Group Five 2025 Benchmarking Results Plus Our Take on What’s Ahead in Stock Compensation

Each year, we step back to assess where stock-based compensation (SBC) stands. Not just as an accounting requirement or a disclosure obligation, but as a process that sits at the intersection of human capital strategy, external reporting, investor dynamics, and corporate governance.

We pair this with the release of Group Five’s signature benchmark survey of equity compensation financial reporting service providers, which underscores the significant role SBC plays in today’s business environment.

First, we’ll review the survey results, and then we’ll turn to themes we’re watching for:

1. Market Forces Shaping SBC in 2026
   1. Regulatory Activity: Incremental Change With Real Consequences
   2. Investor Focus Is Narrowing to Economics
   3. Macro Volatility and the Challenge of Goal-Setting
   4. IPO and M&A Market Activity

2. Internal Challenges and Priorities for SBC in 2026
   1. Operational Excellence as Risk Management and Capability Expansion
   2. Integrated Teams and Connected Processes
   3. Insight Beyond Compliance 

3. Where AI Meets SBC
   1. AI in Compensation Planning, Accounting, and Reporting
   2. The AI Talent Market and Equity Economics
   3. Incentivizing AI Adoption at the Executive Level

Noteworthy this year is the publication of our SBC Best Practices Survey, which ran in late 2024 and early 2025 and was formally released via our December 4, 2025 webcast, “SBC Excellence in Practice.” You can obtain a full copy of the survey report here.

Group Five Survey Results

We’re honored to once again be recognized as the top-rated provider in the Group Five equity compensation financial reporting survey.

Group Five surveys practitioners responsible for equity compensation financial reporting. These are the professionals who experience the consequences of process breakdowns, missed deadlines, and unclear ownership. The message in this year’s results was consistent with what we see across our client base: the success factors are technical mastery, reliability in delivery, laser-fast responsiveness to questions, and being easy to work with.

Group Five uses the Net Promoter Score (NPS) to measure client loyalty. Our NPS is 93, and the industry average is 56.

Equity Methods Overall Satisfaction and NPS vs. Industry Average

A Detailed Breakdown of the 2025 Results

Every year, we gather as a firm to read the survey report together. We read every comment, because this reminds us of our “why” for all the hard work and investment that goes into doing what we do. This is also why we spend so much time traveling to see clients, as it humanizes relationships and brings empathy to how our work product is used.

Summarized here are just a few of the comments shared:

• “Equity Methods is very knowledgeable, so they’re able to answer any of our questions promptly. They provide excellent services and are accommodating to our various requests.”

• “They never miss a deadline, are extremely communicative, and we’re very confident in their reports.”

• “Great customer service, great technical expertise. [We have a] highly convoluted ESPP program and [the] Equity Methods team is always able to explain the technical nuances to our auditors in plain English.”

• “Equity Methods is very knowledgeable in the equity field. They’re very responsive to emails and always willing to help. They’ve kept us up to speed on any new laws or regulations and what we need to do as a company to comply.”

• “Their team demonstrates a deep understanding of the complexities involved in cross-border equity compensation and consistently provides accurate, reliable, and timely support. They go the extra mile to ensure compliance and precision, simplifying what could otherwise be highly complicated processes.”

• “Their customer service and tailoring to [our] unique needs is fantastic. We’ve also had a very consistent team that has built on the history of our relationship and equity programs over the years. They’re a wonderful partner!”

To all of our clients, thank you for trusting and giving us the opportunity to serve you. It means everything.

Now, let’s talk about our thematic expectations for 2026.

1. Market Forces Shaping SBC in 2026

Regulatory Activity: Incremental Change With Real Consequences

On the regulatory front, we expect to see at least two big movements from the SEC in 2026. In May 2025, SEC Chair Paul Atkins released a statement indicating the SEC would rethink executive compensation proxy disclosure rules, beginning with a roundtable on the matter in June. We attended the roundtable and have been following the topic closely since.

As discussed in greater detail here, the SEC will face a number of tough tradeoffs in how it approaches revisions. In particular, the commission must choose between implementing minor improvements and simplifying the proxy or taking a hatchet to the entire construct. The latter may yield greater long-run clarity, but would take more time and effort to implement cleanly. Based on our reading of the tea leaves, we view this as roughly a coin flip.

