How uncertainty, talent, and data are redefining executive pay
As the 2026 proxy season winds down, executive compensation discussions are rapidly changing. Pay design, talent retention, disclosure, and technology are no longer separate conversations; they’re converging at the boardroom level.
Against this backdrop, a conversation with R.J. Bannister, partner and Chief Operating Officer at Farient Advisors, a global executive compensation, talent, and corporate governance advisory firm, seemed opportune. Bannister was interviewed by Frazer Jones Principal Recruiter Alfredo Lira. What emerged was insight into how uncertainty, data, and predictive analytics are redefining the compensation committee agenda. We explored what this means for CHROs and Total Rewards leaders.
Goal setting under pressure
“With the level of economic uncertainty, particularly around tariffs, there was significant anxiety about how companies were setting performance targets and ranges, and how they were accounting for volatility,” Bannister explained. That dynamic made target setting one of the many challenges of the 2026 proxy season, as compensation committees addressed balancing rigor and flexibility in an unpredictable and volatile environment.
This pressure has been especially pronounced in commodity-driven industries. Companies in sectors like mining, chemicals, and petroleum are dealing with significant price volatility, compounded by geopolitical developments.
Compensation committees are today challenged to strike the right balance between economic reality and aspirational performance, and then to clearly explain outcomes when external forces exert an outsized influence. In response, many committees are turning to more rigorous analysis earlier in the process.
“There is a lot of work committees can do upfront by analyzing historical and forward-looking performance targets, and by reviewing them through both internal and external lenses. That kind of preparation can help mitigate many of these challenges before they surface.”
The limits of ‚paper‘ pay for performance
As those goal setting challenges play out, compensation committees are also navigating what Bannister described as “a real tension today between the capital markets and the talent market.”
On one side, proxy advisors continue to exert significant influence, particularly when companies take actions outside traditional total direct compensation frameworks. High sign-on awards, retention grants, and one-off incentives tend to draw scrutiny. “Those types of actions draw the microscope of proxy advisors,” he explained, “and they can lead to negative say-on-pay recommendations if they are not well supported.”
At the same time, boards and management teams are focused on retaining key leaders through periods of uncertainty and transformation. “Management is looking at their talent and asking, ‘How do I keep the right people engaged and motivated when the business model is under pressure?’”
This tension is compounded by the way performance is assessed. Pay for performance remains central to proxy advisor evaluations, particularly over multi-year periods, but traditional quantitative pay-for-performance frameworks are increasingly misaligned with how value is being created in today’s environment.
“A lot of the decisions behind say on pay still flow from quantitative pay for performance models, but those models do not always capture what is really happening when a company is being disrupted or deliberately retooling because of technology and AI.”
Context, he emphasized, matters. “Are you a disruptor, or are you getting disrupted? And how are you responding? Those distinctions are critical, but they do not always show up cleanly in the numbers.”
As a result, the balancing act often hinges less on the pay decision itself and more on how it is framed, justified, and communicated to shareholders.
The rise of compensation storytelling
Despite expectations of deregulation, governance requirements have not materially eased at the proxy statement level. While there has been regulatory whiplash across administrations, executive compensation disclosure obligations remain largely intact.
“There was an expectation that certain requirements, like the CEO pay ratio, might go away. A lot of people said they were not really getting value from it. But so far, it has been relatively quiet.”
He pointed, however, to a broader structural issue shaping board thinking: the steady flow of capital from public to private markets. “One of the reasons you have seen so much capital move from public to private is the administrative burden of being public,” he said, adding that “any effort to unwind that complexity would be seen as a positive.”
In this environment of regulatory stability, disclosure has become a strategic lever. What was once largely a legal compliance exercise has evolved into an essential communications tool.
“The proxy statement, especially the CD&A, is now the primary way companies get their message across,” Bannister explained. Historically, legal teams dominated the process, resulting in conservative, risk-averse language. “The materials were bland, because the goal was to guard against risk.”
That has changed significantly over the last decade. Investors now want insight into the decision-making process itself. “They want to feel like they were in the room. They are not just interested in outcomes, but in the deliberations,” he said, referring to why a peer group was chosen, why discretion was applied, and what trade-offs were considered.
As a result, the narrative has become just as important as the numbers themselves.
The modern talent risk
Perhaps the most profound shift is the expansion of compensation committees into broader human capital oversight. Today, over 50% of S&P 1500 compensation committees have formally changed their name to include human capital, leadership development, or talent.
More importantly, the remit itself has expanded. Succession planning has become a focal point. “Boards have really taken back ownership of succession,” Bannister said.
However, many organizations are still early in their maturation. “They have completed talent assessments and nine box reviews, and then they stop. They have not linked succession planning to compensation design, role sequencing, or retention strategy,” he said, noting that this pattern is common across companies of various sizes and sectors.
This often leaves organizations exposed. “They might have two or three strong utility players as emergency backups, but that is not the same as having real depth or a sustainable leadership.
The AI inflection point
Years of investment in HR systems have left companies rich in data. Unfortunately, an abundance of data does not translate into clarity.
“Now companies are asking, ‘What are the questions we are actually trying to answer?’”
AI has intensified this shift by forcing organizations to evaluate people and technology side by side in a more explicit way. “Companies are more likely to ask: if work needs to get done, do I deploy a person, or do I deploy AI?”
This represents a fundamental rethink of how organizations view their workforce. “People have historically been treated as expenses rather than assets,” Bannister explained. “AI forces companies to think differently about that trade-off.”
While clear answers are still emerging, compensation committees are beginning to engage more deeply with these questions. They are asking management how AI investments compare to people investments, where returns are being generated, and where the most acute trade-offs exist.
What this means for HR talent
From a recruitment perspective, these shifts are materially changing what organizations require from Executive Compensation and Total Rewards leaders.
As Bannister’s observations highlight, the role has moved well beyond program design and annual pay decisions. Today’s compensation leaders are expected to operate credibly at the board and committee level, exercising judgment in environments shaped by uncertainty, external forces, and competing stakeholder pressures. Technical expertise remains essential, but it is no longer sufficient on its own.
Committees are spending more time debating context, narrative, and intent. That places a premium on leaders who can clearly articulate why decisions were made, explain performance amid disruption, and connect pay outcomes to longer term strategy.
Expectations are also rising around data fluency. As organizations become data rich, compensation leaders are expected to help boards ask better questions. As Bannister highlighted, this includes framing tradeoffs between investment in people and investment in technology as AI reshapes how work gets done.
Taken together, this marks a clear inflection point. Executive compensation has moved beyond a focus on compliance and annual processes to become a „strategic lever“ that boards use to guide leadership, manage risk, and drive long-term value. That requires the supporting talent to evolve accordingly.
