Shearman & Sterling LLP 25 | ESG Continues to Find its Way into Incentive Compensation Plans
Percentage Weighting
of ESG Metrics as Part of
Holistic Qualitative Review
of Individual Performance
Weighting of Individual ESG Metric
33 8
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 1 1
3
10
2
2
7
3
10
1
9
1
20%
15%
10%
5%
Discretionary
modifier
67%
50%
25 – 34%
20%
10%
Discretionary
modifier
Percentage
not specified
ESG METRICS IN THE INCENTIVE COMPENSATION PLANS OF THE TOP 100 COMPANIES
41
surveyed companies
incorporate ESG metrics
into their executive
compensation program
of these companies include them in their annual plan
36
in both their annual plan and their long-term plan and
5
as part of their annual determination of total
target compensation
5
Of the Top 100 Companies:
ESG means different things to different companies. This is how companies that used ESG metrics defined ESG:
7
have ESG metrics
that apply only
to certain named
executive officers
or that are tailored
for each named
executive officer
specifically
reference a focus
on diversity
state that a focus on safety
is a metric, up from five
companies last year that
stated that increasing the
health and safety of their
employees was a metric,
and one of these companies
specifically states that
COVID-19 safety is a metric
includes fixing
disparities in the
healthcare of
underrepresented
groups as a metric
27 17
1
