High pay in the financial sector

In a time of rising bills and when many people are struggling with living costs, high executive pay, whilst never justifiable, now seems even more immoral.

The figures reflect total compensation for the highest paid director, which may be made up of a base salary, a bonus, variable pay (based on employee performance), and shares. The base salary and bonuses are usually the smallest amounts. For example, JP Morgan’s CEO had a base salary of $1.5 million, a bonus of $5 million, shares worth $25 million, and $52 million in option awards (option to buy shares in the future at a set price).

Companies awarding pay of £1 million or over receive the lowest scores in the Anti-Social Finance category on our score tables in our ethical finance guides.

Two giant US banks that we have rated for the first time – JP Morgan and Goldman Sachs – pay their directors stratospheric amounts, way beyond excessive. Perhaps unsurprisingly, they also have the highest investments in dodgy, but lucrative, areas, namely nuclear weapons and cluster munitions, fossil fuels, deforestation, and animal cruelty.

Since 2021, those who pay £250,000 – £1 million lose some points in our ratings. Companies that fall into this category are mainly the building societies, although Nationwide and Skipton pay some staff more more.

Those that pay below £250,000 are not marked down in our ratings but details appear in the table below. Only five companies fell into this category: Revolut, Charity Bank, Principality, NS&I, and Ecology Building Society.

Pay of the highest paid directors at 39 banks and building societies

The table below shows how 39 banks and buildings societies perform for excessive pay at the top, ranked by top pay in 2022.

In this table, '-' means that the figure could not be found.

CEO pay ratios

All publicly listed firms with more than 250 UK employees now have to publish the ratio between the total remuneration of their CEOs and the full-time equivalent remuneration of their UK employees on the 25th, 50th (median) and 75th percentile.

The return of bankers’ bonuses

In 2024, Barclays became the first UK bank to significantly extend the cap on bankers’ bonuses, after regulators scrapped a restriction on remuneration in the financial sector in 2023.

The bank announced, in an internal memo to employees, that it had extended its bonus cap to enable staff to receive up to 10 times their salaries in bonuses, according to a report by the Guardian.

The cap was introduced in the wake of the 2007-08 financial crisis in which banks received £1.162 trillion in financial support from the government. It was aimed at addressing the bonus culture criticised for sparking the financial crisis through prioritising short-term gains over long-term stability. EU regulators argued that limiting the performance element of bankers’ remuneration would reduce the incentive to make risky investment decisions.

The Conservative government announced the removal of the cap in October 2023. Months later, Barclays shareholders agreed to drop a measure that capped bonuses at two times employees’ salaries. Meanwhile, other banks including Lloyds and HSBC are planning to lift the cap.

According to Barclays’ annual report for 2023, Group Chief Executive Coimbatore Sundararajan Venkatakrishnan received a total salary of £4.6m, including a £1.4m bonus, in 2023.

Under our rating criteria, any annual remuneration over £1 million is considered excessive. Barclays received a worst rating for Anti-Social Finance, and a total Ethiscore of 0.5 out of a possible 100 in our Current Accounts guide.

Wealth gap widens

The prospect of higher remuneration for bankers comes as many people are still suffering from cuts in benefits and public services that were put in place following the banking crisis over 15 years ago.

In March, the UK experienced its highest rise in absolute poverty in 30 years, sparked by rising energy prices.