Pearl Meyer Survey Indicates a Steady Approach to Executive Compensation Levels in 2025

News provided by

Nov 19, 2024, 09:30 ET

—Additionally, almost half of all respondents expect improved overall financial results—

BOSTON, Nov. 19, 2024 /PRNewswire/ -- Executive compensation and leadership consultancy Pearl Meyer has published recent survey results indicating "cautious optimism" amongst those responding to the firm's annual questionnaire on corporate performance and executive pay. Board directors, executives, and HR professionals representing 219 public, private, and not-for-profit organizations shared their expectations for the coming year. While 17% said they anticipate a modest decline in their overall financial results in 2024 compared to the previous year, almost half expect to see a moderate (36%) or significant (10.5%) improvement. Further, 82% expect to provide about the same or higher salary increases in 2025 as they did in 2024.

"Companies are struggling with an overall increased level of uncertainty—driven by a vast array of economic, political, and global concerns—that impacts business results and long-term strategic prospects," said Matt Turner, president of executive compensation consulting at Pearl Meyer. "However, companies also recognize that building and maintaining a strong leadership team is critical. For that reason, we do anticipate executive base salary pay levels to generally increase slightly above historical norms, and to see a majority of annual bonus and long-term incentives pay out at or above threshold in '25. Our survey has further guided that outlook."

Key Findings

Most respondents expect to provide salary increases to their executives in 2025. For the CEO, the average expected increase is 3.3%, 3.5% at median, and 4% at the 75^th percentile. These figures are almost identical for the CEO's direct reports, and the average expected increase among respondents for the broader workforce is 3.5%. Just 18% of respondents are forecasting lower levels of salary increases in '25 than in '24.
Year-over-year survey data indicate that salary increase percentages, while still higher than the typical historical target of 3%, appear to be moderating compared to the period of time immediately after the pandemic.
For both short-term and long-term incentive plan payouts in '25, a majority of respondents expect performance to be equal to or greater than the threshold for achieving some level of compensation.
- For short-term incentives, 50% expect performance to be at target for a full award or better.
- With long-term incentives, the expected payout for cycles ending in 2024 that are at or above-target has declined from 2023 survey results.

"Unlike the previous few years, when anticipated base salary increases were far above the historical norm, this year our respondents are projecting rates that are best characterized as cautiously optimistic," said Bill Reilly, managing director at Pearl Meyer and sponsor of the annual survey. "One notable point relative to incentive plans is that the results did indicate generally sound pay-for-performance alignment, where nearly 75% of the respondents that expect financial performance declines are also projecting lower incentive plan payouts."

An executive summary is available for download here and a complete data set is available for non-survey participants to purchase.

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.

SOURCE Pearl Meyer