Resource Library ESG

In certain cases, many enduring principles of executive compensation should be applied to ESG metrics, including considering the alignment to company strategy and values and the incentive value that a broader view of performance can provide.

For companies that are early in their ESG and HCM journey and considering a link to incentives, a scorecard may be a good starting point to help address some of the issues that come along with setting ESG and HCM goals.

We recommend boards and directors ask these questions to help understand their role in process oversight, emergency planning, transition dynamics, and more.

As companies finish the 2022 compensation season and prepare for 2023, we highlight top-of-mind topics for compensation committee members, questions to ask, and related resources.

Third article of a three-part series focused on how companies can implement the foundational steps of board-level ESG oversight.

The ground is shifting for executive compensation, from a focus on shareholder metrics to a more intentional longer-term approach that better supports key stakeholders: workers, suppliers, communities, and customers. To make the shift, companies need to prioritize their key stakeholder issues, then identify which ones actually belong in a compensation package.

What (if any) role should ESG play in their companies’ compensation plans, and if used, how should ESG-related incentives be structured?

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.