For bank CEOs last year, the pay raises were bigger at the smaller institutions.
In 2024, chief executives at banks with between $10 billion and $50 billion of assets got an average pay bump of 24.1%, according to a study of 59 banks by Compensation Advisory Partners. That was almost double the rate at banks with more than $50 billion of assets. The average raise for the CEOs of those larger banks was 12.4%.
"This finding marks a departure from prior studies, which found closer alignment with the movement between large and small banks," the researchers wrote.
If the results were unusual, so were the last two years. In 2023, three regional banks
In 2023, bank CEO compensation
In 2024, the pay bounced back — and because the CEOs of smaller banks had seen the steepest drops, they also enjoyed the sharpest rises — according to Compensation Advisory Partners.
"They were kind of down more in '23, and so being up in '24 shows a bigger increase," said Kelly Malafis, one of CAP's founding partners.
Compensation Advisory Partners analyzed the three main components of CEO compensation: base salary, bonuses and long-term incentive pay.
Of those, bonuses increased the most in 2024. John Kemper, CEO of the $32.4 billion-asset Commerce Bancshares, scored the
This difference was particularly pronounced at banks below the $50 billion mark. Between 2023 and 2024, the base salaries of CEOs at the smaller lenders rose by 3.7%, but their bonuses shot up by 59%. Meanwhile, at larger banks, bonuses climbed by a comparatively modest 29.9%.
Why was the rise in bonuses so much sharper at smaller lenders? While bigger banks have wide discretion on executive bonuses, smaller lenders tend to stick to a formula, Malafis said. And in a year like 2024, which started with low performance expectations, those calculations paid off for numerous CEOs.
"We think a lot of the smaller banks were really taking a good look at their goal setting and making sure they built in a little bit of the unexpected market environment for '24," Malafis said. "And because they went in with this view of expected volatility, they performed better versus those goals than they did in '23."
Another potential factor is M&A. Cameron Boyd, a managing partner at
"Imagine you're a $10 billion bank, and you acquire a $5 billion bank," Boyd said. "All of a sudden the CEO's compensation bumps up to be equivalent to that of a $15 billion bank."
Last year saw a number of
Also last year, UMB Financial of Kansas City, Missouri, reached a deal to buy Heartland Financial, growing its assets by 45% to $69 billion. UMB's CEO,
Another factor could be what Compensation Advisory Partners called "retention concerns." As larger banks try to lure executives away, smaller regional banks could be using larger pay packages to keep them where they are.
And the competition can go both ways, according to Shaun Bisman, another partner at CAP.
"Smaller banks would likely try to poach some talent from the larger banks — obviously not necessarily the CEOs of the larger banks, but maybe some of the different [heads of] business units," Bisman said. "So that's also part of the reason for that tight market for talent."
Boyd said that in his experience, smaller banks looking for new executives "almost always" train their sights on larger lenders.
"If you're a $10 billion bank looking for a CEO, you're looking to pull someone out of a national organization," he said. "And those people have bigger paychecks."
Overall, bank CEO compensation rose by 18% in 2024 — a stark difference from 2023. Bonuses marked an even sharper contrast: After they fell by 30% in 2023, they surged by 42% in 2024.
"Coming off of lower numbers, the increases were higher because they had bigger decreases the year prior," Bisman said.
