The Advisors' Blog

It’s not even February, but it’s fair to say that 2026 has already been full of surprises for me – and most of those surprises are being delivered by our federal government. In the executive compensation sphere, one thing that wasn’t on my bingo card was a January 7th executive order that calls on defense contractors to ramp up production – “or else.” I’m paraphrasing, but as you can see from the fact sheet, the threatened consequences include limiting buybacks – which Dave blogged about last week on TheCorporateCounsel.net – as well as stepping in on executive pay. Here’s an excerpt:

The Secretary shall further take steps to ensure that future contracts permit the Secretary to, upon determining that a contractor is experiencing such issues, cap executive base salaries at current levels (with inflation adjustments permitted) while scrutinizing executive incentives to ensure they are directly, fairly, and tightly tied to prioritizing the needs of the warfighter.

The Order requires that executive incentive compensation under future contracts be tied to on-time delivery, increased production, and necessary operating improvements rather than short-term financial metrics.

As this article from the Federal News Network notes, the President also posted on social media that no executive should be allowed to make more than $5 million, but that didn’t make it into the EO. The article gives this color:

A cap on executive compensation already exists in some form — contractors can pay their executives whatever they choose, but the government only reimburses costs up to a certain limit.

The executive order, however, goes a step further — it’s shifting from how much the government will reimburse the contractor to limiting how much the company can pay its executives.

“Pretty significant difference, but maybe they’ll fall back on the same mechanisms. I don’t know that yet. Nobody in the department is talking yet about how they’re going to implement this. I’m sure they’re still trying to work that out,” Chvotkin said.

“It’s fine to debate executive compensation, in GovCon and across the economy, and whether it is aligned with long term performance. It’s not as simple as saying you can only make ‘X’. Compensation has multiple dimensions and the government’s role in controlling many of them is not at all clear. The EO does nothing to clarify how or by what measures, or even authority, the government plans to do so,” Soloway said.

This McDermott blog gives a bunch of practical suggestions for affected companies – here are a few that relate to executive pay:

Contractors should anticipate that future government contracts may include explicit provisions linking executive compensation to delivery and production outcomes and may also incorporate salary caps or other limits consistent with the administration’s stated priorities. Companies are advised to review current compensation structures and prepare to adjust incentive plans to align with these new requirements.

Review existing government contracts and evaluate those where EO‑driven clauses are likely.

Review past and current performance metrics, with a focus on production levels and on-time delivery rates.

Boards and management should assess whether the prohibition on stock repurchases affects previously issued earnings per share (EPS) guidance. Many companies’ EPS projections assume ongoing buybacks, which reduce the number of shares outstanding and can impact reported EPS. Management, the disclosure committee, and the board should evaluate whether current guidance remains accurate or if updates are needed.

Prepare to demonstrate performance using program‑specific metrics.

Distinguish government‑driven changes or delays from contractor‑controlled factors and document approved baseline changes.

If possible, prepare a narrative that shows month‑over‑month improvements to performance metrics.

If distributions occurred, explain the board’s capital allocation rationale and any simultaneous investments that increase capacity and performance.

Meanwhile, David Katz of Wachtell weighed in with these thoughts in a write-up for the NYU School of Law:

The Executive Order could face litigation challenges on the ground that it proposes an unprecedented federal government intrusion upon traditional corporate governance matters such as executive compensation, capital allocation and return of capital for the defense industry. Companies in the defense and other industries will need to carefully monitor developments here to see how any such litigation plays out over time and how the Executive Order is ultimately administered and enforced. More broadly, companies will need to monitor whether the concepts established in this Executive Order expand into other areas of U.S. government contracting.

While the executive order is directed at companies in the defense industry, this administration seems to have zero qualms about involvement with Corporate America. So, companies in other industries may also want to keep an eye on what happens. If the government gets into the business of dictating executive pay arrangements, any excitement about pay-for-performance disclosures getting easier, and proxy advisors getting less powerful, may be short-lived.

