Shearman & Sterling LLP ESG Slowly Finding its Way into Incentive Compensation Plans | 25
ESG means different things to different companies. This is how the 36 companies that used ESG metrics defined ESG
2
have ESG metrics
that only apply to
the CEO and one
company weights
ESG metrics higher
for the CEO
consider talent
and succession
specify that
increasing
diversity is
part of the
talent and
succession
analysis
include
environmental
sustainability
as a metric
also include
a metric that
relates to
increasing the
health and
safety of their
employees
includes working
to increase
the legal age
to purchase
tobacco as
a metric
32 31 6 5 1
Percentage Weighting of ESG Metrics as
Part of Holistic Qualitative Review of
Individual Performance
Weighting of Individual ESG Metric
27 10
of the Top 100 Companies incorporate ESG
metrics into a holistic qualitative review of
individual performance
of the Top 100 Companies include ESG
as an individual metric (one company
includes ESG as an element of a holistic
qualitative review and also as an
individual metric)
1
3
4
2
10
8
1
7
1
20%
15%
10%
5%
50%
25-30%
15-20%
5%
Discretionary
modifier
ESG METRICS IN THE INCENTIVE COMPENSATION PLANS OF THE TOP 100 COMPANIES
36
of the Top 100 Companies
use ESG metrics in their
executive compensation
programs
of these companies include the metrics in their
annual plan
28
in their long-term plan and
3
as part of their annual determination of total
target compensation
5