Our best guess on timing is a proposed rule in the spring or summer of 2026, followed by a comment period. If comments are collected in Q3 or Q4, this suggests a final rule could be forthcoming in early 2027 for adoption during the 2028 proxy season. This would also correspond with completing the initiative prior to the 2028 presidential election.

More recently, on December 11, 2025, President Trump signed an executive order titled “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors.” We’ve been covering proxy advisor regulation since it was initially rebooted by then-SEC Chair Jay Clayton. In the world of executive compensation rule-making, there may not be a wobblier political football than proxy advisor regulation. This executive order may be the force that brings finality to the issue.

The implications of proxy advisor reform are far-reaching. At a minimum, we expect to see more novelty and heterogeneity in executive compensation design. The shift already underway toward greater fundamental analysis of SBC expense and dilution will likely intensify, as investors turn to more classical methods for assessing how much SBC is too much—or too little—in the absence of proxy advisor black-box frameworks.

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Investor Focus Is Narrowing to Economics

Building on the point above, investor evaluation of SBC is becoming more disciplined and economics driven. The days of dismissing SBC as a non-cash expense that can be non-GAAPed out of core earnings are waning, as investors increasingly ask questions like:

• How quickly is SBC expense growing relative to revenue and earnings?

• How much dilution is being generated, and where is it concentrated?

• How do dilution and expense levels compare to industry benchmarks?

We expect FASB’s disaggregation of income statement expenses (DISE) rule, promulgated in ASU 2024-03, to reinforce this shift. As compensation costs become easier to isolate and compare, investors will have an even stronger magnifying glass for identifying outliers.

This trend extends beyond traditional high-growth technology sectors. Equity compensation has become a durable component of total rewards across industries, and investors are evaluating it accordingly. In effect, SBC is being assessed like any other capital allocation decision.

Naturally, executives are asking how to measure the return on their SBC programs. This doesn’t suggest there’s an effort to reduce SBC as much as there’s an interest in understanding how to get more bang for the buck. This can mean creative award design to introduce more payout upside and downside, cost-effective but lucrative employee stock purchase plan (ESPP) designs, and recalibrating how equity is used throughout the job architecture.

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Macro Volatility and the Challenge of Goal-Setting

Macro uncertainty remains a defining feature of the environment heading into 2026. Inflation dynamics, interest rate sensitivity, geopolitical risk, and uneven growth trajectories continue to complicate the design of performance-based equity awards. Goals must be set well in advance, yet evaluated in hindsight against conditions that may look very different.

The playbook for responding to goal-setting difficulty hasn’t changed much, and many companies still feel stuck between a rock and a hard place. The typical plays include:

• Greater use of relative metrics and market-based modifiers

• Wider performance ranges with more graduated payout curves

• Shortening the performance period for some or all metrics

• Adopting growth metrics that anchor to the prior year’s actuals

This last approach has gained steam because it offers a partial reset after shocks that disrupt the original budget. For instance, if an EBITDA growth rate of 15% is required and 2026 turns out to be a large miss, the 2027 goal tees off the 2026 actual as opposed to remaining anchored to a plan that’s no longer realistic.

We’re often asked whether there are any strategic opportunities with discretion. Covered in detail in our white paper on the matter, the short answer is: Don’t expect much wiggle room from creative discretion clauses in the LTIP. The annual plan is a whole other matter, but when it comes to the LTIP, too much leeway in the use of discretion can wreck the underlying accounting model.

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IPO and M&A Market Activity

The Wall Street Journal reported that 2025 was a record year for deal size, with 68 transactions exceeding $10 billion in value, and that 2026 is shaping up to deliver more of the same.[1] On the IPO front, 2025 saw a measured recovery—vastly exceeding 2024 in deal size, but still experiencing fits and starts amid tariffs, a government shutdown, and other sources of volatility.

SBC is vastly impacted by all forms of market activity. When our clients buy companies, the usual decision is to assume the target’s equity and then prospectively apply the acquirer’s existing SBC granting framework. This approach gives rise to numerous data conversion, accounting, and participant communication challenges.

When our clients spin off business units—which has become a specialty area for us— there are even more cross-functional decisions with existential implications, certainly for the spinnee and often for the spinnor as well. This checklist captures a host of these key considerations. Our advice is to be ready for more spin activity as capital markets apply greater scrutiny to business models and their viability within a conglomerate or on their own.

