How new executive compensation data can help attract and retain key leadership talent
Executive compensation follows the stock market. When stock performance is strong, CEO pay tends to increase, and vice versa. The S&P 500 has experienced an incredible 53% bounce back from the 2022 low point, coinciding with reduced fears of a recession and the easing of post-pandemic inflation. This strong market led to a recovery in 2023 as executive compensation grew 5.3%, which is reasonable relative to inflation.
With worries about a potential recession and lower profits in early 2022, many corporate boards expressed concern about executive pay increases, resulting in steep declines in 2022 CEO pay. However, by the end of 2022, the S&P 500 increased 7.3% from the October lows, and real gross domestic product (GDP) growth exceeded 2% in the second half of 2022 after declines in the first half of the year.
Executive compensation has bounced back
The improved business conditions in 2023 led to a bounce back in CEO pay. Gallagher consultants conclude that the pay-for-performance model is working at most companies, as we clearly saw during the 2022 weak economy and in the 2023 strong economy.
Top executive compensation levels reflected the impacts of the economy in 2023, with median CEO compensation levels increasing among both the Russell 3000 and S&P 500 indexes. These leadership pay increases came after CEO pay declined in 2022 when boards realized inflation was still creating distortions in the economy, while the Federal Reserve Bank continued to tighten monetary supply. Further, Russia's invasion of Ukraine in February 2022 cranked up concern about risks of inflation and recession.
Detailed executive compensation data and analysis
The senior leadership compensation analysis focuses on 2023 pay programs as reported in 2024 proxy filings.
CEO pay decreased in 2022 after unprecedented growth in 2021, while remaining much higher than pre-pandemic levels. The economic recovery beginning in late 2022 into 2023 led to a resurgence in CEO pay, bringing pay to levels slightly below the 2021 highs. Indeed, 2023 executive compensation for S&P companies exceeded the 2021 peak by 3.7%.
Many organizations are continuing to review their executive compensation and incentive programs to ensure they attract, motivate and retain key talent. Such corporate goals become more important in the face of lingering economic uncertainties, particularly following slowing GDP growth in early 2024.
Our 2024-2025 executive compensation research includes data for 2,892 companies provided by MainData Group. This report is designed to provide a comprehensive set of benchmarking data and analysis to support financial leaders, compensation executives and board compensation committee members in making strategic pay decisions.
Analysts delved into the most recent corporate disclosure by Russell 3000 companies to review individual elements of compensation packages, the evolving features of incentive plans and executive compensation trends by major industry and company size.
Read CEO and Executive Compensation Trends: 2024-2025 Edition now to delve deeper into these insights and more, to help inform your team and board's compensation committee. Explore in-depth data for CEOs and named executive officers (NEOs), as well as summary compensation data for CFOs. Determine your strong direction for pay-for-performance models and policies for CEO, NEO and CFO pay packages in the evolving business environment.
