2026 Executive Compensation Outlook: How Boards Are Resetting Pay, Equity, and Bonuses Across Sectors

A “Measured but Competitive” Year for Executive Pay

Executive compensation in 2026 is being shaped by two opposing forces: boards face intense scrutiny on pay and inequality, yet they still operate in a global talent market where top leaders remain scarce and mobile. Surveys of compensation committees and HR leaders indicate a deliberate shift to “measured but competitive” pay strategies—moderating fixed pay growth while preserving upside through equity and performance-based incentives.​

Median salary increase projections have edged down as inflation cools and labor markets soften, but equity-based awards and long-term incentives remain robust, particularly in US and global large-cap companies. The result is a compensation environment where headline cash increases look restrained while total realizable pay can still expand meaningfully if performance and markets cooperate.​

Base Salary Trends: Moderation at the Top

Across industries, most organizations still expect to provide base salary increases for executives in 2026, but the size of those increases is drifting lower than in the immediate post-pandemic years. Pearl Meyer’s 2026 outlook suggests median salary increase percentages around 3% for both CEOs and broad-based employees, with CEO direct reports slightly higher at roughly 3.4%. These projected increases are modestly below recent actuals, reflecting lower inflation and a marginally less tight labor market.​

Notably, CEOs remain the least likely executive group to receive a raise at all, even as significantly more CEOs anticipate increases than in the 2022–2023 period. At the same time, a higher share of companies project raises of 5% or more for CEOs versus other titles, suggesting a barbell pattern: more companies hold CEO base pay flat, but those that move are prepared to move decisively.​

Equity Mix: Long-Term Incentives Carry More Weight

The structural story in 2026 continues to be the dominance of equity and long-term incentives in executive pay portfolios. Global and sectoral analyses show equity—stock awards and options—now accounting for roughly half or more of total compensation for many senior executives, with salary and cash bonuses comprising a smaller share. In broad samples, one recent study finds average executives receiving about 27% of total compensation in salary, just over 4% in cash bonuses, around 30% in stock awards, and over 12% in options, with the balance in other non-equity incentives.​

Advisory research on US and European issuers indicates that companies seeking to remain globally competitive are increasing long-term incentive opportunities, particularly through performance-based stock and restricted stock units. More than 70% of European companies making “bold” changes to pay design have done so by raising long-term incentive values, narrowing the gap with US peers. For senior roles tied to continuity and growth, long-term incentive plans, deferred compensation, and retention bonuses are now common rather than exceptional.​

Bonuses: Funding Levels and the Rise of Discretion

Annual bonus cycles for 2025 performance, paid in early 2026, are expected to land near target in many sectors, though dispersion is high. In oilfield services and drilling, for example, a survey of companies shows about 55% of respondents expecting payouts between 90% and 109% of target, with fewer anticipating either very low or outsized payouts. Broader executive compensation reviews suggest that, despite economic uncertainty, most organizations are budgeting at least some incentive payout for cycles ending in 2025.​

At the same time, governance commentary for the 2026 proxy season notes a growing reliance on discretionary bonuses or time-vesting equity grants when boards feel performance goals are difficult to set or were rendered unrealistic by external shocks. Proxy advisors and many investors remain skeptical of overusing discretion, preferring clearly disclosed performance metrics and guardrails that prevent retroactive “make whole” adjustments.​

Governance Pressures: ISS, Investors, and Policy Shifts

Proxy advisers and institutional investors are exerting meaningful influence on the design of 2026 compensation plans. Guidance for the 2026 proxy season indicates that ISS will adopt a somewhat more flexible stance on the mix of performance versus time-based equity, while still expecting a substantial performance-linked component for most large issuers. Investor support for pay programs remained strong in 2025 despite record CEO pay levels, but governance reports warn that misaligned pay-for-performance outcomes or overly generous one-off grants may test that support.​

Another notable trend is the pullback in standalone DEI and climate-related incentive metrics. Compensation reviews point to a “recalibration” beginning in 2024 and accelerating in 2025, as companies shift from highly specific demographic or ESG targets toward broader human capital and risk measures in response to legal and political developments. Boards are still being asked to disclose how non-financial considerations shape pay, but they are doing so with more caution around litigation and backlash risk.​

Pay Levels and Ratios: Political Scrutiny Remains Intense

Headline CEO pay remains elevated, and public scrutiny shows no sign of fading. AFL-CIO data for 2024 puts average CEO pay at S&P 500 companies near $18.9 million, roughly a 7% increase over the prior year, with an average CEO-to-worker pay ratio around 285:1. Certain sectors—such as arts, entertainment, and recreation—recorded average CEO pay above $35 million and pay ratios close to 2,000:1.​

Across industries—from accommodation and food services to utilities and retail—sectoral data show wide differences in both average executive pay and CEO-to-median-worker ratios, feeding into political debates over fairness, taxation, and stakeholder capitalism. Compensation committees designing 2026 packages must assume that these metrics will continue to be scrutinized by media, regulators, and activist investors, particularly when cost-cutting, layoffs, or price increases coincide with rising C-suite pay.​

Sector-by-Sector Themes: Who Is Paying Up?

Sector-specific research highlights distinct patterns in how 2026 compensation is being calibrated. In energy and oilfield services, recovering profitability supports stronger bonus funding and renewed equity upside, though boards remain sensitive to commodity volatility and political pressure. In technology and high-growth sectors, equity remains the primary lever, with long-vesting stock and options used both as a retention tool and as a way to align leaders with long-term value creation.​

Financial services and regulated industries balance aggressive competition for senior talent with tighter supervisory and political constraints on perceived excess. In non-profit and mission-driven sectors, compensation data suggest slightly higher projected salary increases for executives relative to for-profit peers, reflecting different market dynamics and governance expectations. Across sectors, organizations with heavy transformation agendas—AI, digitalization, or portfolio restructuring—are more likely to lean into long-term incentives and selective retention awards.​

Key Design Themes for 2026 Packages

Total rewards commentary for 2026 points to several design themes crystallizing across leading organizations. First, there is a clear move toward integrated “total rewards” packages that combine competitive base pay, meaningful long-term incentives, and a targeted mix of annual bonuses, benefits, and non-financial rewards. Second, boards are increasingly tying a portion of variable pay to strategic transformation metrics—such as successful implementation of AI, operational resilience, or culture and engagement—while avoiding overly narrow or politically contentious targets.​

Third, compensation plans are being stress-tested against multiple macro scenarios, with adjustments to performance ranges and payout curves to account for volatility. Survey data show that many companies have delayed setting performance goals or adjusted them mid-cycle in recent years because of uncertainty; for 2026, boards are seeking designs that are robust enough to avoid constant recalibration.

2026 Executive Compensation – Pay, Equity, and Bonus Signals

For CEOs, boards, and investors, the 2026 compensation landscape demands nuance: signaling restraint on fixed pay, maintaining strong links between performance and reward, and using equity design intelligently to compete for scarce leadership talent without losing the public license to operate.