According to Deloitte’s review of proxy statements filed between February 2020 and January 2021, less than 40% of Fortune 100 companies incorporated ESG measures in their executive incentive plan. Those that did most commonly used one or more social metrics (with human capital/culture and diversity, equity, and inclusion being most prevalent) in their annual incentive plans. However, from a big picture standpoint, numerous types of measures were represented, as shown here:
Assuming a company wants to go this route, the piece outlines a number of sound considerations associated with determining which ESG measures to incorporate and how, and reiterates the importance of effective disclosure to investors and other stakeholders.
See our recent report: “Sustainability-Linked Pay” and additional resources and “how to” considerations on our Executive Pay page »Non-Financial Metrics (Sustainability, DE&I, etc.).
This post first appeared in the weekly Society Alert!