How Should Environmental, Social and Governance (ESG) Performance be Reflected in Executive Compensation?

Companies are responding to increasing pressure from shareholders, proxy advisors, employees, and even local and state governments to consider environmental, social and governance (ESG) issues as part of business strategy and performance.

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Many of the public company boards and corporate executives (very notably, 181 CEOs signing the Business Roundtable Statement avowing Stakeholder primacy1) that are eager to demonstrate this responsiveness cite compensation as an existing, meaningful and highly visible tool that is…