{"id":795122,"date":"2024-12-16T10:11:01","date_gmt":"2024-12-16T15:11:01","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/us-companies-refine-their-approach-to-esg-metrics-in-executive-pay-programs-wtw-study-finds\/"},"modified":"2024-12-16T10:11:01","modified_gmt":"2024-12-16T15:11:01","slug":"us-companies-refine-their-approach-to-esg-metrics-in-executive-pay-programs-wtw-study-finds","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/us-companies-refine-their-approach-to-esg-metrics-in-executive-pay-programs-wtw-study-finds\/","title":{"rendered":"US companies refine their approach to ESG metrics in executive pay programs, WTW study finds"},"content":{"rendered":"
\n

NEW YORK, Dec. 16, 2024 (GLOBE NEWSWIRE) — As environmental, social and governance (ESG) metrics become a common feature in executive incentive plans, U.S. companies are focusing more on setting metrics that are better aligned to their business priorities, according to a new global study by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. The annual study also revealed the prevalence of diversity, equity and inclusion (DEI) metrics remained relatively stable despite recent backlash against corporate DEI initiatives.<\/p>\n

In the U.S., more than three in four S&P 500 companies (77%) reported in this year\u2019s proxies they incorporated at least one ESG metric in their executive incentive plans. That\u2019s unchanged from the previous year but up sharply from 52% four years ago. Similarly, the number of companies using ESG measures in both short-term incentive (STI) and long-term incentive (LTI) plans remained unchanged at 75% and 9%, respectively.<\/p>\n

Globally, 81% of companies incorporated at least one ESG metric in their executive incentive plan, a moderate increase from the previous year. Over three-quarters of global companies (77%) reported using ESG measures in their STI plans while 29% reported using ESG measures in their LTI plans.\u00a0\u00a0<\/p>\n

Human capital metrics remain the most popular ESG metric category, used by 72% of S&P 500 companies and 73% of companies globally. Among U.S. companies, 57% use DEI metrics in their executive pay plans, including 26 companies that introduced the metrics this year. However, there were 29 companies that eliminated ESG metrics, and an additional six companies disclosed plans to remove DEI metrics in the current year.<\/p>\n

\u201cDespite some opposition on DEI goals and initiatives that some companies are experiencing, we see companies taking different approaches to DEI metrics,\u201d said Kenneth Kuk, senior director, Work and Rewards, WTW. \u201cWhile prevalence of DEI measures may continue to decrease amid pushback on corporate DEI initiatives, the remaining ones will better withstand scrutiny because these companies made a compelling case for why DEI helps drive business results and preserve long-term sustainable value for stakeholders. We would caution against only discussing human capital and DEI within the narrow context of ESG metrics in executive incentive plans given their broader business impact.\u201d<\/p>\n

WTW\u2019s study also found that among S&P 500 companies, ESG and non-financial metrics tend to yield about 10% higher payout than financial metrics. This may validate investors\u2019 concern that the level of rigor in goalsetting is not as robust with ESG metrics, especially when measurement is qualitative and discretionary.<\/p>\n

WTW\u2019s study also included 311 companies across eight major indices in Europe and 193 companies across seven major markets in the Asia Pacific region.<\/p>\n

The key findings from those companies include the following:<\/p>\n