Incentive compensation has long been a board's primary tool
to ensure the interests of management are aligned with the
interests of its shareholders. To that end, the ongoing challenge
facing compensation committees is choosing metrics that motivate
management to optimize shareholder value without incentivizing
behaviors that focus on short-term stock price appreciation that
can threaten the company's long-term interests.
In this chapter of our 18th Annual Corporate Governance
& Executive Compensation Survey, we examine the forces
have led to the increased use of ESG metrics in incentive
compensation plans and action items for companies looking to
consider incorporating ESG metrics into their incentive
compensation programs.
