wtw-氣候變遷高管薪酬指南（英）-2021.11-34正式版

ExecutiveCompensationGuidebookforClimateTransition

IncollaborationwithWorldEconomicForum’sPrinciplesforEffectiveClimateGovernance

??20212021WillisWillisTowersTowersWatsonWatson.All.Allrightsrightsreservedreserved.Proprietary.andConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Supportingchapters

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

1

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Aboutthisguidebook

Asorganizationsacknowledgetheneedtotransitiontoanetzerobusinessmodel,investorsexpectboardmembersnotonlytodrivetheadoptionofacredibleclimatetransitionstrategy,butalsotoprovideclearevidencethatitsexecutionhasbeenembeddedeffectivelyacrossallkeymanagementprocesses,includingenterpriseriskmanagement,strategicplanning,innovation,capitalinvestmentandhumancapital.

Onecriticalleverisformanagementtobeheldaccountableforthedeliveryofthestrategyand,whereappropriate,thecapturingofopportunitiesinclimatetransition.

WillisTowersWatson,partneringwiththeClimateGovernanceInitiative,hasdevelopedthisguidebooktoexplorehowtodrivetheclimatestrategybymeaningfullyembeddingitwithinexecutivecompensationframeworks.Ourworkisinformedbyfindingsofsurveysandinterviewswithinvestorsandboardmembersfromorganizationsacrosstheglobe.

Tableofcontents

Executivesummary…………..……..……….

4

Business,investorandregulatorycontext……………

5

Bestpracticesindrivingclimateobjectiveswithexecutivecompensation…………..…

12

Marketinsights:Climatemetricsinexecutiveincentiveplans………….………….……

23

Industrydeep-dives……………….……..…………

29

Endnotes..………..……………….

32

ThisguidebookissetupasaninteractivePDF.Eachofthesectionsmaybeaccessedbyclickingonthelinksbelow.

Forexample,tojumptoourviewson“effectiveexecutivecompensationdesign,”simplyclickonthebanneratthebottomofthepage.

Deepdivesonselectindustriescanbeaccessedattheendof“Marketinsights”section.Simplyclickontheindustryonpage29,andthiswilltakeyoutoindustry-specificobservationsonhowtheindustryrelatestoclimatechangeatahighlevel,wherecompanieswithintheindustryareintermsofincorporatingclimateintotheirexecutiveincentiveframeworks,commonchallenges,aswellasleading-companyexamples.

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

2

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

TheWorldEconomicForumPrinciplesforEffectiveClimateGovernance

In2019,theWorldEconomic

ForumunveiledthePrinciplesfor

EffectiveClimateGovernance

fornon-executiveboard

directors.

Theseprinciplessetouthow

well-governedboardsshould

incorporateaclimatelensinto

allrelevantaspectsoftheir

oversightfunctions.Oftheeight

principles,Principle6focuseson

incentivization.1Withinthisarea,

executivecompensationis

identifiedasoneofthekey

mechanismsthatdrivetheright

behaviorsandenablethe

companytodeliveronitsclimate

transitionstrategy.

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

3

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Executivesummary

Throughinterviewswithboardmembersaroundtheworld,reviewofpublicdisclosuresfrommorethan800companiesandWillisTowersWatson’sexpertiseinexecutivecompensationdesign,wedocumentourobservationsonthebestpracticesinhowexecutivecompensationcanbeapowerfultoolindrivingclimatetransitionandclimateriskmitigation.

Themeritsoflinkingexecutivecompensationandclimateobjectivesarewellestablished.Emissionsreductionandrenewableenergyadoptionareincreasinglyprevalentmetricsinexecutiveincentiveplans,especiallyinEuropeandinhigh-emittingindustriessuchasoilandgas.

Thereremainsmuchforthebusinesscommunitytolearnabouttheimplicationsofatransitiontonetzero.Settingconsistentandreliablegoalsandmilestoneswillbechallenging.Butcompaniesmustresistthetendencytowardinaction,asclimateiswidelyconsideredthesingle-mostsignificantrisktotheplanet,businessesandthestabilityoftheglobalfinancialsystem.