IPOs have always had a tricky connection to SBC because the story begins long before the IPO actually occurs. Years ahead of IPO, you’ll see plan design changes take place, such as a full or partial shift from options to restricted stock units (RSUs). As IPO timing approaches, companies often work to shore up SBC accounting quality, transition to a new administration platform, and potentially launch an ESPP or price-hurdle performance stock units.

A few specific watch-outs include:

• A surge in GAAP expense linked to the IPO event flipping performance conditions into probable classification. This requires robust operational processes to ensure IPO readiness and a reliable S1 filing.
• Greater risk in the underlying calculation “plumbing,” as expense and disclosure calculations present even more exposure than the memo-writing workstream.
• Continued SEC scrutiny of cheap stock issues, amplified by ongoing valuation volatility.
• A high-stakes migration to a more sophisticated equity administration platform, involving data and accounting reconciliation; employee communication; integration with the HRIS, payroll platform, and transfer agent; and the setup of new templates and controls.
• Cap table testing and waterfall clarity, given that SBC is often one of the most complex components of the cap table and requires careful validation of any stock splits, tax withholding conventions, and share pool tracking.

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2. Internal Challenges and Priorities for SBC in 2026

The internal environment reflects both external pressures and the formation of best practices that drive continuous improvement. Here we’ll look at a handful of priorities taking shape within organizations that we think will shape SBC priorities in 2026 and beyond. We’ll draw on insights from our SBC Best Practices Survey, as well as conversations we’re having on the front lines with accounting and HR executives across industries.

Operational Excellence as Risk Management and Capability Expansion

Operational excellence in SBC is about resilience and impact. Teams must be able to withstand turnover, system changes, new award types, and evolving disclosure requirements without sacrificing reliability, speed, or controls.

This first and foremost boils down to process automation that reduces key-person risk. Manual calculations and spreadsheets rolled forward period to period not only introduce process risk, they also constrain what the process can deliver beyond core compliance. But automating the process makes room to focus on higher-order tasks like more and better forecasting, more robust analytics, senior management visualization, and cross-department initiatives.

Operational excellence is also about designing processes that can adapt when assumptions or structures change. The drivers can include M&A, modifications, new award types, or any number of other factors.

We’re often asked whether operational excellence matters even when SBC is a relatively modest expense in the P&L. We think so. Every sector faces enormous disruption from AI and evolving business models, which creates immense human capital onboarding (and offboarding) demands. SBC is central to retaining, attracting, and motivating key talent, and a well-oiled SBC reporting capability supports better and faster decision-making.

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Integrated Teams and Connected Processes

SBC is one of the few disciplines that cuts so evenly across Finance, HR, Legal, Tax, and Payroll, not to mention the compensation committee of the board and countless external specialists. If input data or output results don’t flow cleanly across functions, the result is inefficiency at best and non-compliance or some form of misstatement at worst.

Naturally, each function approaches SBC from its own vantage point: Technical Accounting from a GAAP compliance angle, FP&A from a forecasting angle, Total Rewards from an equity planning and strategy angle, and so on. We see an emerging theme of investing in tighter connectivity across processes and functions. We aspire to do this organically for our clients via an end-to-end service model, but it can also be accomplished through refined internal protocols such as:

• Clear ownership models with defined handoffs

• Shared data sources rather than parallel spreadsheets

• Regular cross-functional checkpoints aligned to the equity lifecycle

Integration ensures that decisions made upstream are reflected accurately downstream, and that downstream needs are taken into account upstream.

As you may know, we’ve made significant investments in our equity management services offering, in which companies outsource some or all of their stock administration to us. This area is the epitome of interdependence. It creates the source equity data, but must work hand in hand with Legal on insider filings, Total Rewards on participant communications, and Accounting on explaining data changes and movements.

Ultimately, the organizations that treat SBC as an integrated lifecycle will be the ones best positioned to move faster, reduce risk, and make more effective equity decisions.

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Insight Beyond Compliance

A broader shift in the accounting and finance community has been this notion of looking around the corner versus merely reporting the news. When we ask CFOs what qualities are most important in their functions, this is it—being able to explain in plain language what’s going on behind the numbers and what that means for decision-making. (They’re quick to caveat that operational excellence and process mastery are foundational prerequisites, and we agree.)

