Are CEO Pay Plans Too Samey?

CEO pay in the S&P 500 has continued to record substantial gains with only a marginal drop-off in investor support, writes Will Arnot.

With the stock market up again in 2024, median CEO compensation in the S&P 500 saw an 8% year-on-year increase while also managing to maintain steady support from investors.

According to DMI Compensation data, the median granted pay for an S&P 500 CEO was $17.2 million in 2024, up from a median of $15.9 million median package awarded for 2023.

This 8.3% increase may have been considered good value considering the S&P 500 delivered an average total shareholder return of 25% in 2024, following a 24% gain in 2023.

Indeed, the average S&P 500 “say on pay” proposal received 89.3% support in the first half of this year, down only marginally on the 89.4% support similar proposals received in the same timeframe last year with experts citing pay plan design practices and regulatory changes as potential factors. Four “say on pay” resolutions failed in the first half of 2025, down from five last year.

Nine S&P 500 companies faced between 40% and 49% opposition to their executive compensation proposals in H1, including Chipotle Mexican Grill and Pfizer while the same period in 2024 saw eight companies face similar levels of opposition.

A standardized approach

Adopting a standard approach to pay plan design is cited as one of the ways in which S&P 500 companies have managed to maintain support for pay plans.

“Companies use standard designs to reduce criticism, which leads to better ‘say on pay’ results,” Matt Vnuk of Compensation Advisory Partners, told DMI, while cautioning that companies would be better served to have more “tailored” designs.

“Incentive programs should be a tool to support strategy and culture, and if everyone uses the same structure, it implies all companies have the same strategy and culture, which is not the case,” Vnuk added.

Jeff Barbieri, a director on AON’s executive and board advisory team, also noted the potential risks associated with standardized plans, arguing that for many smaller or growing companies, formulaic pay policies – with modest base salaries, cash bonuses tied to financial metrics, and stock that vests on different metrics over a certain period – do not drive long-term success.

“Discretionary pay plans get criticized more but may align better with company goals,” he told DMI.

The investor pulse check

The quality of disclosure and the tendency to proactively consult with investors on how compensation changes are being perceived is viewed as a vital part of winning pay plan support.

Laura Wanlass, a partner at AON and its corporate governance leader, explained that S&P 500 companies are spending “significant time and money” monitoring how they will be perceived under proxy advisor models and investor policies and are getting better at “clear, thorough disclosure on the annual compensation-setting process.”

Barbieri added that while there is a well-developed playbook for these companies, conducting shareholder outreach and disclosing rationales remain essential to achieving strong “say on pay” results. For Vnuk, annual shareholder engagement on compensation remains best practice.

The need to act on investor concern was evidenced at Warner Bros. Discovery’s June 2 annual meeting where the media giant’s executive compensation proposal faced over 59% opposition, after facing 46% opposition to the pay plan presented in 2024, and 49% in 2023.

CEO David Zaslav received a 4% increase to his granted compensation in 2024 (the period covered by the 2025 vote), bringing his total package to $51.9 million despite a 7% decline in the company’s share price in the period. Two weeks after the annual meeting, Warner announced that it had entered into a new employment agreement with Zaslav, adjusting his remuneration to address “shareholder feedback and preferences.”

A changing dynamic

Evolving regulations may threaten the gains made through shareholder engagement, however.

In February, the Securities and Exchange Commission (SEC) issued new interpretations of Regulation 13D-G that prompted some major investors to temporarily pause or revise engagement policies in a bid to retain their passive investment status.

In an interview with DMI, Heather Marshall, senior director, executive compensation and board advisory at WTW, said the changes created a “more cautious” engagement environment, which may push investors to be more explicit in voting guidelines rather than addressing compensation concerns through direct engagement.

At the same time, the SEC has signaled its intention to simplify compensation disclosure requirements, citing the cost of preparation. Were that to happen, the new minimum for disclosure might not mitigate investor or proxy advisor concerns about pay outcomes, Wanless warned. “If companies are not required to be as transparent, investor pressure may increase to fill potential disclosure gaps.”

As the landscape continues to change, pay-for-performance alignment is expected to be more critical than ever heading into 2026. “If markets drop, there’ll be more work for companies. We’ve been helping clients think through impacts from geopolitics and other external risks,” said Barbieri. “Now is the time to prepare, not to relax.”

Link to the full report can be found here.