2025 comp predictions

Here are my comp predictions for 2025:

1. Skills-based compensation has its breakout year. Last year I predicted it would gain momentum, this year it goes mainstream. The big use case won’t be endlessly more granular pay ranges, but tracking the market, improved matching, and guiding decisions within ranges.
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2. Comp teams upskill on finance. How many of you know what WACC means? That’s what I thought. Comp sharpens up on finance and accounting fundamentals to stay relevant, especially as M&A returns. Some companies experiment with rotating finance leaders into comp and vice versa, and a handful take it too far and reorganize comp under finance.
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3. Pay equity and pay transparency focuses on Europe. With the EU Pay Transparency Directive expected to go into full enforcement in 2026, companies get their act together this year. Hasty fixes and boiler plate language gets replaced with thoughtful process. Job structures get dusted off, at least in EMEA.
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4. Stock comp declines in target value and participation for most roles. CFOs promise SBC expense cuts to Wall Street and find they can deliver comfortably. Hot jobs and some technical roles see raises, but GTM and G&A see declines.
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5. Compensation dips a toe in AI. A handful of comp teams go beyond asking ChatGPT to write a total rewards statement and experiment with building meaningful models. Most wait and see. At least one shares its approach publicly.

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Grading last year’s predictions:

1. Pay transparency laws take a breather. Minnesota signed new legislation and laws were expanded in Maryland, Massachusetts, New Jersey, and Washington D.C. But proposed laws in Missouri and Virginia were shelved, and a proposed federal rule hasn’t moved forward. Mixed bag, so we’ll score: 0.5.
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2. Non-standard equity vesting schedules stick around and grow. Four-year vesting is down to 73% of new hire grants and 64% of refresh grants according to Compa data. Score: 1.
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3. AI Engineering premiums increase. US P3/P4 median salaries started the year at an 11% premium over Software Engineering and ended the year at an 8% premium. New hire grants started at a 59% premium and ended at a 61%. This was a miss — only specialized AI skills saw rising premiums. Score: 0.
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4. Comp analysts begin evolving into comp scientists. While the vast majority of open comp roles on our Compa Community Jobs Board still focus requirements on spreadsheets, a few mention more powerful analytical skills like R, Tableau, Python, and Compa 😃, and I’m hearing about data lakes, Github, and even LLMs in my conversations with leading comp teams. The evolution has begun, but it’s hard to prove. Score: 0.5.
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5. Skills-based compensation gains momentum. Since launching Compa Skills in late 2024, the high level of interest from a wide range of companies caught even me by surprise. Score: 1.
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6. Bonus: attrition will rise (but remain below normal). Nope, it remained historically low. Maybe 2025 will turn around. Score: 0.

Overall, 3.0 / 6.0 — I’d feel worse about it, but remember I polled the readers last January, and we both whiffed big time on AI premiums: