New data from the CEO and Executive Compensation Practices in the Russell 3000 and S&P 500 report reveals significant trends in how senior leadership is being compensated and how that compensation is perceived by investors and proxy advisors.
The report draws on proxy disclosures from U.S. public companies to offer a comprehensive view of how median executive pay is evolving, how pay design is changing, and what this means for governance and future talent strategy.
1. Executive Pay Continues to Rise, Driven by Equity and Discretion
In 2025 disclosures, median CEO compensation grew 11.8% in the Russell 3000 (to approximately $6.7 million) and 6.6% in the S&P 500 (to around $16.5 million), continuing the upward trajectory observed over recent years.
- Performance-based equity awards are central to this growth. Many boards are structuring long-term incentives around equity vehicles that vest based on performance metrics tied to shareholder value creation.
- Discretionary cash bonuses also increased notably, reflecting board confidence in performance outcomes while preserving flexibility in pay decisions.
- Base salaries, by contrast, have only modestly increased, underscoring the shift toward incentivized compensation as opposed to fixed pay.
For executive teams and compensation committees, this underscores that long-term incentives, not base pay, are today’s primary lever for aligning leadership behavior with shareholder interests.
2. Non-CEO Executive Pay Growth Highlights Shifting Talent Value
Compensation for non-CEO-named executive officers (NEOs) also rose, up 8.2% in the Russell 3000 and 4.3% in the S&P 500. Notably, compensation increases for CHROs and CMOs outpaced those for broader executive roles in 2025.
- Chief Human Resources Officers (CHROs) saw particularly strong reported growth, up 14.1% in the Russell 3000 and 33.5% in the S&P 500, reflecting heightened strategic emphasis on workforce planning, talent management, and cultural leadership.
- Chief Marketing Officers (CMOs) in the S&P 500 also registered significant reported pay increases, reflecting the premium on brand leadership and revenue growth contribution.
- Traditional roles like CFOs, COOs, and CLOs continued their steady compensation increases, remaining among the most highly paid non-CEO executives.
These patterns suggest a broader middle-tier executive mobility market where leadership roles beyond the CEO are increasingly central to strategy and shareholder value.
3. Sector Variation Remains Significant
The report shows meaningful differences in executive pay by industry, reflecting how competitive dynamics and earnings prospects shape compensation strategies:
- Information Technology leaders command some of the highest median CEO compensation, supported by strong stock performance and innovation-driven growth.
- Communication Services and Consumer Staples also feature near the top in reported median pay.
- Financials, while growing, lag behind other sectors, likely due to broader representation of smaller firms within the index and differing performance drivers.
Understanding these sector differences is crucial for compensation committees benchmarking against appropriate peers.
4. Governance Signals: Say-on-Pay and Investor Scrutiny
Although say-on-pay support remains historically high, investor approval margins have softened. In 2025, more companies reported lower support levels, and the number of truly strong “greater than 90% approval” outcomes has declined compared with prior years.
Instances of shareholder dissent, even if still relatively infrequent, highlight rising investor and proxy advisor scrutiny of pay decisions, particularly around equity award design and the alignment between pay and performance outcomes.
Compensation committees should treat this not as a threat but as an opportunity for dialogue, improving disclosures, clarifying performance objectives, and proactively engaging with major shareholders prior to compensation votes.
5. Pay Design Trends: Equity Vehicles and Performance Alignment
Proxy data confirms continued evolution in how equity is used:
- Performance Share Units (PSUs) remain the predominant long-term incentive vehicle, reflecting their ability to tie compensation outcomes to performance metrics valued by investors.
- Restricted stock awards (RSUs) continue to be a staple, particularly for smaller firms that prioritize retention certainty over performance contingencies.
- Stock options, while less central than in past decades, still play a role in certain compensation mixes, especially where firms seek strong alignment with long-term share price performance.
The balance these vehicles strike between retention, performance motivation, and investor comfort continues to evolve as firms refine their pay philosophies.
6. Gender Compensation Gaps: Complex but Nuanced
Reported data also reveals notable differences in median CEO compensation by gender with women CEOs reporting slightly higher median pay in both the Russell 3000 and the S&P 500. However, practitioners caution that such results reflect small female CEO populations and high sensitivity to outliers, rather than a systemic advantage.
The findings point to a more nuanced conversation around representation and equity: closing the CEO gender gap remains less about parity in pay for incumbents and more about increasing the overall representation of women in top executive roles.
Executive Compensation in Context: What This Means for Leaders
The 2026 compensation landscape points to several strategic imperatives for boards, executives, and compensation committees:
- Prioritize performance alignment through equity incentives that balance long-term shareholder value with retention.
- Benchmark pay thoughtfully by industry and role type, recognizing that sector dynamics meaningfully influence competitive pay norms.
- Engage proactively with investors ahead of compensation votes to secure support and clarify pay-for-performance linkage.
- Elevate non-CEO leadership roles as key drivers of organizational value supported by compensation structures that attract and retain top talent.
As compensation levels continue to grow and strategies evolve, transparency and governance will remain central. Boards that articulate coherent, defensible compensation philosophies, supported by robust disclosure and investor engagement, will be best positioned to attract leadership talent while managing governance risk.
