The Advisors' Blog

Gallagher’s Executive Compensation Consulting recently released its latest annual report (available for download), analyzing executive pay trends across most of the Russell 3000 companies in 2024. Here’s the finding that most stood out to me:

Smaller companies, particularly those earning less than $50 million in revenue, saw a staggering 44.7% increase in median CEO compensation after two years of decline. This surge was driven by aggressive long-term incentive (LTI) grants.

I typically think of LTI being a smaller component of pay at smaller companies, but with this increase, “LTIs at smaller companies doubled in value compared to their slightly larger peers, making up 82.4% of total CEO compensation — the highest percentage of any revenue group.” Wow.

Why this surge? Smaller companies compete aggressively for leadership talent, often recruiting from larger firms. Smaller firms also tend to deliver higher growth, take higher risk and draw less scrutiny from institutional investors . . . Emerging sectors like technology and life sciences commonly employ LTI-heavy compensation to attract talent while conserving cash. LTI levels at these smaller firms rival those at much larger companies.

With equity awards representing such a significant portion of pay — and the possibility that large awards might be the subject of a legal challenge — it’s more important than ever to perfect your process. Tune in at 2 pm ET on Wednesday, December 3rd, for our webcast “Equity Award Approvals: From Governance to Disclosure” for a deep dive on award approvals. Our panelists — Troutman Pepper Locke’s Sheri Adler and David Kaplan and Pay Governance’s Jeff Joyce will address common foot faults and share best practices to help you dot your i’s and cross your t’s when awarding equity in 2026 and beyond. Head to the linked webcast landing page to add the program to your calendar.

– Meredith Ervine