Intel, Xcel Energy, Alcoa Among US Companies Linking Exec Pay to Sustainability

by | Jun 1, 2012

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Intel, Xcel Energy, Alcoa, ING, National Grid, Shell, and Suncor Energy are among the US companies tying executive compensation to sustainability performance, according to a report from The Conference Board.

The report, “Linking Executive Compensation to Sustainability Performance,” says shareholders are placing more value on corporate sustainability initiatives, and are becoming increasingly interested in linking such performance to executives’ compensation.

In 2011, 243 proposals related to matters of social and environmental policy were submitted at companies holding annual meetings between Jan. 1 and Aug. 3, constituting 35 percent of the total proposals in that time, the report says. This is an increase from 29 percent in 2007 and the 28 percent in 2010.

Additionally, shareholder support for sustainability proposals is growing. In 2010, the share of sustainability proposals supported by a majority of shareholder votes was 0.6 percent, compared to 1.3 percent in 2011.

The Conference Board cites a 2010 report by Glass Lewis, which studied publicly traded companies in the US, the UK, Australia, France, Germany and the Netherlands. It found 29 percent of companies disclosed a link between compensation and sustainability.

Results from a 2010 survey by The Conference Board of US public companies showed 11.1 percent of respondents integrated sustainability objectives into business operations by linking compensation and sustainability.

Intel, the report says, has linked sustainability performance to bonuses for all employees since 2008. Intel’s bonus calculations take into account the energy efficiency of the company’s products, commitments to renewable energy, and the company’s performance related to its carbon footprint reduction goals.

The tech giant has pledged to reduce its direct greenhouse gas emissions by 10 percent on a per-chip basis by 2020 compared to 2010 levels.

Xcel Energy links its annual incentive awards for executives to sustainability performance metrics, including greenhouse gas reduction. Alcoa included sustainability performance in its executive bonus plan in 2010, linking 20 percent of the bonus to nonfinancial metrics, such as carbon dioxide reduction, safety and diversity, according to The Conference Board.

An Accenture report published earlier this month found 44 percent of senior executives say that sustainability is critical to their businesses, and that figure rises to 64 percent in emerging markets.

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