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.

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