2026 comp predictions

Here are my comp predictions for 2026:

1. AI begins to eat comp as we know it. Analysis moves from spreadsheets and Tableau to agents and ChatGPT. Mega-manual processes are not optimized with AI, but deleted. This trend concentrates in the tech industry, but becomes highly visible with real success stories, not just hand-waving.

2. Merit increases shift from discretionary to formulaic. More companies lose patience with manager peanut-buttering leading to bad outcomes on pay equity and retention and opt for comp-controlled, formulaic pay changes — prevalence of this approach at least doubles from 2025. Pay-for-performance focuses on bonus and stock, if at all. Shoutout to Ashley on my team for underscoring my conviction here.

3. AI premiums cool off. No, I’m not predicting an AI winter and Mag Seven crash, but downward trending premiums over SWE (especially at higher percentiles), and less spend on sign-on bonuses as the market absorbs this new engineering discipline. I noticed early signs of this last month and wrote about it here.

4. “Non-standard” vesting becomes majority practice. The multi-year trend continues and the standard 4-year vest loses its majority position as companies rethink goals on dilution, retention, and SBC expense. In 2025, 54% of companies used the standard 4-year vest, down from 60% in 2024 and 62% in 2023.

5. We see fewer secondaries for large private companies. In 2025, companies like Stripe, Databricks, OpenAI, and Anduril completed tender offers, providing liquidity for employees while staying private. The IPO window opens further and this approach wanes as more companies go public.

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Grading last year’s predictions:

1. Skills-based compensation has its breakout year. Usage of skills data in comp spiked in 2025 for one particular use case: precision in hot jobs. Deciphering what “AI Engineering” really means or isolating the semiconductor market to analog design talent was an unlock for skills in comp, but many teams are only experimenting at the surface level. Mixed bag, so we’ll score 0.5.

2. Comp teams upskill on finance. Every comp team we work with got closer to, not further from, their finance functions in 2025 as they navigated stock comp pressure, M&A, and massive offer exceptions. Score: 1.

3. Pay equity and pay transparency focuses on Europe. Yep, very quiet on US pay equity initiatives, lots of compliance preparation for European legislation, including paying off some job architecture debt. Score: 1.

4. Stock comp declines in target value and participation for most roles. Sales & Customer domain median new hire grant up 5%, prevalence up 7 points; Corporate Functions down 8%, prevalence down 7 points; Technical up 10%, prevalence down 10 points. This was a mixed result — I was right that G&A would take a big hit, but Sales & Customer went up, and while Technical comp rose fastest we saw a drop in prevalence, perhaps because it’s the biggest pot you can pull from to reduce equity spend. But I’ll take the loss, score: 0.

5. Compensation dips a toe in AI. This was spot on, AI is exploding into comp, but unevenly. We increasingly see barbell-shaped AI adoption — you’re either all in, or falling far behind. Score: 1.

Overall, 3.5 / 5.0. Looking at our poll from last year, we all got EU pay transparency and AI right (maybe it was a lay-up?), but I beat you (qualitatively and anecdotally) on comp teams learning finance!

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