Incentive compensation for top executives at digital workflow company ServiceNow will be tied to the company’s performance against its ESG targets, according to the company’s 2022 proxy statement.
In the filing, the company reveals that 2021’s cash incentive program for Named Officers included “environmental and diversity, equity and inclusion (“DEI”) related targets,” based on the Compensation Committee’s belief that “tying ESG performance to compensation will drive the execution of our ESG strategy, and, ultimately, our business strategy.” According to the statement, 75% of the cash incentive is based on a series of financial metrics, with the remaining 25% based on individual performance metrics including ESG.
The proxy statement also revealed that the move follows shareholder feedback indicating interest calling on the company to “tie ESG to compensation program to motivate execution against ESG strategy.”
ServiceNow’s initiative is part of a growing trend among companies across a wide range of industries to link compensation to ESG progress, including similar moves at UBS, Caterpillar, Apple and Trane, among several others. Last week, Mastercard announced that it would extend its compensation model tying bonus pay to ESG goals to all of the company’s global employees.
In the company’s newly released Global Impact Report, ServiceNow CFO Gina Mastantuono said:
“Given ESG’s connection to long-term value creation, we’ve made it a strategic imperative at ServiceNow. We’ve embedded it into our operations, solutions, and cultural mindset to benefit our employees, customers, partners, and communities.”