– Liz Dunshee

As I noted in a blog last fall, the “conventional wisdom” for executive pay is that a high percentage should be “at risk” – i.e., keyed to performance objectives. With such a large portion of executive pay coming in the form of performance awards, it’s important to get the design right. This Meridian alert outlines three best practices that compensation committees should keep in mind:

1. Choose appropriate performance metrics – Metrics need to have the right blend and degree of emphasis on advancing profitability/efficiency vs. growth. This depends on where a company is along the profitability continuum.

2. Set Appropriate Performance Goals – Performance goals – whether for short- or long-term performance incentives, generally require both quantitative and qualitative assessments. It is important to consider not just “target” but the performance range around target (threshold and maximum). The alert shares five perspectives that, in combination, should lead to sound performance goals.

3. Maintain Good Governance and Oversight Process – Process and oversight matter. The alert explains the importance of benchmarking, implementing ownership, vesting and clawback features, communicating clearly, and regularly reviewing and (if needed) adjusting to reflect changes in business strategy and conditions.

Check out the full alert for more insight on each of these points, along with the other resources in our “LTIPS/Annual Incentives” Practice Area.

– Liz Dunshee

Tune in at 2:00 pm Eastern today – Tuesday, January 20th – for our annual 90-minute webcast, “The Latest: Your Upcoming Proxy Disclosures.” We’ll hear from Mark Borges of Compensia and CompensationStandards.com, Alan Dye of Hogan Lovells and Section16.net, Dave Lynn of Goodwin Procter and TheCorporateCounsel.net and Ron Mueller of Gibson Dunn on a variety of compensation “hot topics” – including:

– Status of SEC Executive Compensation Disclosure Requirements

– Other Possible Topics for SEC Review

– Incentive Compensation – Disclosure Considerations for Tariff Challenges and Discretionary Adjustments

– Executive Security and Other Key “Perks” Disclosures

– Investor Perspectives: “Homogenization” and Performance Equity

– Proxy Advisors – Impact of the Executive Order

– Proxy Advisors – Voting Policy Updates for 2026

– Proxy Advisors – Impact of Announced Move Towards “Customization” of Voting Policies

– Proxy Advisors – Status of Legal Challenges in Texas and Florida

– New Challenges with Shareholder Engagement

– Clawback Policies – Lessons from 2025

– Compensation-Related Shareholder Proposals in 2026

– ESG and DEI Goals: Impact of Shifting and Conflicting Perspectives

– Managing Stock Price Volatility When Granting Equity

Members of this site can attend this critical webcast at no charge. If you’re not yet a member, you can sign up by contacting our team at info@ccrcorp.com or at 800-737-1271.. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. The webcast cost for non-members is $595.

We will apply for CLE credit in all applicable states (with the exception of SC and NE who require advance notice) for this 1-hour webcast. You must submit your state and license number prior to or during the live program using this form. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval; typically within 30 days of the webcast. All credits are pending state approval.

This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the archive page.

– Liz Dunshee

Tune in at 2:00 pm Eastern today for our webcast “The Secret of My Success: Best Practices for Management Succession Planning” to hear tips for succession planning best practices from our panelists:

Derek Chien, Vice President, Assistant General Counsel, Synopsys
Richard Fields, Head of Board Effectiveness Practice, Russell Reynolds Associates
Tracey Heaton, Chief Legal Officer and Corporate Secretary, Heidrick & Struggles
J.T. Ho, Partner, Cleary Gottlieb
Jennifer Kraft, Former Executive Vice President & General Counsel, Foot Locker

They plan to discuss:

Members of this site can attend this critical webcast at no charge. If you’re not yet a member, you can sign up by contacting our team at info@ccrcorp.com or at 800-737-1271. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. The webcast cost for non-members is $595.

