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Roughly two-thirds of companies responding to Pearl Meyer’s annual executive pay practices survey expect similar year-over-year salary increases, but there are signs wage growth may be slowing, according to the findings released Dec. 19. Specifically, only 9% of the respondents expect higher percentage rates, compared to 40% last year. By contrast, 24% expect lower-level increases, compared to 6% in 2023.

The survey also found that a growing number of compensation committees are becoming more involved with broader human capital oversight, especially among publicly traded companies. Similar to last year, around 20% of companies expect to include environmental, social, and governance-related issues as a stand-alone metric in their incentive plans, although just 5% expect to add new ESG metrics, a noticeable decrease from 12% for 2023. Additionally, slightly more than 40% are considering changing their short-term incentive plans for senior execs, most commonly adding financial metrics.

“Salaries remain above historical norms, but it is a different landscape from this time last year,” Bill Reilly, the advising firm’s managing director who developed the survey, stated in a press release. “Things are certainly cooling off, consistent with declining overall inflation levels, but the outlook is not gloomy.”

According to the Pearl Meyer survey, the median expected increase for broad-based employees is down to 3.7%; for senior execs—CEOs and their direct reports—it’s 3.5%, a decline for both groups from the 4% expectation reported last year.

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

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