The compensation for chief executive officers at America’s largest publicly traded companies has surged by a significant 16% over a two-year period, pushing the median total pay package to more than $18 million. This sharp increase, detailed in a recent report by GRC software company Diligent, is attributed to a confluence of factors, including intense competition for top executive talent and robust company performance. As CEO pay continues its upward trajectory across major indices, Travis Bland of CCI delves into the escalating scrutiny faced by corporate compensation committees and the mounting governance challenges inherent in rewarding top leadership.
Diligent’s comprehensive analysis of executive compensation, spanning from 2023 to 2025, reveals a consistent pattern of remuneration growth for senior executives. The report indicates that across the board, the salaries and total compensation packages for top executives are not experiencing declines; rather, they are experiencing substantial increases. This trend suggests a dynamic market where companies are increasingly incentivizing and rewarding their highest-ranking leaders.
Antoinette Giblin, Editorial Manager at Diligent Market Intelligence, explained the primary drivers behind this compensation surge. "One of the biggest drivers this year is intensifying competition for executive talent," Giblin stated. "Boards are navigating this while also asking CEOs to manage a broader range of risks, including supply chain disruptions, tariffs, and the challenges and opportunities created by AI. Rising CEO turnover has added to the urgency. Strong market performance has also played an important role. Total shareholder returns reached notable highs for both the S&P 500 and the Russell 3000 in recent years, which has influenced executive compensation outcomes."
The escalating CEO pay packages are becoming a focal point of tension between increasingly vigilant shareholders and the boards of directors responsible for approving these compensation decisions. This standoff could be further exacerbated by potential changes at the Securities and Exchange Commission (SEC). Recent discussions suggest the SEC might consider diminishing the influence of investors on executive pay by potentially eliminating advisory "say on pay" votes. Should shareholder voices be muted, experts predict that frustrations may increasingly be directed at board compensation committees, leading to significant shifts or heightened pressure on governance processes within large public companies.
"CEO pay is no longer simply a question of how much executives are paid," Giblin elaborated. "It is increasingly tied to global competition, strategic complexity, and the quality of governance. For boards, the most defensible pay plan is one investors can understand: what it rewards, why it is appropriate, and how it supports the company’s strategy."
Rising Pay and Escalating Tensions
Diligent’s findings paint a clear picture of a rapidly inflating executive compensation landscape. For companies within the S&P 500 index, the median total CEO pay rose from $15.68 million in 2023 to $18.23 million by 2025, representing a substantial increase. The Russell 3000 index, which captures a broader spectrum of U.S. publicly traded companies, also witnessed significant growth, with median CEO pay climbing from $6.51 million in 2023 to $7.44 million by 2025, a 14% increase over the same period.
The report further dissects the components contributing to this rise, highlighting the role of sign-on bonuses as a key factor, particularly in the context of increased CEO turnover and fierce competition for leadership. Between 2023 and 2025, CEO turnover saw a notable increase of 29%. In 2025, the average sign-on bonus for CEOs in S&P 500 companies reached $3.7 million, marking a six-year high and a significant jump from the $2.4 million reported in 2023.
A particularly illustrative case detailed in the report involves an inducement award granted to the new CEO of software company Procore Technologies. This award faced considerable opposition, with nearly 37% of shareholders voting against it during the say-on-pay vote. The primary concern cited was the award’s magnitude, described as "nearly four times the value of the total median pay for peer CEOs."
This substantial shareholder dissent underscores the heightened level of scrutiny that investors are applying to board compensation committees, especially concerning large sign-on bonuses and other lucrative executive packages. While the report indicates that compensation committees generally receive high levels of investor support – averaging around 95% in the first half of 2026 – and that say-on-pay votes aligned with compensation committee decisions 90.1% of the time in 2026 (a slight increase from 89.6% in 2025), these aggregate figures mask underlying investor concerns about the sheer scale of rising CEO pay. In fact, compensation committee chairs have increasingly become targets in activist investor campaigns, according to Diligent’s findings.
Giblin elaborated on the nuances of shareholder engagement: "The non-binding ‘say on pay’ vote gives investors a way to raise concerns about executive compensation. Common concerns include a lack of alignment between pay and performance, excessive pay levels, and inadequate disclosure. Recent proxy seasons have also shown that investors may turn their attention to the compensation committee, and especially its chair, when they believe their concerns have not been addressed."
The Potential Demise of "Say on Pay"
Adding another layer of complexity to this evolving landscape, the SEC has proposed significant changes to the disclosure requirements for public companies. Among these proposals is the potential elimination of say-on-pay votes for approximately 80% of listed entities. This move, if enacted, could fundamentally alter the dynamics of shareholder engagement with executive compensation.
"Investors argue that shareholders would lose an important right to express their views on executive pay," Giblin noted, referencing the potential impact of the SEC’s proposal.
While say-on-pay votes are non-binding, they serve as a crucial mechanism for investors to voice their dissatisfaction and exert influence. Furthermore, they provide a degree of insulation for compensation committees, shielding them from direct blame when shareholders are unhappy with executive remuneration. In a public comment submitted regarding the SEC’s proposal, the California Public Employees’ Retirement System (CalPERS), a major institutional investor, cautioned that such a move would "significantly undermine governance" and "increase the risk of fraud."
