Photo of Arthur S. Meyers

Art Meyers is a shareholder in the Corporate Practice Group of Gunster. He focuses on the corporate, employment, tax and securities law aspects of executive and equity compensation, as well as on employee benefits law matters.  Art acts as US counsel for many of London’s top law firms and their international clients to “Americanize” global share schemes. He authors the US Chapter of the Legal 500 Employee Incentives Comparative Guide.  Art is a current member of the Executive Advisory Committee of the National Association of Stock Plan Professionals.   Art is recognized by The Best Lawyers in America, Chambers USA and Legal 500.  He graduated from The University of Michigan Law School.  Art’s recent speaking engagements include conferences for Certified Equity Professional Institute, Charles Schwab, Computershare, Equilar, E*TRADE, Financial Executives International, Global Equity Organization, NASPP and Society for Corporate Governance.

Image by 政徳 吉田 from Pixabay

Environmental, Social and Governance considerations (ESG) are expected to play an increasing role in equity pay determinations for executive officers. About 50 percent of S&P 500 companies used ESG metrics in cash-based, short-term incentive compensation plans during 2020. Conversely, only about 4 percent of S&P 500 companies used ESG metrics in long-term equity incentive plans. This should change beginning with 2021 awards due to anticipated SEC-required disclosure of ESG business risks. ISS, Glass Lewis and large investors (e.g., BlackRock, Vanguard) have made calls for more ESG disclosure. Banks increasingly view ESG risks as credit risks. In addition, national media outlets have made the case for executive pay to tie with ESG goals.

In recent years equity awards made to executive officers have been tied to achieving company performance goals. But these performance evaluations are usually linked to relative total shareholder return or financial metrics such as EPS or return on invested capital. As the tide shifts to include ESG metrics, the question now asked is, “how do we set equity awards for executives to help our company attain its ESG goals?”
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