As the use of ESG metrics in incentive plans continues to grow, we see a diverse set of models by which
companies incorporate these metrics. As with many ‘non-financial’ metrics, the use of ESG metrics within a ‘scorecard’ is a common approach, although this is certainly not the only solution.
We anticipate the evolution toward incorporating more weighted and prominent ESG structures into plan design to continue to grow in the coming years.
In this report, we analyze the reported design approach to incorporating ESG metrics into incentives within the S&P 500.
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How Compensation Committees Can Improve Impact on Talent Planning
How can committees continue to improve their impact on talent planning without “stepping on the toes” of management—recognizing that the administrative responsibility for talent matters is a management activity?
How Compensation Decisions Support CEO Succession
Recognizing both the shrinking of leaders’ tenures and the shifting skill sets needed for future success, many boards are now making succession planning a continual process.
2022 ESG + Incentives Reports
Moving forward, we anticipate that ESG metrics will continue to become more prevalent among S&P 500 companies before hitting an eventual plateau.
Factors Affecting ESG Metric Selection
While there is building momentum to adopt ESG related incentive metrics, it is important to consider the company’s specific business and talent requirements before doing so.
HCM Disclosure: A Strategic Opportunity
Human capital management (HCM) disclosure is evolving rapidly, and the proxy is quickly becoming the most prominent area for boards to tell their HCM story.
How Boards Can Avoid the Pitfalls of DE&I in Incentives
Nearly 30 percent of companies in the S&P 500 used a diversity, equity, and inclusion (DE&I) metric in executive incentive design last year, and a quarter of these businesses did so for the first time, although metrics focus on representation only, easily achieved goals disconnect from long-term aspirations, and metric definitions are not stress tested.
How Boards can Engage Investors on Human Capital Management
Boards are now broadening their oversight to capitalize on the criticality of more diverse, equitable and inclusive organizations—and strong organizational culture.