Why is insight reporting so important? Because boards, investors, and internal stakeholders increasingly expect a comprehensive narrative:

• Why did SBC expense change? What were the top five factors, and what was their relative impact?

• How do SBC expense and dilution trends correlate with headcount, attrition, and performance?

• What would the proxy and 10-K disclosure look like if certain modifications were made?

• How will SBC expense and dilution trend across the three scenarios in our long-range plan?

Answering these questions requires more than GAAP technical competence. It requires a robust, granular process that can also be distilled into KPIs and analytics. In 2026, the most effective SBC teams will be those that can translate complexity into clarity.

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3. Where AI Meets SBC

Although November 2022 marked ChatGPT’s official debut—and kicked off an arms race in AI innovation—2025 represented a unique moment when the seriousness of both the opportunity and risk became a conversation topic in nearly every boardroom.

There’s no doubt AI will remain a central theme for years to come. Here we discuss ways that AI intersects with SBC. These include how practitioners are engaging with AI, how companies are pursuing AI talent, and how boards are considering the use of AI-linked incentive metrics. Three very different questions, but all utterly novel in the wake of the AI revolution.

AI in Compensation Planning, Accounting, and Reporting

Practitioners in Accounting, HR, Stock Administration, and Payroll are deeply interested in how AI can drive efficiency and enhance decision-making. Many companies have top-down mandates for AI adoption, whereas others are taking a more cautious approach. Perspectives on the risks, and even on how to define success, vary wildly.

At the same time, questions around AI governance continue to challenge enterprise risk and legal teams. Many recognize the importance of embracing emerging technologies. But 10 new questions can pop up for every one resolved, making the path to responsible adoption full of twists and turns.

At Equity Methods, we’re deeply immersed in cutting-edge research on how we can deploy AI to help our clients. Many of our partners in the broader ecosystem are doing the same. In late February, we launched this survey on AI adoption in SBC. We encourage you to participate in the survey, which closes in late Q2.

We don’t think 2026 will be the year these questions are fully answered (just like 1999 wasn’t the year e-commerce was mastered). But we do expect considerable progress and discipline in defining the goals for AI adoption.

We’re thinking about AI adoption in the context of the SBC lifecycle and, specifically, where AI could be most valuable.

There are different lenses through which to approach this question. One is identifying areas with significant manual processing, where an agentic workflow could reduce errors and improve efficiency. Another lens looks at where deterministic versus probabilistic answers fit best. We don’t need AI to amortize $100 of expense over four years, for example, but perhaps we could harness it to create analytics on that amortization. These are the sorts of questions we’re looking to unpack in our newly launched survey.

Every industry is grappling with the guardrails and guidelines surrounding AI, and ours is no different. Those of us who remember the dot-com era will recall a similar dynamic in which some brick-and-mortar companies fell behind due to under-adoption, while others were hurt by flawed adoption strategies.

Stay tuned as we publish and present on this topic. And please consider taking our AI in SBC Survey, which should take only six to ten minutes to complete.

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The AI Talent Market and Equity Economics

The competition for AI talent has dominated the popular press throughout 2025. Stories, gossip, and rumors about exorbitant salaries for AI engineers have left total rewards teams struggling to respond. And while most companies aren’t pursuing the same volume or nature of talent as the so-called Magnificent Seven and a handful of private players, virtually every organization is engaged in this market in some capacity.

For technology companies aggressively pursuing AI talent at scale, the challenge is determining the best way to compete and the role that compensation should play. Some have used enormous headline grant sizes, whereas others have taken to deprioritizing compensation and emphasizing mission and purpose.

Some of the larger players have struggled with demonstrating upside given how large their market caps already are, forcing them to flex the headline grant value or create novel designs with payout upside linked to business-unit or otherwise more targeted metrics.

Vesting is another lever many companies have played with, such as beginning monthly vesting on day one instead of using a one-year cliff.

Corporate culture responds in kind. Each compensation approach reflects and reinforces a different cultural ethos with firm-wide reverberations. Compensation decisions are never made in a vacuum.

But what about everyone else—the majority of the market that isn’t at the epicenter of the AI arms race, but still needs talent and is caught up in the cyclone?

