Wall Street's valuation for bank leaders is reverting to pre-financial crisis levels. Data compiled by Bloomberg from company disclosures reveals that the total annual compensation for the CEOs of America's six largest banks has reached or exceeded $40 million each, with the overall scale surpassing previous records set in 2006 and 2021.

The compensation for Bank of America CEO Brian Moynihan increased by 17% year-over-year to $41 million. Citigroup CEO Jane Fraser received a 22% raise, bringing her compensation to $42 million.

This rise in CEO pay coincides with a period of industry prosperity. According to reports, top U.S. financial institutions recorded their largest annual profits since 2021.

For investors, this upward trend in compensation reflects improved profitability and business momentum, while simultaneously reigniting concerns regarding costs and corporate governance.

Although executive pay packages have faced shareholder scrutiny, they have typically been approved in votes. In the current climate, where sensitivity to technology and staffing costs is heightened due to advancements in artificial intelligence, management at major banks is facing more frequent questions about their "expense curves."

With compensation comprehensively breaching the $40 million mark, the post-2008 crisis ceiling has been shattered. Data indicates that the annual total compensation for CEOs of the largest U.S. banks has universally crossed the $40 million threshold, and the aggregate amount has surpassed previous peak levels from 2006 and 2021. It is noted that after years of restraint following the 2008 global financial crisis, Wall Street is now awarding record-breaking compensation packages to its CEOs.

Among disclosed cases, Goldman Sachs CEO David Solomon's compensation was the highest among peers at $47 million, representing a 21% increase. Bank of America's Brian Moynihan and Citigroup's Jane Fraser reached $41 million and $42 million, respectively.

A "bumper year" for profits underpins the salary increases, driven by a resurgence in trading, credit, and mergers and acquisitions activity. The direct backdrop for rising compensation is strengthened industry profits. Reports state that robust performance in trading, lending, and a rebound in merger and acquisition activity collectively boosted earnings and the pools of money available for bonuses.

Alan Johnson, Managing Director at compensation consultancy Johnson Associates Inc., commented that "CEOs had a very good year in terms of compensation," adding that "the banks performed well, had few losses, profits were handsome, and I think they managed very well." Within this narrative, rising CEO pay forms a feedback loop with increases in broader bonus pools.

Some pay raises carry clear governance signals. Citigroup's decision to increase Jane Fraser's pay is viewed as a vote of confidence from the board in her turnaround efforts, particularly after the company had underperformed its peers for years.

The discussion around compensation at Goldman Sachs pointed more towards "retention." Reports indicated that despite criticism over the size of $80 million retention awards for CEO David Solomon and President John Waldron, the bank's pay package still received majority support last year. The bank argued the move was necessary to retain key executives amid competition from deep-pocketed private market investors.

Mike Mayo, Head of U.S. Large-Cap Bank Research at Wells Fargo & Co., stated that there is a link between pay and performance, noting that "a large portion of their compensation is paid in stock, which helps align their interests with shareholders."

Opposition voices remain, but voting has been relatively smooth, while the focus on costs intensifies. Executive compensation is not without resistance. It is pointed out that pay packages have faced some shareholder opposition, but they have typically not encountered major obstacles during votes.

Concurrently, industry focus on expenses and compensation is growing. Reports suggest that as the rise of artificial intelligence fuels greater concern over investments in staff and new technology, major bank executives are being pressed more frequently on how they plan to pursue revenue growth while controlling costs.

For investors, this means the "return of high pay" is likely to become a dual focus alongside "cost control" in future earnings seasons and during votes on compensation packages.