We will apply for CLE credit in all applicable states (with the exception of SC and NE, which require advance notice) for this 60-minute webcast. You must submit your state and license number prior to or during the program using this form. Attendees must participate in the live webcast and fully complete all the CLE credit survey links during the program. You will receive a CLE certificate from our CLE provider when your state issues approval; typically within 30 days of the webcast. All credits are pending state approval.

This program will also be eligible for on-demand CLE credit when the archive is posted, typically within 48 hours of the original air date. Instructions on how to qualify for on-demand CLE credit will be posted on the archive page.

– Meredith Ervine

Despite their prevalence — actually near ubiquity at large-cap companies these days — the research on whether PSUs actually accomplish their goal is mixed. A recent report, The Debate on Performance Shares—Who Has It Right?, by Charles Tharp and Ani Huang of the CHRO Association lists these key research findings:

– Pay Governance found companies with PSUs show robust alignment of realizable pay (Compensation Actually Paid) with TSR, but not Summary Compensation Table pay. This was the only study to find an advantage with PSUs.
– Farient Advisors’ Marc Hodak showed that PSU-heavy companies paid their CEOs more but delivered weaker shareholder returns.
– Norges Bank found that among their US holdings, firms using PSUs underperformed sector peers without PSUs.
– Virginia Tech Professor Felipe Cabezon found companies that change their pay structure to become more similar to other firms (often, by adopting PSUs) underperform in shareholder returns and firm valuation compared to those with tailored designs.
– WTW reported that “enduring high-performance firms” relied more on stock options, had longer vesting, and fewer metrics—tailoring incentives instead of adopting the most common practice.

Not surprisingly, institutional investors hold varying views on what mix of performance-based or time-based equity is best. In addition to recent proxy advisor survey results, a recent Pay Governance survey found that 37% of large investors surveyed expressed a preference for PSUs, 34% both PSUs and long-vesting time-based RSUs and 24% long-vesting time-based RSUs.

In terms of what the conflicting data and views mean for executive compensation programs right now, the report suggests:

The takeaway isn’t to abandon PSUs overnight but to ensure they are a part of a thoughtful, strategy-driven mix rather than a reflexive adoption of prevailing practice.
Ask: Does our LTI mix reinforce our strategy, or just proxy advisor references?
Test: Would a more tailored blend—longer vesting, some options, greater ownership— better align with our performance and talent goals?
Remember: Homogeneity reduces criticism of incentive design, but it may also reduce shareholder value.

– Meredith Ervine 

The Delaware Supreme Court may have concluded the Tornetta case by weighing in only on the recission issue, but does the Court’s decision imply that mega awards aren’t inherently unfair to a corporation? This Fried Frank article says:

The decision can be read as implicitly sanctioning the concept of super-sized compensation. The Court of Chancery, in the opinion below, appeared to suggest that super-sized compensation, at least at some extreme point, might be inherently unfair to a corporation and its shareholders. The Supreme Court, however, by leaving the compensation intact and awarding the Plaintiff nominal damages of $1, seems implicitly to have rejected that view. Moreover, although the Supreme Court stated that partial rescission (i.e., reducing the amount of the compensation) would have been a proper remedy if there had been evidence in the record as to what amount of compensation would be fair, the Supreme Court did not remand the case to the Court of Chancery for such evidence to be developed, but instead awarded nominal damages of $1—suggesting that it viewed the Plaintiff as not having been much damaged by the super-sized compensation that was granted.

And this, it suggests, may facilitate mega awards at other companies, especially when considered with the 2025 DGCL amendments and the Trade Desk decision.

Notably, the new safe harbors for controller transactions, provided under the 2025 DGCL amendments to the Delaware General Corporation Law (the “DGCL Amendments”), also will facilitate super-sized compensation for controller-executives. However, for the most part, the only public companies that are likely to want, and to be able, to grant super-sized compensation will be those that, like Tesla, are controlled or semi-controlled, have a superstar CEO, and have the potential for venture capital company-style growth even though a public company . . .