Do’s

Continuouslymonitorandevolvemeasurementofclimategoals

Considercompany-specificclimatetransitionstrategyandmetrics

Measureshort-,medium-andlong-termprogresstowardsnetzero

Selectmetricsandgoalsthatarescience-based,clear,ambitious,transparentandconsistent

Tellthestoryofhowexecutivecompensationdrivesclimatetransitionwithrobustdisclosures

Don’ts

Addclimatemetricstoincentiveplansasa“check-the-box”exercise

Blindlyfollowmarketpracticesandwhat“l(fā)eadingcompanies”do

Setannualgoalswithnotie-intotheoverallnetzerovision

Usejudgment-basedorambiguousclimatemetricsorgoals

Manageannualreports,executivecompensationdisclosuresandESG/climatereportinginsilos

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

4

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Business,investorand

regulatorycontext

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

5

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Thestarkrealityandbusinessimperativetoact

Drawingonthefindingsofmorethan14,000scientificstudies,theSixthAssessmentreport2fromtheIntergovernmentalPanelonClimateChange(IPCC)warnedthatunlesstheworldseesadrasticreductioningreenhousegas(GHG)emissionswellbeyondthetargetsalreadyadoptedworldwide,averageglobaltemperatureareexpectedtosurpassthe1.5?Cthresholdwithinthenext20years,causingextremeandirreversibledamagetopeopleandtheplanet.

TheIPCCreporthassharplyraisedthepressureonnationstomakefarmoreambitiouscommitmentsonclimatetransitioninadvanceoftheUNClimateChangemeetingheldinNovember2021,COP26.

Assignatories(nowover190)oftheParisAgreementlayoutplanstoachievenetzeroby2050orearlier,attentionhasalsoturnedtotheprivatesector.AsofMarch2021,morethanone-fifthoftheworld’slargestcompanieshadcommittedtoanet-zerotarget3—afigurethatisexpectedtorise.

Leftunchecked,climatechangeposesthesingle-greatestrisktoglobalsystemicfinancialstability.Climateriskaffectsdifferentcompaniesindifferentways:Heavyemitters(businessesthateitherproduceorconsumelargeamountoffossilfuels)facethechallengeofcompletelyreshapingtheirbusinessmodels;andcompanieswithphysicalassetsinareaspronetoextremeweathereventsmustidentifystrategiestomitigateriskandincreaseresilience.Buttherearealsoaspectsofclimateriskthataresystemicandfromwhichnocompanyisimmune.Inparticular,therearedifferentlevelsofriskassociatedwithdifferenttypesoftransition—fromtherelativelysmoothtotheverydisorderlytransitionwhichwillresultfrominadequateactioninthenearterm.

Climatetransitionandtheneweconomy,however,alsopresentopportunitiesformanybusinessestoinnovateandofferzero-carbonalternativestoconventionalhigh-carbonproducts,thuspotentiallydisplacingincumbentswithdisruptivebusinessmodels.Consumersareincreasinglydecidingwheretheybuy,andemployeesaredecidingwheretheyworkbasedoncompanies’commitmentstoclimatetransition.Forward-thinkingbusinessesseethesepressurepointsasopportunitiestogainacompetitiveedge.

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

6

executiveincentiveplans

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Regulatoryactionsandnetzeroplansbygeography

Whileactionsvarybyregion,thedirectionoftravelisclear

NorthAmerica

InJune2021,CanadaenactedtheCanadian

Net-ZeroEmissionsAccountabilityAct,which

laysoutaclearpathtonetzeroby2050.4

TheU.S.presidentreleasedanexecutiveordertosetaninterimcarbonreductiongoalby2030.5Somestateshaveenactednetzeroplansby2050.TheHouseandSenateeachpassedmajorlegislationoncleanenergyinnovationbetween2020and2021,pendingreconciliation.

LatinAmericaandtheCaribbean

AllcountrieshaverectifiedtheParis

Agreement,andmosthavesubmitted

theirNationallyDetermined

Contributions(NDC),theirpost-2020

climateactionplans.Somecountriesin

theregion,suchasChile,wereamong

thefirstcountriestosubmitNDCs.6

WesternEuropeandtheUnitedKingdom

TheEUhascommittedtonetzeroby2050,withsomememberstatessettingearliertargets.TheEuropeanParliamentreachedaprovisionalagreementontheClimateLawRegulationinApril2021.7Inthesamemonth,theU.K.setanambitiouscarbonreductiongoal8andcontinuestobeagloballeaderinclimatetransition.

