ESG metrics making their way into more S&P 500 firms' incentive plans

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More S&P 500 companies are adding ESG metrics to executive incentive awards, according to an analysis by Willis Towers Watson.

The analysis of 310 S&P 500 companies shows 92 companies added some kind of environmental, social and governance metric to their 2021 or 2022 annual incentive plans, including 42 companies that had not previously done so. By category, 81 companies added a social metric, 30 added an environmental metric and 16 added a governance metric.

To their long-term incentive plans, 22 companies added an ESG metric, and all but one had not done so before. Of that total, 15 added an environmental metric, 14 added a social metric and one added a governance metric. Some companies added more than one type of metric.

“We are seeing that companies are continuing to see ESG as a business priority,” said Kenneth Kuk, senior director, work and rewards at WTW, in a phone interview. “Whether it would just be good to have in incentive plans, or whether it’s going to change some behaviors, we’re going to see these show up.”

In another analysis, WTW looked at mandatory say-on-pay voted among the 1,003 Russell 3000 companies that had disclosed their shareholder voting results by May 20, and 97% of proposals received majority support, with that support averaging 90%. WTW said that is the roughly the same level of shareholder support as in previous years.