2026 Top 250 Annual Incentive Plan Report

FW Cook’s 2026 Top 250 Annual Incentive Plan Report reviews annual incentive design and outcomes at the 250 largest companies in the S&P 500 by market capitalization. The report examines trends over the past four years in plan design, financial and non-financial measures, goal-setting practices, payout ranges, and actual payouts.

Key highlights include:

• Core annual incentive design features remained broadly stable over the last four years: formulaic plans remain nearly universal, two or three financial measures are most common, profit and revenue are the most prevalent financial measures, and average plan weighting remains roughly 80% financial and 20% non-financial.
• Notable changes occurred within the non-financial component, including greater use of team-wide strategic goals, less emphasis on individual performance, a sharp decline in diversity & inclusion measures, and the emergence of artificial intelligence-related objectives.
• Goal-setting practices shifted in 2025, with revenue and profit targets clustered more closely around prior-year actual results and wider threshold-to-maximum performance ranges being used. These observations do not necessarily indicate less goal rigor, as a majority of companies set revenue targets above the midpoint of beginning-of-year external guidance.
• A 0% of target payout at threshold goal achievement has become the most common practice, surpassing a 50% of target threshold payout.
• Median CEO annual incentive payout for 2025 was 127% of target, in line with 2023 and below 2021.