The new year is just around the corner, and large organizations are making leadership moves and projections in advance of 2025. Corporate leaders are preparing for the new year with new business projections and top executives across the corporate sector are expected to see pay increases higher than the historical norm in the new year, according to new research.
Indeed, most respondents to a new survey from Pearl Meyer said they expected to provide salary increases to their executives in 2025. For CEOs, the average increase is expected to land around 3.3%, with 3.5% being the median, according to the survey. These figures, according to the survey, are "almost identical" to those for CEOs' direct reports the survey found.
The survey was conducted among board directors, executives and HR professionals representing 219 public, private and not-for-profit organizations, examining expectations for the coming year. Specifically, the breakdown includes 110 publicly traded companies, 83 private for-profit companies, and 26 not-for-profit organizations.
While 2025's salary increase projections generally averaged around 3.3% to 3.5% among respondents, those figures rest above the historical norm of roughly 3%, Bill Reilly, managing director at Pearl Meyer, told Agenda. However, they are moderating, he said. "A couple of years ago it was solidly 4% and above," he said, adding that figures have been trending downward but remain "reasonably robust."
The average expected increase among survey respondents regarding the broader workforce is 3.5%, while 18% of respondents expect lower salary increases to come in 2025 versus 2024, according to the survey.
Most business and organizational leaders surveyed also expect to provide payouts for incentive cycles ending in 2024 for both short-term and long-term plans, said Reilly, adding that projections are slightly more optimistic for short-term plans versus LTIs.
Survey respondents forecasting less favorable results—such as a market decline year over year—tended to forecast lower base salary increases and lower incentive award payouts at their organizations, while those anticipating improvements at their organizations forecasted higher increases, Reilly explained.
"Most are continuing to expect payouts, but we have seen somewhat of a less optimistic perspective, and I think that's a reflection of the . . . continued volatility within the economy," said Reilly.
Further, the survey found a slight uptick among respondents regarding the anticipated use of positive discretion going forward, said Reilly. As in the past, to the extent positive discretion is under consideration, it would be more likely to apply in cases with short-term incentive plans versus long-term and more likely to apply regarding private companies versus publicly traded ones, said Reilly.
The Pearl Meyer survey also examined comp committee levels of oversight among respondents, said Reilly.
On a year-over-year basis, topics relating to employee engagement and culture gained prevalence at publicly traded companies in terms of what's included in comp committees' remit, he said. These gains speak to the continued focus from comp committees on being more mindful of broader human capital issues, said Reilly.
Specifically, for the first time this year, the survey found that the majority of public company respondents categorized their comp committee's level of involvement with broad human capital issues as either moderate or high, said Reilly.
On a general level, the findings from the Pearl Meyer survey reflect a marked resiliency within the labor market, said Reilly.