Last year, U.S. companies trailed their European peers in tying environmental, social and governance metrics to their executive pay packages. Yet many businesses may need to prepare for regulatory changes requiring American companies to make such disclosures in the future, according to advisory firm Pay Governance LLC.
The Pay Governance study showed that 22% of U.S. companies in a sample of a group of 95 businesses included ESG metrics in their executive compensation packages in 2020, and a bit under a third of companies said they plan to incorporate such metrics into their top managers’ compensation packages this year. Meanwhile, 90% of a select group of U.K. and European Union-based companies, including 30 businesses from the FTSE 100 and Stoxx 50 indices, included ESG metrics in their compensation plans.Agenda – Considering ESG Pay Targets? Europe Offers Clues