The implications for compensation committee members, particularly chairs, could be profound if the say-on-pay mechanism is removed. Giblin suggested that without this advisory vote, directors might find themselves facing increased pressure from activist shareholders. "Investors already hold compensation committee directors accountable for pay decisions and outcomes," she stated. "Advisers indicate that, without the ‘say on pay’ vote, those directors would lose an important protective buffer and could face even greater scrutiny when standing for reelection."
Background and Broader Context
The trend of rising CEO compensation is not a new phenomenon, but its acceleration in recent years is notable. Historically, executive pay has been influenced by market forces, company performance, and the perceived need to attract and retain top talent. The period between 2023 and 2025 has been characterized by significant economic shifts, including persistent inflation, geopolitical uncertainties impacting supply chains, and the rapid integration of artificial intelligence into business operations. These complex challenges demand sophisticated leadership, and companies are willing to pay a premium for executives capable of navigating such an environment.
The Diligent report’s timeframe aligns with a period of strong market performance for many U.S. equities. The S&P 500, for example, experienced considerable gains during these years, driven by technological advancements, robust consumer spending, and a generally favorable economic climate in the initial stages. This strong performance often translates into higher payouts for CEOs, as a significant portion of their compensation is typically tied to stock performance and total shareholder returns.
However, the disconnect between executive pay and the average worker’s wage has been a persistent point of contention for decades. While CEO pay has soared, the compensation for rank-and-file employees has grown at a much slower pace. This disparity fuels public and investor concern about fairness and the distribution of corporate wealth.
Chronology of Key Developments
- 2023: Median CEO total pay for S&P 500 companies stands at $15.68 million; Russell 3000 median is $6.51 million. Average sign-on bonus for S&P 500 CEOs is $2.4 million. CEO turnover begins to show an upward trend.
- 2024-2025 (Projection/Analysis Period): Diligent report analyzes data and trends leading up to and including 2025. Median CEO pay for S&P 500 companies rises to $18.23 million; Russell 3000 median reaches $7.44 million. Average sign-on bonus for S&P 500 CEOs hits a six-year high of $3.7 million. CEO turnover increases by 29% over the period.
- Early 2026: SEC proposes changes to disclosure rules, including the potential elimination of say-on-pay votes for a majority of listed companies.
- First Half of 2026: Compensation committees average approximately 95% investor support. Say-on-pay votes align with compensation committee decisions 90.1% of the time.
- Recent Proxy Seasons: Increased investor focus and activist campaigns target compensation committee chairs.
Supporting Data and Analysis
The Diligent report provides concrete figures that illustrate the magnitude of the compensation increases:
- S&P 500 Median CEO Total Pay:
- 2023: $15.68 million
- 2025: $18.23 million (16% increase)
- Russell 3000 Median CEO Total Pay:
- 2023: $6.51 million
- 2025: $7.44 million (14% increase)
- S&P 500 Average CEO Sign-on Bonus:
- 2023: $2.4 million
- 2025: $3.7 million (54% increase, 6-year high)
- CEO Turnover (2023-2025): 29% increase.
The analysis suggests that the "war for talent" is a significant contributor. In a market where experienced leaders are in high demand and are being asked to navigate increasingly complex global challenges, companies are employing more aggressive recruitment strategies, including substantial sign-on bonuses. This is compounded by the need to retain existing CEOs, whose departure could trigger instability and significant costs associated with finding a replacement.
Furthermore, the link between strong market performance and executive compensation is undeniable. When companies deliver robust returns to shareholders, boards often feel compelled to reward their leadership accordingly. This creates a virtuous cycle for executives, where success begets higher compensation, which in turn is expected to motivate future success. However, this cycle is precisely what draws investor ire when pay levels are perceived as excessive or not adequately tied to sustainable, long-term value creation.
Broader Impact and Implications
The potential removal of say-on-pay votes by the SEC could have far-reaching consequences for corporate governance. While intended to streamline disclosures, critics argue it would disempower shareholders and reduce transparency. Without this advisory vote, the primary avenue for investors to formally express discontent with executive compensation would be diminished. This could lead to several outcomes:
- Increased Activism: Disgruntled shareholders might resort to more direct and confrontational tactics, such as proxy fights and targeted campaigns against individual board members, particularly those on compensation committees.
- Erosion of Trust: A perceived lack of accountability in executive pay could further erode trust between shareholders and management, potentially impacting stock valuations and the overall reputation of companies.
- Shift in Board Dynamics: Compensation committee members might face increased personal liability and scrutiny, potentially leading to a more cautious or risk-averse approach to setting executive pay, or conversely, a more entrenched position if they feel less accountable to shareholders.
- Focus on Disclosure Quality: If say-on-pay is eliminated, there may be a heightened emphasis on the quality and clarity of executive compensation disclosures. Investors would need to rely more heavily on the information provided to make informed judgments.
- Potential for Increased Fraud: As CalPERS warned, reducing shareholder oversight could theoretically create an environment where opportunities for financial misconduct or excessive compensation schemes might go unnoticed or unchallenged.
The evolving narrative around CEO pay is thus a complex interplay of market economics, corporate strategy, and regulatory oversight. As companies continue to grapple with a dynamic global landscape, the compensation of their leaders will remain a critical indicator of their governance practices and their relationship with the investing public. The coming period, marked by potential SEC rule changes and ongoing investor vigilance, promises to be a pivotal moment in shaping the future of executive compensation and corporate accountability in the United States.
