IN-DEPTH: Financial services delivers biggest severance payouts in 2023
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.
