Corporate Governance

2022 Corporate Governance and Executive Compensation Survey - 20th Annual

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Shearman & Sterling LLP 29 | ESG and Incentive Compensation Plans: Are Investors Satisfied? Weighting of Holistic Individual Performance Weighting of Individual ESG Metric 39 21 of the Top 100 Companies include ESG metrics in a holistic qualitative review of individual performance of the Top 100 Companies include ESG as an individual metric 1 2 2 2 1 1 2 3 10 2 8 5 10 1 11 1 2 9 30% 25% 20% 15% 10% 7.5% 5% Percentage not specified 67% 50% 25–34% 20% 15% 10% Discretionary modifier Percentage not specified ESG METRICS IN THE INCENTIVE COMPENSATION PLANS OF THE TOP 100 COMPANIES 60 surveyed companies incorporate ESG metrics into their executive compensation program of these companies include them in their annual plan 51 in both their annual plan and their long-term plan 7 Shearman & Sterling's review of the Top 100 Companies reveals that: 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, down from 17 companies last year that stated that increasing the health and safety of their employees was a metric 43 12 in their long-term plan only and 2

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