E&S Metrics in Executive Remuneration: A Focus on North America and Europe

Below are key takeaways from ISS’ recently released report titled E&S Metrics in Executive Remuneration: A Focus on North America and Europe. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.

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• Since 2020, there has been a notable increase in the number of companies in Europe and North America that incorporate E&S metrics in their executive compensation programs.
• The use of E&S metrics in executive variable compensation is more widespread in Europe than it is in North America. In 2023, 70% of European executive variable pay included E&S metrics compared to 39% in North America.
• In North America, E&S metrics are primarily included in short-term incentive plans.
• The use of E&S metrics in executive variable compensation was more prevalent at Canadian companies than U.S. companies: 74% of Canadian companies included at least one E&S metric into their variable compensation program in 2023, compared to only 37% of U.S. companies.
• Energy and Utilities top the list of sectors with the highest percentage of companies integrating E&S metrics to their executive variable pay structures. The Information Technology sector, on the other hand, has the lowest rate of E&S metrics integration into executive pay.

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