The first commercially available mobile phone, the Motorola DynaTAC, hit the market in 1983. It weighed 2.5 pounds, cost $3.5K, and was only good for 35 minutes of talk time. By 1991, mobile phones began shrinking and moved to 2G technology. In 1992, IBM released its Simon Personal Communicator, a mobile phone that incorporated email and touchscreen technology. The IBM Simon is considered one of the first smartphones, but the term “smartphone” didn’t appear until 1999, when IBM’s Ericsson R380 phone was commercially labeled a smartphone. Smartphones became ubiquitous by 2007, when Apple released the first iPhone using 3G technology, which arrived in 2001. Today, smartphones are small and light enough to fit in your pocket, have batteries that can last for days, and continuously improve with new features.From the minute mobile phones came onto the scene, change and evolution never stopped. While executive compensation may not be as cutting-edge as mobile phones, it is another area where change is constant — particularly as regulators have begun reviewing and questioning the way that it’s determined. Each new year brings eagerly anticipated bonuses and salary updates, and 2026 is no different. Yet, as bonus season rolls around this year, many businesses may be wondering if it is time to change the way they approach executive compensation.Compensation Disclosure Requirement Changes The Securities and Exchange Commission (SEC) announced last June that it is reviewing the executive compensation disclosure to see if they can simplify and clarify the rules. SEC Chair Paul Atkins referred to existing disclosure requirements, last updated by the regulator in 2006, as a “Frankenstein patchwork of rules.” The SEC is considering whether requirements should more closely align with the decision-making methods of compensation committees and corporate boards, as well as if disclosures should outline how realized performance outcomes stack up against the initial targets set.
Metric Changes for CompensationThe metrics used to determine executive compensation are also changing. According to data from the WTW Global Executive Compensation Analytics Team, in 2024, roughly 60% of companies factored multiple metrics into bonus plans, with financial metrics and operating income the most common (65%) and revenue growth (48%) trailing close behind. There has also been a noticeable shift toward aligning the total pay of executives with long-term incentives (LTIs). According to the findings of the BDO 600 annual study of compensation practices, in 2024, LTIs comprised 69% of CEO pay and accounted for 62% of CFO pay, which was largely awarded in the form of full-value stock. Beyond financial and operational performance, many organizations have historically incorporated qualitative or values-based measures into executive compensation plans. Diversity, equity, and inclusion (DEI) programs were one such metric, often used to reinforce culture and long-term workforce sustainability. However, these measures have been removed or scaled back among a number of institutions in the last year. In 2024, 42% of bank executives reported that their institutions had no formal DEI program; that number rose to 57% in 2025. DEI metrics may not play as large a role in executive compensation calculation, but that could change, as 53% of respondents stated they are continuing DEI practices.Executive Succession PlanningEmployee retention and the ability to attract experienced candidates are other reasons to reconsider the approach taken to executive compensation. As financial institutions seek to attract leaders who can help them adapt and evolve within a changing industry, the approach that organizations take to executive compensation is more important than ever, especially with so many aging executives heading for retirement or gearing up to do so. One avenue for attracting and retaining executive talent is using deferred compensation, a key LTI that lets executives defer salary, bonuses, or stock that can be sold after so many years of service with the financial institution. The deferred earnings are not yet taxed, can earn interest, and provide executives with the flexibility needed to improve tax management, time income disbursement strategically, and reduce tax liabilities. This approach also brings alignment to the financial institution’s long-term goals and the executive’s interests. According to the findings of Bank Director’s 2025 Compensation & Talent Survey, 38% of executives were compensated with deferred compensation.Asset Size ConsiderationsA financial institution’s asset size plays a major role in compensation as well, and organizations need to be sure that they are relying on appropriate data — particularly if an institution has experienced significant asset growth. Once financial institutions reach the $5B asset level, they should consider creating a custom group of roughly 15 to 20 publicly traded peers to measure their compensation approach against. Ensuring that your organization is measuring against comparable peers is important, given the significant disparities between CEO compensation at different asset levels. According to data from CAP, in 2024, total CEO compensation for financial institutions with $1B to $5B in assets was $1.1MM, compared to $1.7MM for those in the $5B to $10B range and $3MM in compensation for those with more than $10B in assets. As the banking industry faces significant ongoing changes in everything from the way that individuals use financial institutions to the regulatory landscape, executive compensation needs to evolve as well. With regulators taking a closer look at the way financial institutions compensate executives, now is the perfect time for CFIs to reassess their individual approaches.
Metric Changes for CompensationThe metrics used to determine executive compensation are also changing. According to data from the WTW Global Executive Compensation Analytics Team, in 2024, roughly 60% of companies factored multiple metrics into bonus plans, with financial metrics and operating income the most common (65%) and revenue growth (48%) trailing close behind. There has also been a noticeable shift toward aligning the total pay of executives with long-term incentives (LTIs). According to the findings of the BDO 600 annual study of compensation practices, in 2024, LTIs comprised 69% of CEO pay and accounted for 62% of CFO pay, which was largely awarded in the form of full-value stock. Beyond financial and operational performance, many organizations have historically incorporated qualitative or values-based measures into executive compensation plans. Diversity, equity, and inclusion (DEI) programs were one such metric, often used to reinforce culture and long-term workforce sustainability. However, these measures have been removed or scaled back among a number of institutions in the last year. In 2024, 42% of bank executives reported that their institutions had no formal DEI program; that number rose to 57% in 2025. DEI metrics may not play as large a role in executive compensation calculation, but that could change, as 53% of respondents stated they are continuing DEI practices.Executive Succession PlanningEmployee retention and the ability to attract experienced candidates are other reasons to reconsider the approach taken to executive compensation. As financial institutions seek to attract leaders who can help them adapt and evolve within a changing industry, the approach that organizations take to executive compensation is more important than ever, especially with so many aging executives heading for retirement or gearing up to do so. One avenue for attracting and retaining executive talent is using deferred compensation, a key LTI that lets executives defer salary, bonuses, or stock that can be sold after so many years of service with the financial institution. The deferred earnings are not yet taxed, can earn interest, and provide executives with the flexibility needed to improve tax management, time income disbursement strategically, and reduce tax liabilities. This approach also brings alignment to the financial institution’s long-term goals and the executive’s interests. According to the findings of Bank Director’s 2025 Compensation & Talent Survey, 38% of executives were compensated with deferred compensation.Asset Size ConsiderationsA financial institution’s asset size plays a major role in compensation as well, and organizations need to be sure that they are relying on appropriate data — particularly if an institution has experienced significant asset growth. Once financial institutions reach the $5B asset level, they should consider creating a custom group of roughly 15 to 20 publicly traded peers to measure their compensation approach against. Ensuring that your organization is measuring against comparable peers is important, given the significant disparities between CEO compensation at different asset levels. According to data from CAP, in 2024, total CEO compensation for financial institutions with $1B to $5B in assets was $1.1MM, compared to $1.7MM for those in the $5B to $10B range and $3MM in compensation for those with more than $10B in assets. As the banking industry faces significant ongoing changes in everything from the way that individuals use financial institutions to the regulatory landscape, executive compensation needs to evolve as well. With regulators taking a closer look at the way financial institutions compensate executives, now is the perfect time for CFIs to reassess their individual approaches.
