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Sustainability Targets in Executive Remuneration: Targets, Time Frame, Country and Sector Specification

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  • Karen Maas
  • Sanne Rosendaal

Abstract

Existing remuneration plans for CEOs still mainly focus on financial performance and do not necessarily promote sustainable value creation for their firms. By way of reaction to this, a growing number of academics and practitioners are acknowledging the need for the inclusion of sustainability targets in executive remuneration. This study examines the current status of the use of sustainability targets in executive remuneration specified by country, sector and targets. Based on a sample of 490 listed firms from 11 countries and different sectors, the use of targets related to sustainability in executive remuneration is assessed. The targets are specified by kind of target (short term and long term) and content of target (environmental, social or a combination of both). The results of this study show that (a) in 2010 on average 33% of the firms used sustainability targets in remuneration, (b) mainly the ‘dirty’ industries use targets, (c) the targets used are mainly short‐term targets and (d) they focus on social issues. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment

Suggested Citation

  • Karen Maas & Sanne Rosendaal, 2016. "Sustainability Targets in Executive Remuneration: Targets, Time Frame, Country and Sector Specification," Business Strategy and the Environment, Wiley Blackwell, vol. 25(6), pages 390-401, September.
    • Handle: RePEc:bla:bstrat:v:25:y:2016:i:6:p:390-401
    DOI: 10.1002/bse.1880
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    9. Hien Thi Thuc Nguyen & Subhan Ullah & Hanh Thi My Le & Affan Hameed, 2023. "Sustainability Targets in Executive Remuneration Contracts and Corporate Sustainability Performance in the United Kingdom and European Union," Environment Systems and Decisions, Springer, vol. 43(3), pages 393-415, September.
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