In 2021, The Trade Desk awarded its founder-CEO-controller a ten-year equity-based incentive compensation package of up to $5.2 billion, dependent on specified milestones being met. This package is the largest ever granted, other than Musk’s packages. The package was approved by the company’s board, but not submitted to a vote of shareholders. In In re The Trade Desk (Nov. 6, 2025), the Supreme Court affirmed the Court of Chancery’s dismissal of the suit, on demand futility grounds.

The Court of Chancery had ruled that, although Green is the company’s controller (with majority voting power), the plaintiffs failed to establish with sufficient particularity their contentions that (i) the purportedly independent directors were beholden to Green based on professional, financial, and personal ties, (ii) Green’s attending compensation committee meetings exerted undue influence on the process, or (iii) the minutes of the committee meetings reflected a lack of negotiation over the compensation package.

The article made some pretty interesting predictions:

When large private tech companies (such as the next Facebook or Uber) go public, we expect to see super-sized compensation “baked in.”

[I]n future cases challenging super-sized compensation, the judicial result could be a reduction in the compensation rather than its being left intact . . . Where a plaintiff seeks total rescission, the defendants will face a strategic decision whether to seek to enforce the full compensation, or instead (or in addition) to seek to avoid total rescission by arguing that at least part of the package is fair and submitting evidence into the record as to what amount clearly would be fair.

There may also be some upward pressure on executive compensation more generally, given dramatic increases at the very top of the scale.

On that last point, we’ve noted how Musk’s awards have already had that impact.

– Meredith Ervine 

This Semler Brossy article asks, “Should compensation be a quiet validation of outcomes or a loud rallying cry for change?” It posits that the second most common reason pay programs fail — even though designed to drive strategy — is because the company doesn’t use the pay design to effectively communicate priorities. Here’s an example:

A retail chain emphasizes “increasing the percentage of online sales” for its executives, but the targets are set at 90% achievement rates. Since the percentage is easily achieved, these bonuses become an entitlement, not an incentive.

Between the two communication approaches, when is one better than the other? It concludes:

Go prominent when strategy is changing—turnarounds, new business models, M&A integration—or when performance has plateaued and you need a behavioral shift. Prominent programs also work when employee surveys show confusion about priorities, when the market is forcing existential choices, or when you need the entire organization rowing in the same direction on 1-2 critical outcomes.

Go quiet after you’ve hit strategic milestones and need to steady the ship, or when employees report ‘compensation fatigue’ from constant plan changes. Choose this approach when operational execution is solid, strategy is stable, and over-communication risks making pay feel engineered or manipulative. Quieter programs also make sense for large, stable workforces in low-growth environments—when the needle doesn’t move much, focusing attention on pay may not be the best use of organizational energy or management bandwidth.

The immediate action item for this time of year is to make sure communication is part of your 2026 compensation planning:

Before your next compensation committee meeting, ask one question: Are we designing incentives to be heard, or hoping they’ll speak for themselves? Boards that treat this as a strategic oversight question—not just an implementation detail—are far more likely to see compensation actually drive the behavior and focus they intended.

– Meredith Ervine 

We are off to a quick start this year! In addition to the ISS FAQs that I blogged about yesterday, BlackRock Investment Stewardship has published its commentary for 2026 meetings, including these docs that compensation committees should be aware of:

– Global Principles

– Voting Guidelines

– Engagement Priorities

– Approach to Engagement on Incentives

– Approach to Engagement on Human Capital

This Alliance Advisors article summarizes key updates – flagging these compensation-related changes:

Executive compensation: BIS added a discussion on executive perquisites, which states that it examines the rationale for certain perquisites, such as security, and whether their appropriateness is regularly evaluated by the compensation committee.

Human capital management: BIS has removed its expectation that companies disclose their approach to DEI, as well as their workforce demographics based on EEO-1 Survey disclosures.

