In 2022, rising energy costs, continued supply chain issues and US fiscal policy combined to increase inflation. These economic conditions led to worries about a potential recession and lower profits, with many companies wary of executive pay increases. Given global stock market performance, the fact that annual and long-term incentives weakened in 2022 demonstrates the pay-for-performance compensation model is working at most companies.

Top CEO and executive compensation pay levels reflected the impacts of the economy in 2022, with median CEO compensation levels decreasing among both the Russell 3000® and S&P 500® indexes. These decreases came after CEO pay soared in 2021, when boards rewarded top executives for steering their companies through the pandemic-induced recession.

Gallagher's 2023 report, under the direction of James F. Reda, managing director for Executive Compensation Consulting, includes compensation data for 2,834 companies, provided by MyLogIQ®. The report focuses on 2022 pay-for-performance compensation packages derived from 2023 proxy filings and offers a comprehensive set of benchmarking data and analysis.

Analysts examined the most recent corporate disclosures from Russell 3000 companies to review individual elements of executive compensation packages and trends by 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.

This report explores 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 key CEO and executive pay insights to create a total picture of executive compensation packages. The following are two of five key insights for executive compensation committees to consider in their planning:

CEO pay decreased a surprising -7.3% and -2.7% for the overall Russell 3000 and S&P 500 indexes. This decrease contrasts with the explosive increase rates of 35.1% and 18.7% for 2021, compared with 3.0% and -4.1% for 2020.

Weaker annual and long-term incentive awards contributed to a reversal in total compensation trends. Poorer stock performance accounted for much of the decline in CEO pay in 2022 because CEO compensation often is tied partly to investor returns. With the economy down, growing investor pressure and regulatory changes, the downward CEO compensation trend suggests boards are showing a renewed conservative approach toward executive compensation.

While Russell 3000 CEO pay decreased by -7.3%, incumbent CEO pay decreased at a slightly lower rate of -7.1%. Contrary to the Russell 3000 companies, incumbent CEO pay at S&P 500 companies actually increased slightly by 0.5% year-over-year.

This difference suggests that companies continue to reward and strive to retain successful CEOs who can navigate the volatile business climate. Further, new CEOs hired into the role, either internally or externally, are less likely to receive the same level of compensation as their more tenured predecessors.

Continued economic uncertainty and heightened regulations will further exacerbate business challenges and public scrutiny.

Read Gallagher's CEO and Executive Compensation Trends, 2023 Edition now to delve deeper into these research findings and gain more insights to inform your leadership team and board's compensation committee.


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