Pearl Meyer Survey Points to Continued Moderation in Executive Pay for 2026

BOSTON, October 30, 2025—According to the Pearl Meyer survey, “Looking Ahead to Executive Pay Practices in 2026,” organizations are taking a measured approach to executive compensation as they plan for 2026. The annual survey of companies across various industries suggests a continuation of the cautious sentiment that defined 2025, with lower projected salary increase percentages, restrained use of discretion in incentive payouts, and a notable pullback in stand-alone DE&I and ESG incentive plan metrics.  Half or more of respondents listed economic uncertainty and inflation among the top three factors impacting their organizations and executive compensation programs, with more than one-third also citing legal/regulatory developments and tight labor markets.

“Our survey found that as organizations face some uncertainty, they are focusing on sustainable, long-term pay design rather than reacting to short-term volatility,” said Pearl Meyer’s Managing Director Bill Reilly, who developed the survey. “Most respondents do not anticipate significant plan design changes for 2026 and generally rate their executive compensation programs as effective in achieving desired objectives, while acknowledging there is always room for improvement,” he added.

Moderate Salary Increases for 2026

Projected base salary increases for 2026 average 3.3%–3.4%, down slightly from 2025 levels. CEOs are expected to receive increases around 3.0%, while other executives’ projected raises are modestly higher at 3.4%. Industry variations persist: technology companies anticipate the strongest increases (averaging up to 5.7%, with 50th percentile projections equal to 4.0%), whereas energy and utilities report the lowest (around 2.3%). A minority of organizations expect salary freezes, about 19% for CEOs, compared with 9% for CEO direct reports and 2% for other employees, underscoring an overall commitment to stability despite economic headwinds.

Incentive Payouts Expected but Tempered

For both short- and long-term incentive cycles ending in 2025, nearly all companies expect some level of payout, with a strong concentration around target. Anticipated use of discretion remains limited: roughly half of companies do not expect to apply discretion to short-term incentive (STI) payouts, and six in ten will take the same approach for long-term incentives (LTI).  Another one-third of respondents are taking a “wait and see” approach.  When discretion is used, positive adjustments are more common for broader employee groups than for executives, particularly in private companies.

Reduced Emphasis on DE&I and ESG Metrics

The survey notes a significant decline in companies with stand-alone DE&I or ESG goals in incentive plans. When excluding “don’t know” and “N/A” responses, most companies do not use stand-alone DE&I or other ESG-related metrics within incentive plans, representing a notable shift in how nonfinancial goals are being used to drive performance.

• Only 22% of public companies and 13% of private firms now include stand-alone ESG metrics in incentive design.
• About 15% of respondents have eliminated DE&I metrics or folded them into broader strategic categories.
• Approximately 4% of respondents continue to use DE&I or other ESG-related metrics but have adjusted the way they communicate about them externally.
• None of the respondents said they recently added stand-alone DE&I metrics.

Succession Planning and Governance Stability

The survey found that CEO turnover occurred at 16% of surveyed organizations in the past year, most commonly under pre-planned succession strategies. The turnover corresponds to 6.25 years expected tenure, slightly lower than a recent CEO average tenure of 6.5 years. Nearly all organizations surveyed maintain either a strategic or emergency CEO succession plan.

About the Survey

The “Looking Ahead to Executive Pay Practices in 2026” survey reflects responses from nearly 250  public, private, and not-for-profit organizations across multiple industries. Conducted in mid-2025, the study examines expected changes in salary budgets, short- and long-term incentive plans, pay positioning, and governance practices. The full executive summary is available here and a complete data set is available for non-survey participants to purchase.