European Business Schools Librarian's Group

HEC Research Papers Series,
HEC Paris

No 1507: All Hat and No Cattle? ESG Incentives in Executive Compensation

Matthias Efing (), Stefanie Ehmann (), Patrick Kampkötter () and Raphael Moritz ()
Additional contact information
Matthias Efing: HEC Paris
Stefanie Ehmann: University of Tübingen
Patrick Kampkötter: University of Tuebingen
Raphael Moritz: University of Tuebingen

Abstract: This paper examines the integration of ESG performance metrics into executive compensation using a detailed panel dataset of European executives. Despite becoming more widespread, most ESG metrics are largely discretionary, carry immaterial weights in payout calculations, and contribute little to executive pay risk. Such ESG metrics with arguably weak incentive power are common in financial firms and large companies, particularly for their most visible executives, which seems consistent with greenwashing. In contrast, binding ESG metrics with significant weights, which have potential to influence incentives, are only found in sectors with a large environmental footprint.

Keywords: executive compensation; ESG; optimal contracts; sustainability; incentive pay; performance pay; CSR; ESG contracting; ESG metrics

JEL-codes: G30

81 pages, October 2, 2024

Full text files 

papers.cfm?abstract_id=4974204 HTML file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Antoine Haldemann ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ebg:heccah:1507This page generated on 2024-11-29 15:53:37.