Overall, as noted in this Cooley blog, BIS strikes a pretty deferential tone to management in the 2026 updates and continues to emphasize its role in representing its clients’ interests in long-term financial performance. BlackRock added this note on its engagement commentary:

On February 11, 2025, the U.S. Securities and Exchange Commission (SEC) staff issued updated guidance for shareholders to maintain their eligibility to report their beneficial ownership under Schedule 13G of the Exchange Act. We comply fully with these requirements and do not engage with portfolio companies for the purpose, or with the effect, of changing or influencing control of any company.

As we’ve been discussing on The Proxy Season Blog on TheCorporateCounsel.net (and at our Proxy Disclosure & Executive Compensation Conferences back in October), BlackRock and other big asset managers have not only been pushing “voting choice” programs, they’ve also split the voting functions for the index and active stewardship teams. That means that there’s a separate set of Global Engagement & Voting Policies that apply to BlackRock’s actively managed funds, so you’ll need to know which funds hold your company’s stock in order to know which policies apply.

The Active Stewardship policy identifies compensation program features that will factor into the voting decision, and says:

We may vote against proposals to introduce new share-based incentives, approve existing policies or plans, or approve the compensation report where we do not see alignment between executive compensation arrangements and our clients’ financial interests. When there is not an alternative, or where there have been multi-year issues with compensation misaligned with performance, we may vote against the election of the chair of the responsible committee, or the most senior independent director.

I’m gonna be honest: the “favorable features” boil down to the same general concepts that BIS has been encouraging, but I already find it super challenging to sort through the half-dozen or so documents that make up BIS’s “benchmark” approach, so I’m not super excited about having another set of policies to keep track of.

– Liz Dunshee

I’m sure many of our readers have more refined holiday traditions than I do, but I like to think that some of you enjoy watching random portions of “A Christmas Story” during its annual 24-hour marathon. If so, you’ll recall how Ralphie’s excitement reaches its pinnacle when his “Old Man” tells him there’s one more present hidden behind the tree. That is kind of how I felt yesterday, when Meredith and I realized that during the December hustle & bustle, ISS posted updated FAQs and related documents for the upcoming 2026 changes that were announced in late November.

As Meredith shared back in November, there are many compensation-related changes to ISS’s benchmark voting policies that will apply to 2026 meetings. The FAQs overlap with – and expand upon – those updates. But (to keep the holiday analogies going) there are also a couple of Easter eggs! Here are a few key takeaways:

1. Non-Compensation Policies & Procedures FAQs: Consistent with the new benchmark policy changes, ISS beefed up the FAQ on non-employee director pay by saying that it may issue adverse recommendations if there’s been problematic pay in two or more years (even if non-consecutive) – and that ISS could also issue an adverse recommendation in Year 1 in egregious cases. The FAQ also clarifies that ISS is inclined to issue an adverse vote recommendation for the entire board committee responsible for director pay, rather than just the chair. In ISS’s view, problematic director pay can exist based on excessive magnitude, or problematic perquisites, performance awards, stock options, or retirement benefits.

2. Equity Compensation Plan FAQs: Updates include:

– When calculating burn rate, ISS doesn’t offset incentive compensation grants with repurchased shares.

– Beginning February 1, 2026, equity plan proposals are generally analyzed on a post-economic transaction basis when matters such as a merger, financing, etc. are also on the ballot. Common shares issuable pursuant to the economic proposal will be included in ISS’s calculations, unless the proposed equity plan would only become effective if the proposed transaction isn’t completed.

– Elaborating on the two changes to the Equity Plan Scorecard framework about (1) limits on cash-denominated awards to non-employee directors (which applies to S&P 500 and Russell 3000 models) – and (2) the “overriding factor” for a plan that lacks a sufficient “Plan Features” pillar score (which applies to S&P 500, Russell 3000, and non-Russell 3000 models).

–> For the non-employee director awards, the FAQ says that if a plan discloses a cash-denominated award limit for directors – or if directors aren’t eligible participants under the plan – a company gets full points. If directors are participants and no cash-denominated limit is disclosed, then companies get no points for that factor. Companies don’t get points if their plan only has non-cash (i.e., share-denominated) award limits.

