Mercer identifies a baseline for AI adoption in executive incentive plans
When you ask S&P 500 CEOs and top-tier leaders how they’re doing with AI adoption, many believe they’re lagging and fear they’re losing their competitive edge.
The reality tells a different story.
Most companies aren’t as far behind the curve as they think they are, and plenty of opportunity still exists.
One telling benchmark is whether, and to what extent, companies are building AI into their executive compensation plans. Success depends not just on talking about AI adoption, but on demonstrating measurable impacts.
To establish a baseline, Mercer reviewed proxy filings from 145 S&P 500 early filers, looking specifically for explicit AI — or machine learning — performance metrics in executive short- and long-term incentive plans.
Here’s what reported adoption looks like in early 2026.
The plan-to-reality gap
While 48% of companies point to AI as a notable accomplishment in their proxy filings, only 14% report having actually translated their stated accomplishments to a measurable short-term incentive (STI) metric. Only 2% have done so in their long-term incentive (LTI) plans.
Key takeaway: Most companies are aware of AI's strategic importance, but remain in the process of figuring out how to hold executives accountable for it.
Adoption by sector
When it comes to adoption, some sectors are ahead of others. None are taking a commanding lead, though. Communication Services comes in at the top with 33% of companies surveyed having reported an AI-related STI metric, followed by Financials (25%) and Information Technology (IT) (18%). IT is the only sector with reported LTI adoption (9%). Consumer Staples, Energy, and Materials show zero adoption in either plan.
Key takeaway: AI adoption is in its early stages in some sectors, non-existent in others.
Internal vs. external-focused metrics
Definitions
- External / Sales of AI: selling artificial intelligence-powered products, services, or software to customers outside the organization
- Internal Use of AI: the strategic deployment of artificial intelligence tools to design, manage, and optimize business processes; may also refer to a company's requirement that employees adopt artificial intelligence in their everyday work
AI adoption can drive operational efficiencies or spur external revenue growth from AI-powered products. Both represent significant value for organizations of all kinds. Our findings indicate, though, that among early adopters, only 45% report measuring both internal and external AI metrics, 35% are focused internally, and 20% are focused on external impacts. Companies using an LTI metric all tie it exclusively to external outcomes.
Key takeaway: It’s not just adoption that matters—it’s outcomes that span internal, external, short-term and long-term.
Overall, these findings reflect an environment in an early stage of adoption of AI incentive plan metrics. Chances are, your organization isn’t behind the curve at all, but poised to move forward with greater confidence and a clear plan for continually evaluating internal and external impacts tied to short- and long-term executive incentives.