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December 18, 2023

Pearl Meyer Survey Shows Salary Increases Slowing

Annual fall compensation survey shows increases expected are still above historical norms, but lower than last year.

BOSTON—Dec. 18, 2023—Executive compensation and leadership consulting firm Pearl Meyer recently published survey results that indicate a slowing in 2024 of the outsized base salary increases noted last year, while still remaining above longer-term historical norms.

The annual Looking Ahead to Executive Pay Practices survey indicates roughly two-thirds of respondents are expecting somewhat similar year-over-year increases. However, there are also indications of slowing expectations for wage growth. Just 9% of respondents are forecasting higher percentage raises versus 40% last year. Twenty-four percent are expecting lower levels in 2024, versus just 6% in the last survey.

“Salaries remain above historical norms, but it is a different landscape from this time last year,” said Managing Director Bill Reilly, who developed the survey. “Things are certainly cooling off, consistent with declining overall inflation levels, but the outlook is not gloomy. Ninety-seven percent of respondents expect increases in 2024 for their broad-based workforce and 86% expect raises for senior executives. Additionally, nearly 20% of respondents increased or plan to increase competitive positioning for one or more pay components, reflecting ongoing strong demand for key talent within the current environment.”

According to the survey, at the 50th percentile the expected increase for broad-based employees is 3.7%, down from the 4% expected last year. For senior executives—CEOs and their direct reports—the number drops to 3.5%, also down from 4%.

“Data provides an important context for any company’s compensation programs, but it should not be the driver,” said Reilly. “It is a helpful point-in-time reference, but cannot accurately account for your organization’s unique circumstances. Examine the data and understand your position relative to trends, but always base compensation decisions on your talent management strategy and business goals.”

Pearl Meyer's "Looking Ahead to Executive Pay Practices" is an annual, online survey and valuable compensation planning tool. This year's survey included 304 companies. Of those, 148 were publicly traded, 110 were private for-profit, and 46 were not-for-profit organizations.

Additional Key Findings

  • Most survey respondents anticipate year-over-year (YOY) improvements in financial performance; 32% are projecting moderately better results (+5% to +19%) and 12% are expecting significantly better outcomes (+20% or more); approximately 25% expect YOY reductions.
  • When it comes to the role of the compensation committee, almost two-thirds have responsibility for executive succession planning and 39% are responsible for leadership and talent development.
  • A growing number of compensation committees are becoming more involved with broader human capital oversight, especially among publicly traded companies, where 20% of respondents already changed or plan to change the committee name to reflect this expanded role.
  • The prevalence of ESG-related issues as stand-alone incentive plan metrics remains around 20%, similar to the year prior, although prevalence of respondents expecting to add new ESG metrics declined from 12% for 2023 to just 5% in 2024.
  • Slightly more than 40% of all respondents are considering making changes to the short-term incentive plan for senior executives in 2024; of those, adding new financial metrics is the most common expected change.
  • Almost all (97%) of public companies and 68% of private for-profit companies offer long-term incentive plans for senior executives; for 2024, 10% of respondents are planning to increase participation levels within the company.

About Pearl Meyer

Pearl Meyer is the leading advisor to boards and senior management helping organizations build, develop, and reward great leadership teams that drive long-term success. Our strategy-driven compensation and leadership consulting services act as powerful catalysts for value creation and competitive advantage by addressing the critical links between people and outcomes. Our clients stand at the forefront of their industries and range from emerging high-growth, not-for-profit, and private organizations to the Fortune 500.

At Pearl Meyer, we work with boards and organizations to design and implement compensation and leadership strategies that build great management teams.
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