–> For the “Plan Features” overriding factor, the FAQ says ISS may recommend a vote against the equity plan proposal when the pillar score is less than 7 points.

– For non-Russell 3000 models, a clawback factor is now also part of the “grant practices” pillar.

– Updating factor weightings within all models (but no changes to any of the passing scores).

3. Pay-for-Performance Mechanics: ISS details how it’s adjusted its model to reflect longer time horizons – from 3 to 5 years for the measures of Relative Degree of Alignment and Financial Performance Assessment and from 1 year to the average of a 1- and 3-year assessment for the relative Multiple of Median measure. Those time horizons might be shortened – or measures might be excluded – for companies with fewer years of data. The FAQ explains how this is all calculated and assessed. This FAQ also says that extended time-based awards will now be viewed as a positive factor in the qualitative evaluation – while awards with vesting or retention requirements of less than 5 years will continue to be viewed negatively.

4. Executive Compensation Policies: Lots of updates here:

– Says that ISS is unlikely to raise significant concerns for relatively high executive security-related perks, as long as the company discloses a reasonable rationale. For example, disclosure of an internal or third-party assessment, and a broad description of the security program and its connection to shareholder interests, would generally mitigate concerns regarding relatively large security costs. However, extreme outliers in security costs may still drive significant concerns, particularly if not adequately addressed in the proxy disclosure.

– States that ISS will review management proposals seeking shareholder approval to reprice or exchange stock options on a case-by-case basis. ISS will consider factors like the quality of disclosure and rationale, whether the proposal is value-neutral, the program’s participants, historic trading patterns, timing, stock volatility, cost of equity plans, etc. ISS will generally recommend opposing repricing/exchange programs if the program includes NEO and/or director participants, the replacement awards are not subject to a minimum one-year vesting period, or any other factors that ISS considers problematic.

– Adds to the factors that ISS considers when evaluating “responsiveness” to a low say-on-pay vote to include significant corporate activity (e.g., mergers) and “any other recent compensation action or factor considered relevant to assessing board responsiveness.”

– Lays out lengthened time periods for the pay-for-performance model, similar to what’s explained above for the Pay-for-Performance Mechanics.

– Points out that the 3-year Multiple of Median measure is now incorporated into the quantitative screen, instead of just being provided for informational purposes.

– Updates and clarifies the list of factors ISS considers in its qualitative evaluation – e.g., to include time horizons, rationale for pay structures and decisions, and relevant industry or other external factors.

– Adds an explanation of how ISS considers a company’s financial performance in the qualitative evaluation and says that ISS sources GAAP performance measures sourced from Compustat as well as adjusted results and financial highlights disclosed by the company in its proxy statement. ISS also might consider performance as measured by its own financial performance assessment measure. For example, strong financial or operational results may explain above-target incentive payouts despite poor TSR performance.

– Details how ISS will review extended time-based awards as part of the pay mix evaluation. A program that consists primarily or entirely of time-based awards won’t in itself raise significant concerns as long as the design uses a time horizon of at least 5 years, which can be achieved through vesting or retention requirements. The FAQ goes into detail on how to demonstrate a 5-year time horizon through different types of vesting arrangements. The FAQ says that as before, if the program consists of more than 50% time-based equity that doesn’t utilize an extended time horizon, it will generally be a negative consideration.

– ISS (and investors) still want one-time/special awards to be performance based. The factors for those awards are unchanged.

– Clarifies that ISS considers profit-sharing awards to be incentive compensation, so payments are included in the quantitative screen and considered in the qualitative evaluation. ISS considers similar factors as for other incentive compensation when assessing these awards.

