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.
To complete your report download, please fill out this one-time form:
Simple Rules for Including ESG In Incentives
There is general agreement that this means that the company should have the competencies and resources to make a material, positive impact on the ESG issue of concern.
Take ESG Compensation Metrics to the Next Level
Spurred in part by the pandemic and the social protests of the past year, shareholders are calling for greater disclosure and commitment to ESG matters, and some are explicitly asking companies to include at least one material, measurable ESG metric in their executive pay plans.
The HCM Mandate for Boards
With long-term success increasingly depending on attracting, retaining and engaging talented people, HCM has become a concern not just for senior executives, but also for the board of directors.
The People Factor
Pressed for greater oversight of human capital management, boards are exploring ways to expand and sharpen their focus on talent.
How to Translate ESG Imperatives into Executive Compensation
By investing in these areas even without an immediate commercial payoff, companies can bolster their long-term positions with both the stock market and society.
The Evolving Disclosure of Human Capital
When approached strategically, a focus on HCM can help companies develop the agile, innovative, and engaged workforce critical to differentiation and meeting strategic goals.
The HCM Funnel
Investor demands, societal pressures and competition for employees are pushing boards to be intentional about where and how they focus on human capital management (HCM). Leading companies view HCM as a value driver and strategic differentiator.
Measuring up to HCM
Corporate sustainability risks and opportunities have received increasing interest from investors for the past decade. Environmental concerns initially led the list, but attention to human capital has swiftly emerged as an additional focal point of discussion in the boardroom.