For boards, executive compensation is focused on securing the leadership needed to deliver strategy, rewarding performance and demonstrating to investors that pay decisions support long-term value.

Diligent Market Intelligence’s new Executive Compensation in 2026 report explores why that balancing act is becoming even more demanding.

Across the S&P 500, median granted CEO pay rose more than 8% in 2025 to $18.2 million. Median granted CEO pay in the Russell 3000 also increased, rising more than 2% to $7.4 million.

The report points to intensifying competition for scarce executive talent and strong market performance as among the key drivers shaping the market.

The cost of transitions

The report’s findings on CEO transitions reveal that cash sign-on bonuses for incoming S&P 500 CEOs reached a six-year high, averaging $3.7 million in 2025. Average severance for departing CEOs rose to $6.8 million.

With 67 S&P 500 CEOs transitioning during 2025, up 29% when compared to 2023, the financial and strategic consequences of turnover are becoming harder to ignore. Succession readiness is now both a compensation issue and a governance priority.

Compensation committees feel the heat

At the same time, compensation committees face heightened scrutiny as investors demand clearer links between executive pay, performance and long-term strategy. DMI data show that S&P 500 compensation committee chairs received an average of 94.6% support in the first half of 2026, below the 96.4% average for all directors. Committee members attracted 95.8% support.

It comes as proposed reforms led by the Securities and Exchange Commission could further raise the stakes by removing the obligation to hold a “say on pay” vote for as many as 80% of U.S. public companies, if approved.

U.K. pay structures shift as Europe closes the gap

Median granted CEO pay in the FTSE 100 rose 16% to 6.1 million pounds. As U.K. boards loosen pay structures to retain talent and stay competitive internationally, long-term incentives at the FTSE 100 accounted for more than 54% of median granted pay, up from 52% in 2024.

Compensation also increased across the CAC 40, where median granted CEO pay rose nearly 14% to 6.8 million euros. The DAX recorded a more modest 2% increase, also reaching 6.8 million euros.

With the three markets now within a relatively narrow range, France and Germany are becoming important reference points for U.K. boards weighing pay levels, structures and investor expectations.

The report also examines how investor approval levels for golden parachute proposals have fallen amid an uptick in M&A in the U.S. market and how Australia is approaching its own unique pay pivot.

For more on the latest executive compensation trends across the U.S., Europe, Canada and Australia, download the full report here.