Esg Compensation

Where Should ESG Metrics Live in Executive Pay? A Decision Framework for STIP vs. LTIP

Deciding whether to embed ESG metrics in executive short-term (STIP) or long-term (LTIP) incentive plans is a critical structural choice. LTIPs are generally preferred for their alignment with sustainability's long horizon and greater compensation leverage, while meaningful weighting (around 20-30%) and clear measurability are essential to avoid greenwashing.