Resource Library ESG

Will outgoing CEOs stay as a mentor to the new CEO, transition to a board role or depart entirely? Regardless of the role, each path will affect the organization's stability and strategic direction.

ESG metrics are increasingly prevalent in incentives, but disclosure has not kept pace. In recent years, the prevalence of ESG metrics in executive compensation design has expanded.

Following an extensive internal diagnostic, companies can focus on key HCM areas including, but not limited to, performance management; succession planning; diversity, equity, and inclusion (DE&I); and culture.

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.