In 2023, total shareholder return (TSR) for S&P 500 companies climbed 11.6%, prompting boards to fine‑tune executive compensation to strike a balance between performance rewards and fiscal responsibility. Proxy disclosures reveal modest increases in base salary—typically 3–4%—while annual bonus targets generally remained flat. In contrast, long-term incentive (LTI) grants, particularly in equity form, surged by approximately 5–8%, reflecting market optimism amid a stabilizing recovery .
Actual bonus payouts for 2023 slightly exceeded target levels, signaling strong corporate performance, yet they fell below the inflation-adjusted peak nearly 150% marked during early pandemic recovery years. LTI realizations mirrored this caution—typical payouts landed between 125% and 150% of target value.
In headline figures, median total compensation for S&P 500 CEOs reached $15.5 million in 2023, up from $14.4 million in 2022 and $14.5 million in 2021. These numbers reflect a broader trend noted by Meridian’s analysis: base salaries rose modestly—about 1–4%—while grant-date values of LTIs grew 7–8% annually. The surge in LTI awards underscores how companies are anchoring executive compensation to long-term value creation rather than short-term gains.
Pearl Meyer’s analysis of early 2025 proxy filings confirms these trends. Among the first 100 S&P 500 companies, median base salary rose from $1.25 to $1.3 million—a 4% increase—while annual cash bonuses rose 13%, from $2.13 to $2.41 million. Medium‑term incentives held firm, with a 7% uptick in LTI values from approximately $11.72 to $12.49 million.
Nevertheless, questions about executive pay remain. Median TSR performance masks dispersion—while many firms delivered solid returns, others lagged. ISS Corporate Solutions found median S&P 500 CEO base salary increased 2.9% to $1.3 million, but bonus payouts dropped 5.4% to $2.59 million. Stock and option awards, however, jumped 9.5% and 8.3% respectively. ISS also reported that 3.1% median CEO pay increases in 2023 represented a sharp deceleration from 13.2% the previous year.
The CEO-to-median-employee pay ratio also birdied. According to Equilar/AP assessments, the median 2023 CEO pay was $16.3 million—12.6% higher than 2022—and CEOs were paid 196 times more than median employees. Barron’s noted a $23.7 million median in the largest companies—an 11.4% increase that eclipsed employee raises of approximately 4.3%, further widening the pay gap .
A Financial Times analysis highlighted that executive pay in the S&P 500 jumped 12% in 2023—the fastest rate in 14 years—surpassing the ~4% general wage growth. This acceleration stemmed largely from stock-based awards. Although such sizable equity grants raise concerns over inequality, proponents argue they align pay with shareholder value, particularly when TSR trails or outpaces compensation increases .
No review is complete without noting ESG metrics’ increasing prominence. In 2024, 77% of S&P 500 companies incorporated environmental, social, or governance (ESG) targets into executive compensation—nearly matching the 77.8% level in 2023, signaling a growing intertwining of purpose and pay.
These trends reflect boards’ strategic posture: rewarding executives for comparable, sustainable performance while avoiding the pitfalls of pandemic-era exuberance. The significant emphasis on LTIs and equity aligns leadership with long-term company value, but reliance on stock awards raises questions about volatility and potential misalignment with broader workforce interests.
Looking ahead, boards will likely keep EVP pay growth moderate, tether LTI plans to performance that reflects sustained TSR and broader ESG goals, and monitor public and investor sentiment on pay equity. The emerging pattern suggests a cautiously optimistic corporate recovery: stable, performance-driven rewards without overshooting, yet uncovering deeper debates on incentive structures and income distribution.
