BOV defends CEO’s 68% pay rise after The Shift questions €644,000 package

Bank of Valletta has defended a dramatic increase in the remuneration of its Chief Executive, Kenneth Farrugia, after The Shift questioned why the head of Malta’s largest bank received almost €650,000 in 2025 – a rise of almost 68% over the previous year.

The bank’s latest annual report shows that Farrugia received a total remuneration package of €643,798 in 2025, up from €382,411 in 2024. The most striking increase was in his fixed remuneration, which jumped from €299,187 to €486,114 in a single year – an increase of almost 63%.

Responding to questions from The Shift, BOV insisted that the increase was not arbitrary but followed “an independent market benchmarking exercise commissioned by the Bank and approved through its governance processes”.

“The increase in the CEO’s remuneration in 2025 was principally driven by an adjustment to fixed pay following an independent market benchmarking exercise,” the bank said.

According to BOV, the review was intended to ensure executive remuneration ‘remained competitive and appropriately aligned with comparable organisations’ and was not limited to the CEO. It said the exercise resulted in remuneration adjustments across a number of executive positions.

Pressed for further details, the bank explained that the benchmarking exercise was carried out by a specialist remuneration consultancy and subsequently “independently corroborated by one of the Big Four audit firms in Malta”.

It said the study examined “a number of medium-to-large banking institutions operating in Malta”, selected because they shared business models and organisational characteristics comparable to those of Bank of Valletta. The exercise relied on a confidential remuneration survey supplemented by publicly available information, including annual reports and recognised salary benchmarking studies.

Despite relying on the benchmarking exercise to justify one of the largest executive pay increases seen in recent years, BOV refused to identify either the specialist consultant or the banks included in the peer group, insisting that the exercise was conducted under strict confidentiality arrangements.

The bank also declined to disclose where Farrugia’s remuneration ranked against the benchmark before the increase, the salary range recommended by the consultants, or why such a substantial adjustment was implemented in a single year.

The explanation comes as BOV’s Chief Executive has become one of the highest-paid corporate executives in Malta. His remuneration package is broadly comparable to that of the Chief Executive of HSBC Bank Malta, the only other major listed Maltese bank that is comparable to BOV.

On a European level, Farrugia’s remuneration is not exceptional when compared to chief executives running banks with assets of around €15 billion to €20 billion. Many medium-sized listed banks across Europe pay between €500,000 and €1 million annually once bonuses and share awards are included.

Farrugia, who joined BOV in 1985 and became Chief Executive in October 2022, now heads a bank with €16.5 billion in assets, €13.7 billion in customer deposits and a market capitalisation exceeding €1.2 billion, making it by far Malta’s largest banking institution.