Throughout 2021 and into 2022, compensation committee agendas remain in flux as companies continue to respond to fluctuating market effects on business operations, workforce health, supply chain and overall organizational wellbeing. To help make sense of the numbers, Gallagher's CEO and Executive Compensation Trends: 2022 Edition provides an important baseline to understand evolving executive compensation packages.

Gallagher's 2022 report, led by James F. Reda, managing director for Gallagher's Executive Compensation Consulting service, includes compensation data for 2,845 companies, provided by MyLogIQ.® The report focuses on 2021 pay programs derived from 2022 proxy filings and offers a comprehensive set of benchmarking data and analysis to support compensation committees.

Analysts examined the most recent corporate disclosures by Russell 3000® companies to review individual elements of compensation packages and executive compensation trends by major industry and company size. The report also includes comparisons with S&P 500® organizations to offer additional perspective on the difference between large and small firms.

Use the report to explore in-depth data for chief executive officers (CEOs) and named executive officers (NEOs), as well as summary compensation data for chief financial officers (CFOs). The report further summarizes a wide range of highlights to create a total picture of executive talent compensation packages. Here are a few examples:

While CEO pay growth witnessed large increases — particularly long-term incentives — incumbent CEO pay shows increases slightly lower than those for CEOs overall.

Russel 300 CEO pay growth is 28.2%; S&P 500 is 17.7%.

CEO compensation increases suggest that companies continue to reward successful leaders. This trend is important because the volatile business climate — with rising interest rates, supply chain challenges, international turmoil and labor force constraints — calls for seasoned leaders able to navigate these challenges. An uncertain business picture leads to increased and continued demand for top talent.

Environmental, social and governance (ESG) issues continue to draw shareholder focus, and many companies have incorporated ESG-related metrics into their short- and long-term incentive programs.

These metrics increasingly join other strategic factors to consider when setting executive compensation. As investors and other key stakeholders make their ESG expectations known, many companies have started to incorporate ESG-related metrics into their short- and long-term incentive programs. Other organizations that have not yet linked executive compensation to ESG have formally stated they're preparing to do so.

The talent race continues between emerging and larger, established companies.

Overall, the disparity in pay increase rates between larger and smaller companies shows that the compensation gaps continue to close. Smaller companies hire from larger companies and typically represent a higher-growth business model. Smaller biotech companies attracting talent from larger life science companies is an example of this trend.

Reda and his Executive Compensation consulting team suggest leaders use CEO and Executive Compensation Trends: 2022 Edition primarily to identify the latest practices and emerging trends. None of the commentaries included is intended as a recommendation for executive compensation design, compensation-related resolutions or board oversight practices in the field. Rather, Reda and team recommend that compensation and governance groups make decisions after careful consideration of the specific circumstances the company faces in the current marketplace, including its overall compensation policy, strategic priorities and business needs.

Download CEO and Executive Compensation Trends: 2022 Edition now to delve deeper into the insights to help your organization's HR team and compensation committee determine direction for CEO compensation policy, NEO compensation policy or CFO compensation policy in the current evolving business environment.


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