What boards should be asking about ESG-linked executive pay
Here’s an article from The Conference Board entitled “What Boards Should Ask Management About Compensation and ESG.” Here’s an excerpt:
It is most common for companies to put ESG performance measures in their executives’ annual incentive plans. Ninety-seven percent of S&P 500 companies incorporating ESG performance metrics in incentive compensation put them in the annual bonus plan. Only 12 percent of companies put them in long-term incentive compensation, but this percentage may grow over time. The type of performance measure varies, and some companies use multiple approaches simultaneously:
– 49% of S&P 500 companies consider ESG as part of an executive’s individual performance.
– 48% include it in business strategy scorecards.
– 24% use stand-alone ESG metrics.
– 6% use ESG performance to modify a financial or overall bonus rating.