CEOs need to pay attention to climate metrics—or risk getting smaller paychecks

Interestingly, the practice was most common with energy companies. The share of Russell 2000 energy companies using climate metrics in CEO pay calculations was 68%, up from 37% in 2021.

Diversity and inclusion metrics have also jumped. They were found in the pay plans of 75% of S&P 500 in 2023, up from 52% in 2021.

The study also found that incorporating ESG metrics into pay packages is much more common among big companies than small ones. In the Russell 3000, only 24% of companies with revenues under $100 million reported using ESG performance metrics, while the share rose to 83% for companies with revenues of $50 billion or more.

The report’s conclusion: The “ESG backlash, which has been mounting since early 2022, has not dissuaded companies from continuing to integrate ESG-related performance metrics into the incentive plans for their CEOs and senior executives.” Indeed, a full 76% of S&P 500 companies now include some measure of ESG performance in their compensation design (up from 66% in 2021.)

The Conference Board produced the study with FW Cook and ESGAUGE, and gave CEO Daily an early look. You can find the full report this morning here. And catch our year-end wrap-up on the Leadership Next podcast here. (In it, I disclose my favorite CEO interview of the year—apologies to all the others!)

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Warner Bros and Paramount

Warner Bros. Discovery is in preliminary merger talks with Paramount Global, according to sources with knowledge of the negotiations. Warner Bros. Discovery CEO David Zaslav has raised the idea with both Paramount chair Shari Redstone and CEO Bob Bakish. Both companies are struggling with the costs of running streaming services and a viewer exodus from cable TV. Bloomberg

Activision CEO steps down

Activision Blizzard CEO Bobby Kotick is stepping down at the end of the year, as Microsoft completes its acquisition of the video game publisher. Studio heads, like the president of “Warcraft” and “Diablo” developer Blizzard Entertainment, will now report directly to Microsoft executives. Kotick has led Activision since 1991 and steered its merger with Blizzard-owner Vivendi Games in 2008. He later courted controversy due to his dismissive attitude towards sexual harassment at the company. The Verge

Modi interview

Indian Prime Minister Narendra Modi is dismissing concerns that the country’s manufacturing sector won’t be able to replace China. “India wouldn’t have achieved the status of the world’s fastest-growing economy if the issues you’ve highlighted were as pervasive as suggested,” Modi said in an interview with the Financial Times. India surpassed China as the world’s most populous country this year, yet the country still struggles with persistently high unemployment. Financial Times

AROUND THE WATERCOOLER

2024 will see the rise of a new class of worker: the ‘flexetariat,’ predicts a future of work author by Chloe Berger

Wayfair CEO Niraj Shah warns staff ‘history doesn’t reward laziness with success’ after bouncing back to profitability by Orianna Rosa Royle

Commentary: ‘Parroting Putin’s propaganda’: The business exodus over Ukraine was no Russian bonanza by Jeffrey Sonnenfeld, Tymofiy Mylovanov, Nataliia Shapoval and Steven Tian

Rite Aid ‘left its customers facing humiliation,’ says FTC as it hits chain with five-year facial-recognition ban by David Meyer

Figma called employees from companywide PTO to town hall to inform them Adobe deal was dead by Alexandra Sternlicht

Corporate diversity’s supposed fall has been overblown by Ruth Umoh

This edition of CEO Daily was curated by Nicholas Gordon.