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IN-DEPTH: Financial services delivers biggest severance payouts in 2023
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Out of 10 industries examined by Diligent Market Intelligence (DMI), financial services awarded the greatest allocation of severance pay at Russell 3000 companies last year, a 200% increase when compared to 2022.
It’s the second time the sector has claimed the top spot for average severance payments to C-suite executives in the last six years, also recording the highest proportion of such termination payouts in 2021.
Below, DMI takes a closer look at how the various sectors paid out:
Financial services
Topping the list for 2023, financial services awarded $6.9 million to Russell 3000 C-suite members, 35% of all industries examined. In 2022, it awarded $2.3 million or 13% of the total. In 2021, it ranked highest for most severance payments at $3.5 million or 21% of all industries examined.
In the six-year period between 2018 and 2023, the financial services sector awarded $3.9 million in severance payments to Russell 3000 CEOs and $1.6 million to CFOs.
Communication services
The communication services sector recorded the second-highest severance pay of all industries in 2023, awarding $6.2 million (32%), up from $2.3 million (13%) in 2022.
In both 2019 and 2020, communication services represented almost half of all severance payouts at $9 million and $16.6 million, respectively.
Between 2018 and 2023, the sector has recorded the highest proportion of severance pay to CEOs, awarding $18.1 million (41%) of total severance payments to such senior executives. This sector also issued the highest proportion of such pay to CFOs in the same time period, at $2.9 million.
Information technology
Having consistently awarded smaller severance payments than the majority of other sectors, the information technology sector saw a shift in 2023 when average severance pay at Russell 3000 IT companies was $2.3 million, more than double the $1.1 million granted in 2022, making it the sector to award the third-highest severance payments last year.
Healthcare
The healthcare sector has historically awarded smaller severance payments, making up less than 5% of all Russell 3000 CEO severance payments over the past six years. However, the sector also saw a shift in 2023 when it granted the fourth largest payments out of the 10 industries examined, awarding $1.7 million (9%) in severance across all C-suite roles, up from $1.2 million (6%) in 2022.
Industrials
Industrials ranked among the sectors that granted the smallest severance payments in 2023, awarding $1.1 million, 6% of all Russell 3000 severance payments made in the period.
Severance awards in the industrials sector have varied year-on-year. In 2021, the sector awarded $2.6 million in severance pay, making up 15% of all related payments, while, in 2022, industrials awarded 6% of total Russell 3000 severance payouts.
Between 2018 and 2023, the industrials sector has awarded $2 million to Russell 3000 CEOs and $1.3 million to CFOs.