Some of the challenges our clients report include:

• Benchmarking AI talent in a fast-moving market. Traditional compensation surveys operate on annual or semi-annual cycles, but the AI talent market reprices far more frequently. Some products offer more real-time visibility, but then there’s the challenge of inconsistent job leveling.

• Rethinking job architectures around AI skills. The push toward skills-based job architectures makes sense in principle, but few organizations have a credible taxonomy for AI skills. Even when they do, inconsistencies across companies and industries are rampant. As a result, job leveling is likely to stay very noisy for the next few years.

• Assessing AI capability in candidates and employees. Nearly every resume now references AI proficiency, making it hard to separate meaningful expertise from surface-level familiarity. Outside of the most senior roles, it’ll be a struggle to define what AI mastery looks like and which roles genuinely require deeper competency versus general fluency.

• Title inflation and level misalignment. The urgency to attract AI talent has led to inflated titles, with “senior” and designations offered to candidates who wouldn’t command those levels in other disciplines. This further complicates leveling consistency across organizations.

• Organizational clarity on AI’s role. Before compensation frameworks can be designed, the business needs to answer a more fundamental question: What is AI supposed to do for us? Many organizations are adopting a strategy of hiring first and sorting out roles later. But when talent decisions get ahead of strategy, connecting those hires back to business priorities can become a moving target for compensation frameworks, which are supposed to align with those priorities.

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Incentivizing AI Adoption at the Executive Level

Given the existential opportunity—and threat—AI poses to many business models, boards are increasingly asking whether executive compensation should be tied to AI-forwardness. Our research shows that AI-forward companies are already leapfrogging their AI-lagging matched peers in share price performance. As the thinking goes, if AI disruption is real, then perhaps executives should be motivated to effectuate AI adoption.

The speed at which AI can reprice business models was illustrated vividly in February 2026 when Anthropic released its Cowork product. Investors sold off SaaS companies built on per-seat pricing and redirected capital into hardware and AI infrastructure. The episode shows how rapid technological change can splinter sectors, creating sharp divergence between companies that are disrupted and those doing the disrupting.

Incentive plans need to be resilient to that kind of volatility and, ideally, support every organization’s effort to be on the market-leading side of the divide.

Some questions to consider include:

• Is the balance of leading and lagging indicators appropriate for a period of rapid disruption? Most incentive plans emphasize lagging indicators like revenue and earnings. That may not be sufficient when the strategic landscape is shifting so quickly.
• Could an emphasis on efficiency and margin metrics inadvertently discourage longer-run investment? One practical consideration is whether AI-related investments should be excluded from earnings-based metrics to avoid penalizing forward-looking spend aimed at preserving competitive advantage.
• How well do output-focused metrics like TSR ensure management is leaning into AI? Our expectation is that, for most companies, TSR metrics are helpful during periods of rapid change when there’s a decent risk of miscalibration on input metrics and their attendant goal levels.
• How should goal-setting and relative TSR peer groups evolve when sectors are splintering? A legacy peer group may blend companies on fundamentally different trajectories, diluting the signal that relative performance is supposed to provide.
• For targeted strategic metrics, who really influences AI adoption? The kiss of death is introducing a new metric that only one or two executives can meaningfully impact. And if only a few executives have line of sight into such a metric, that may indicate a deeper organizational issue.
• What unintended consequences or goal-setting challenges could arise from a novel metric? In a fast-moving environment, even clearly defining the metric can be difficult.
• If a strategic AI metric is selected, is the long-term incentive plan really the right place for it? Multi-year goals may be hard to establish given the pace of change. The annual plan, which often has a discretionary or balanced scorecard dimension, might be a more practical venue. On the other hand, putting it there could dilute the metric’s strategic importance.

These questions, and others like them, are ones that boards and management teams are actively exploring.

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In Closing

We truly value hearing from our clients and are grateful to know that our service continues to resonate. Thank you for taking the time to participate in Group Five’s benchmarking survey. Your insights matter greatly to us, and we always welcome the opportunity to hear more of your feedback.

Visit our knowledge center for more on the above topics.

Tell us about any other topics you’d like to see us cover.

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[1] Lauren Thomas and Ben Dummett, “Bankers Are Gearing Up for Another Onslaught of Monster Deals in 2026,” The Wall Street Journal, December 30, 2025.