An important new governance survey suggests an increasing willingness to consider linking a company’s ESG performance measures to executive incentive compensation. Such a practice would demonstrate a significant corporate embrace of social responsibility principles. But implementing such measures may present boards and their compensation committees with practical implementation challenges.
The new survey from The Conference Board, “Linking Executive Compensation to ESG Performance” (the “Survey”), essentially concludes that tying some portion of executive compensation to ESG principles is becoming a mainstream governance practice. Indeed, Survey data suggests that the percentage of S&P 500 companies that have adopted ESG performance measures is increasing at a steady pace—from 66 percent in 2020 to 73 percent in 2021.
Long considered controversial from economic and shareholder perspectives, living wage concepts are receiving more attention in the context of economic policy, social responsibility and ESG investing. As progressive perspectives concerning income equality, and executive and employee compensation, are becoming more mainstream, corporate leaders should prepare for greater engagement in this important conversation.
The increased focus on issues of harassment is putting corporate culture under a microscope. Corporate management and board members—regardless of whether the entity is private, public or charitable—must adjust the way they think about harassment in the workplace and how to respond to allegations of misconduct.
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