– Adds detail on how ISS evaluates annual incentives based on discretionary assessments. Bonus programs that are heavily based on discretionary determinations are viewed negatively, particularly for companies that exhibit a pay-for-performance misalignment. The FAQ says disclosures about discrete category and metric weightings, minimum performance requirements for payouts, and pre-set target/maximum pay opportunities, are all considered positive features and they may provide mitigating weight to such bonus programs that are informed by performance but ultimately discretionary.

5. Peer Group Selection Methodology and Issuer Submission Process: Beginning with peer groups constructed for meetings on and after February 1, 2026, ISS’s methodology will give priority to potential peers that were previously chosen by ISS as a peer for the company (among other unchanged factors).

Even though we’re moving into our “fragmentation era” for investor votes, keep in mind that the ISS recommendations still carry weight and reflect the views of many investors. To get more context and intel on ISS’s 2026 updates and priorities – so that you know what to expect for the upcoming proxy season – make sure to tune in tomorrow to our webcast on TheCorporateCounsel.net, “ISS Policy Updates and Key Issues for 2026.” Marc Goldstein, Managing Director & Head of U.S. Research at ISS, will discuss key themes with Davis Polk’s Ning Chiu and Jasper Street Partners’ Rob Main. If you aren’t already a member of TheCorporateCounsel.net, email info@ccrcorp.com to try a no-risk trial.

– Liz Dunshee

In this recent report (available for download), BDO highlights mid-market compensation trends, based on an analysis of 600 companies’ 2025 proxy disclosures. Here are a few key takeaways:

– CEO total direct compensation went up in six out of eight industries. The average CEO pay increase of 2.3% at the BDO 600 companies is lower than what has been reported at larger companies. For example, for the 2025 Equilar 100, median pay for 100 highly compensated S&P 500 CEOs increased by 9.5%, with the median value of stock awards increasing 40.5% in 2024.

– In aggregate, CEOs and CFOs experienced pay increases of 2.3% and 5.8%, respectively. When comparing year-over-year change, CEOs and CFOs experienced the following increases:

• CEOs were provided salary increases of 4.2% on average, while total cash increased by 4.5%. STI increased by 9.8%, reversing a two-year trend of decreases (71% decrease in 2023 and 5.1% decrease in 2022). LTI| increased by 1.1%, and TDC increased by 2.3%.

• CFOs received salary increases of 5.5% on average, while total cash increased by 3.9%.

• For CFOs also, STI increased by 10.6%, reversing a two-year trend of decreases (8.0% decrease in 2023 and 7.7% decrease in 2022). LTI increased by 6.0% and TDC increased by 5.8%.

If you’re thinking that “mid-market” might span a large range of company sizes and practices, the study addresses that by breaking down trends into 3 groups based on revenue size (or assets, for financial services), as well as industry groups. Not surprisingly, the disclosures show that pay is highly correlated with company size:

– Average CEO TDC ranges from $3,467,589 for the smallest companies (Size Group A) – to $7,326,556 for the largest companies in the sample (Size Group C).

– Average CFO TDC ranges from $1,456,672 for companies in Size Group A to $2,948,990 for companies in Size Group C.

– Large companies also awarded the largest pay increases for CEOs and CFOs. CEOs of large companies (Size Group C) experienced the largest increase in pay (3.2%) while CEOs of the smallest companies (Size Group A) experienced a 0.3% decrease. CEOs of midsized companies (Size Group B) experienced a 1.8% increase.

– CFO pay in Size Group C had the largest increase at 6.8%, while CFOs in Size Group B experienced a 4.0% increase. CFOs in Size Group A experienced an increase of 5.2%.

Check out the full survey for more info on the elements of compensation and industry-based trends. BDO also published an analysis of mid-market director compensation trends, which is available on the same download page. Even though the data is based on 2024 compensation practices that were disclosed in 2025, the benchmarking can still be helpful as compensation committees determine programs for the upcoming year.

Members of this site can access additional data in our “Compensation Surveys” Practice Area. (If you aren’t already a member, email info@ccrcorp.com.)

– Liz Dunshee