Executive pay trends in 2026: Proxy insights on CEO pay, incentives and governance under pressure 

Executive compensation is moving through another period of recalibration. Companies are still competing for leadership talent, but they are doing so against a backdrop of market volatility, tariff uncertainty, supply-chain pressure, proxy-advisor scrutiny and fast-moving changes in how work is measured.  

For compensation decision makers, the question is no longer simply whether pay is going up. It’s whether incentive programs remain credible, explainable and resilient when business conditions shift quickly.

WTW’s early read of 2026 CEO pay trends and incentive design is based on a representative sample of 400 S&P 1500 companies filing proxies by April 17, 2026, the CEO security benefits findings cover 425 of S&P 500 companies, and the Say-on-pay results include a review of the full index as of the same date. The findings point to several trends worth watching as companies prepare for mid-year committee discussions, 2026 design decisions and investor engagement.

Key takeaways

• CEO pay continues to grow, led by long-term incentives (LTI). Median target total direct compensation increased 6.7% in 2025, slightly above the prior-year increase of 6.4%. Target LTI grant values were the main driver, increasing 8.1% at the median.
• Earned pay is more sensitive to volatility. Median earned pay growth declined from 14.5% in 2024 to 8.3% in 2025, reflecting market volatility and a lower number of shares vesting year over year.
• Tariff exposure is showing up in incentive design. Companies in more exposed sectors, including manufacturing and global supply chains, are using flexible plan features more frequently and show modestly lower midpoint payouts than lower-exposure companies.
• LTIs are being rebalanced at the margins. Seven percent of companies reduced targeted performance-award mix by at least five percentage points in 2025, with reductions averaging more than 20%. Early 2026 disclosures also show some companies moving toward a roughly 50/50 balance of performance-based and time-vesting LTI.
• ESG is narrowing, not disappearing. Among short-term plans ESG measures remain in use at 55% of companies, but prevalence is down about four percentage points over the last two cycles. DEI-related incentive measures declined by roughly 50% in 2025 versus the prior year.
• AI is beginning to enter incentive discussions. In WTW’s S&P 500 review, 5.9% of companies disclosed at least one AI-related metric in 2025, most often within strategic or individual performance assessments rather than as a standalone measure.
• Say-on-pay support remains strong, but the “why” still matters. Average support is currently 93% for the Russell 3000 and 92% for the S&P 1500, while negative proxy-advisor recommendations are down. However, high pay-for-performance concern is an increasing driver of “against” recommendations.
• Executive security benefits are receiving more attention. Forty-five percent of large-cap companies disclosed CEO security services in 2025, up from 37% in 2024. Personal protective services rose from 26% to 35% among S&P 500 companies.

Turning proxy insights into future design decisions

The strongest theme across the data is not a single design trend; it’s the need for incentive programs that can hold up under pressure. Companies are using familiar tools, including adjusted performance measures, circuit breakers and modifiers, scorecards, individual and strategic performance with discretionary achievement, and overall committee discretion to amend payouts to preserve line-of-sight and reduce the risk of unintended outcomes. These features are especially common among companies with higher exposure to tariffs and cost volatility.

At the same time, investors and proxy advisors continue to expect a clear performance story. That means any added flexibility needs to be paired with strong governance, disciplined documentation and plain-language disclosure. A plan feature that helps management navigate uncertainty can still create concern if the rationale is unclear or if the final payout appears disconnected from results.

The LTI findings underscore a key challenge in design. Performance awards remain central to executive pay design, but multi-year goal setting has become harder in a less predictable environment. Some companies are responding by modestly increasing time-based equity or extending vesting periods to support retention value while reducing pressure on long-range target setting. This is not a wholesale move away from performance-based pay, but it is a meaningful signal for future planning, especially given the recent shift in proxy advisor policies on longer-term time-vesting awards being acceptable in lieu of performance awards.

Nonfinancial metrics are also becoming more selective. The decline in ESG and DEI prevalence does not mean companies are abandoning broader stakeholder priorities. Rather, many are narrowing the measures they use, emphasizing stronger alignment to business strategy and greater measurement discipline. AI may be the next area where this same governance challenge emerges: Companies will need to decide which AI-related priorities are measurable, auditable and appropriate to disclose.

Key design questions

• Are current performance ranges still realistic under multiple economic scenarios?
• Do plan guardrails reduce volatility without weakening the pay-for-performance message?
• Is the LTI mix supporting both retention and credible long-term accountability?
• Are newly incorporated measures, such as those related to AI, tied to priorities that can be measured consistently and explained clearly?
• Does the proxy disclosure and shareholder outreach tell a coherent story about performance, judgment and governance?

The broader message for executive compensation professionals and compensation committee members is straightforward: Executive pay programs are not standing still. Pay levels continue to rise, but the more important shift is how companies are designing, governing and explaining incentives in a less predictable operating environment.