Executive salary increases declined again last year, extending a slowdown that began after the compensation peak of 2023, according to the Engineering News-Record's 1Q 2026 Cost Report.

For HR and total-rewards leaders, the finding signals continued softening in the upper bands of pay structures — a shift that touches executive benchmarking cycles, merit budget planning and retention conversations at the senior leadership level. ENR's cost reporting tracks construction and engineering industry compensation trends, so the deceleration is most directly relevant to employers competing for executive talent in those sectors.

The headline data point is directional rather than granular in the available report summary: increases continued to drop in 2025, following the 2023 high. That marks roughly two years of gradual decline in the pace of executive pay growth.

What the trend suggests for employers

A sustained deceleration in executive raises typically has knock-on effects further down the pay structure. When top-tier increases cool, compensation committees often recalibrate the ranges used for the management layers below — from senior vice presidents through directors — because pay compression risk eases and budget pressure at the top diminishes.

The 2023 peak itself was a product of the tight post-pandemic labor market, when executive poaching and inflation-driven adjustments pushed increase percentages to unusual highs. The subsequent decline suggests employers are returning to more historically normal budgeting for senior-level raises.

For HR teams planning 2026 merit budgets, the report raises several practical questions:

• Are executive increase budgets still calibrated to 2023-era assumptions? Budgets built during the peak year may now overshoot market movement.
• How does the deceleration affect equity refresh cycles? Slower base-salary growth can shift the relative weight of long-term incentives in total executive compensation.
• Is the slowdown consistent across executive levels, or concentrated at the very top? That distinction matters for internal equity review.

Industry context

ENR's quarterly cost reports aggregate compensation and cost data across the engineering and construction economy. The 1Q 2026 edition's finding on executive pay follows the publication's ongoing tracking of labor cost movement in an industry that has faced both skilled-labor shortages and project-demand volatility in recent years.

The construction and engineering sector's compensation dynamics often diverge from broader white-collar benchmarks, so HR leaders in adjacent industries — industrial manufacturing, infrastructure services, real estate development — may also find the trend informative when benchmarking shared executive talent pools.

The retention question

Slower executive pay growth does not necessarily mean weaker retention pressure. If base-salary increases decelerate while demand for experienced leadership remains high, employers may see a shift toward signing bonuses, retention grants and performance-based incentives rather than larger recurring raises. HR leaders reviewing senior-level total rewards packages this budget cycle will want to test whether their incentive mix still matches how the market is actually paying.

The full 1Q 2026 Cost Report contains the detailed figures behind the headline trend, including the specific increase percentages by year and executive level. Compensation teams benchmarking senior roles against the engineering and construction market should consult the complete dataset when setting 2026 ranges.

If the two-year deceleration holds, the 2026 budget cycle could mark a full normalization of executive pay growth back toward pre-peak patterns.