Executive rewards in financial services are entering a period of recalibration. In South Africa’s financial services sector, remuneration discussions now centre on one core theme – balance. How do organisations protect themselves from excessive fixed salary commitments while still attracting and retaining leaders capable of steering businesses through economic uncertainty, regulatory pressure, and rapid digital change, including AI-driven transformation?
Enter the world of Long-Term Incentives (LTIs). These multi-year, value-creation and equity-linked remuneration packages are expanding. Companies increasingly use LTIs to attract and retain executive-level talent. They allow companies to reward performance, limit fixed costs and ultimately attract the upper echelon of performers.
We noted in the latest PwC 2025 Directors’ Remuneration and Trends Report [1] that total pay for CEOs and CFOs, in the JSE Top 200, rose primarily because of long-term incentive components. This portion of remuneration increased by over 40% across the surveyed companies.
We are seeing a clear move away from ‘rewarding tenure’ to genuinely ‘rewarding. In banking, insurance and asset management alike, the real question is: how much of our executive package is genuinely at risk, and over what time horizon?
Why LTIs fit the realities of FS
Financial Services (FS) is a sector defined by longer horizons. Insurers carry liabilities that stretch decades. Asset managers are assessed on performance over rolling periods, while banks’ balance risk across the full economic cycle. Long-term incentives correct the imbalance created by short-term bonuses by rewarding leadership decisions over the period in which their impact materialises.
We see major insurers and investment groups, including the likes of Sanlam, Old Mutual and Momentum Metropolitan all describing this alignment within their remuneration reports. South Africa’s King IV Report [2] on Corporate Governance also sets out clear expectations around fair, responsible and transparent remuneration practices. These principles influence how all financial institution’s structure rewards.
The governance lens on executive pay is an ever-increasing focus on both a local and global level. Boards know that remuneration must signal both confidence and discipline, while aligning with outcomes.
A global war for skills
The South African financial services sector competes globally for leadership talent. PwC data [3] indicates that while CEO guaranteed pay averages around R8 million annually, total remuneration can reach R20 million or more once long-term incentives are included. Long-term incentives often become the deciding factor for executive mobility, particularly when candidates face the prospect of forfeiting existing equity schemes.
How LTIs are evolving
Banks and specialist lenders now commonly use deferred bonuses and share schemes tied to ROE, TSR and risk-adjusted performance. Insurers increasingly tie long-term metrics to embedded value growth, persistency and capital strength. Asset managers often adopt co-investment or carried-interest structures to align leaders with long-term investment outcomes.
The detail may differ from one institution to the next, but the direction of travel is consistent: financial services firms want leaders whose personal reward is tied to sustained organisational success.
Human trust and culture
The South African Journal of Industrial Psychology’s [4] recently published research highlights that a lack of transparency in executive pay can erode internal trust. The erosion of trust will impact morale, and the resultant effect is underperformance.
LTIs, which are linked to performance and outcomes, remove ambiguity; they create defined outcomes and focus.
What this means for executive talent
LTIs will increasingly become part of the remuneration discussions landscape. The right candidates will continue to view these as a crucial part of their decision-making when it comes to choosing a company to engage with. In the same way the employer has a far more robust point of engagement and measurement, with risk balanced to performance.
LTIs help Boards with executive recruitment selections as they increasingly expect leaders to demonstrate long-term vision, not short-term tactical wins.
As a search partner, we find that conversations about leadership capability cannot be separated from conversations about reward design. They are inherently linked.
The road ahead
The executive remuneration mix is no longer just a compliance exercise. It is a strategic tool that financial services organisations need to deploy well. It will help them select the talent they need to navigate digital transformation, tackle evolving regulations, and competitive landscapes.
In short, long-term incentives reinforce long-term thinking, align leadership with stakeholders, and support sustainable success. Properly disclosed, they also enhance the company’s market reputation within the FS landscape.