, Richard Adams, Sr., the chief executive's father and executive chairman of the Charleston, West Virginia-based company, recommended to the compensation committee that his son receive a $500,000 bonus, based upon performance in his new position in 2023.

Last month, the $30 billion-asset company announced plans to acquire Piedmont Bancorp, which would expand its footprint in the Southeast.

Adams, Jr., served as the company's president for seven years before he took over as CEO two years ago, upon his father's retirement. He's been in managerial roles at United for nearly 25 years.

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BOK Financial

CEO: Stacy Kymes
2022 total compensation: $3.3 million
2023 total compensation: $4.6 million
Increase: 37%

The Tulsa, Oklahoma-based company's president and CEO, Stacy Kymes, saw his pay go up 37% in his second full year at the helm. In 2023, Kymes was awarded a bonus close to the maximum allowed by the bank's compensation committee, based on his performance in executing on strategic objectives he set at the beginning of the year.

Those objectives focus on management "expanding organizational capabilities, optimizing business models and managing risk."

BOK Financial, which operates the Bank of Oklahoma and Bank of Texas, bases its executive incentive plan on a comparison with peer banks to "avoid penalizing executives for general industry and economic downturns and encourage executives to produce the best possible results in good and bad economic times," per its proxy. The compensation committee also noted that it aims to provide "competitive remuneration" so that the company can retain talent.

After the bank failures last year, the $50 billion-asset bank saw its loan production and deposits drop, but it also saw an opportunity to grow market share. Deposits stabilized shortly after the turmoil, and BOK had room to fund growth.

Kymes, who's been with the company since 1996, said on a recent earnings call that BOK expects to grow steadily in 2024.

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FNB Corp.

CEO: Vincent Delie
2022 total compensation: $6.3 million
2023 total compensation: $6.8 million
Increase: 8%

Vincent Delie, the longtime CEO of FNB, logged an 8% increase in pay after a 2% increase the previous year. The Pittsburgh-based company noted in its proxy that about half of his compensation is linked to performance.

Since 2009, when Delie started as an executive at the bank, FNB has grown from $8.7 billion of assets to more than $46 billion.

In 2023, FNB's net income available to common shareholders increased 10% to $476.8 million. The bank is also executing a strategy to "optimize" its balance sheet to "enhance our future profitability and capital positioning," Delie said on a January earnings call.

Delie has led the bank's charge to invest in technology, including through its digital banking platform, which it calls "eStore," to open accounts, apply for loans and access financial literacy resources.