MiddleEastandAfrica

Progressvaries.Whileanumberofcountriesin

theregionhavenotratifiedtheParisAgreement,

some(e.g.,Nigeria,MoroccoandSouthAfrica)

havetakenboldactionstowardnetzerothrough

acarbontaxandsignificantrenewableenergy

investments,9andSaudiArabiahaspledgedto

reachnetzeroby2060.10

AsiaPacific

Progressvariesgiventhemixofdevelopedand

developingeconomies.Mostcountrieshave

submittedplanstowardnetzeroby2050(China,

SingaporeandAustraliainthesecondhalfofthe

century).Somecountrieshavealsoinstituteda

carbontaxandinvestedinrenewableenergy.

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

7

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

TCFD’srecommendationsencouragecompaniestodisclosehowmetricsandtargetsaretiedtoremuneration

TheTaskForceonClimate-relatedFinancialDisclosures(TCFD)setoutafoundationalframeworkforcorporatedisclosureconsistingofgovernance,strategy,riskmanagement,andtargetsandmetrics.

Inparticular,TCFDcallsonorganizationstodisclosethemetricstheyusetoassessclimate-relatedrisksandopportunities,aswellastheirperformanceagainstsuchmetrics.Recommendeddisclosuresalsoincludescope1(direct),2(purchasedenergy)and3(suppliersandcustomers)GHGemissions,aswellashowclimateriskisembeddedintheorganization’senterpriseriskmanagementprocess.

Well-measuredanddisclosedclimatemetricsandtargetsarecriticaltodrivingclimatetransitionwithincentivizationandremuneration.BroaderadoptionofTCFD’srecommendationswillsupportthiscause.

TCFD’scoreelementsofrecommendedclimate-relatedfinancialdisclosures

Metrics

Governance

Strategy

Riskmanagement

andtargets

Disclosethe

Disclosethe

Disclosehowthe

Disclosethemetrics

organization’s

actualandpotential

organization

andtargetsusedto

governance

impactsofclimate-

identifies,assesses,

assessandmanage

aroundclimate-

relatedrisksand

andmanages

relevantclimate-

relatedrisksand

opportunitieson

climate-relatedrisks

relatedrisksand

opportunities

theorganization’s

opportunitieswhere

businesses,strategy,

suchinformationis

andfinancialplanning

material

wheresuch

informationismaterial

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

8

executiveincentiveplans

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Investors’perspectives

Theinvestorcommunityseesclimatetransitionasaninvestmentriskandanopportunity.Institutionalinvestorswanttoensurethatthecompaniestheyinvestinhaveviablebusinessmodelsinalow-carboneconomy,sothattheirlong-terminvestmentscreatesustainablevalueandgreaterrisk-adjustedinvestmentreturns.

Institutionalinvestorsarealsoattractedbytheapparent“sustainabilitypremium”onESGassets.GlobalESGassetsexceed$40trillionin2020andareexpectedtoriseabove$50trillionin2021.11

SomeinvestorsbelievethatbecauseESGandclimatecommitmentsultimatelydrivelong-termvaluecreation,conventionalfinancialandtotalshareholderreturnmeasuresmightbesufficienttodrivethedesiredattentionfrommanagement.Theybelievethattheremightnotbeaneedforanalignmenttoincentives.

However,mostinstitutionalinvestorsconsiderincentivecompensationtobeapowerfultoolinacceleratinganorganization’sclimatetransition.Byelevatingtheimportanceofthetopicintheboardroomandbyholdingexecutivesaccountableforthecompany’slong-termclimatetransitiontargets,investorsarepushingtoseedisclosureofmeaningfulclimate-relatedtargetsandhowtheyareincorporatedintoincentiveplans.

Business,investorand

Bestpracticesindrivingclimate

Marketinsights:Climatemetricsin

regulatorycontext

objectiveswithexecutivecompensation

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Westronglyquestionthenotionthat‘climatestrategyisbakedintoourremunerationplan’ifwedonotseedisclosureofmeaningfultargets.”

Ifdisclosuresarenotforthcoming,oriftargetsarenotmeaningfulenough,theninvestorswillbeonit,andmayvoteagainstExecutivePayresolutions,orevenre-electionofRemunerationCommitteemembers.”

Ifyouhavea2030or2050plan[onemissionsreduction]andit’smeaningfulforthecompany,thenwhyshouldn’ttheplanbebrokendownintoshorter-termtargetsandanchoredintotheincentiveremunerationplans?YourCEOwon’tbeherein2050,buttheycancertainlyshapetheroadmaptogetthere.”

Industrydeep-dives

9

Investors’expectationsonclimatemetrics

Thereisstrongconsensusamonginvestorsthatcompaniesshouldselectclimatemetricsthatarematerialtotheirbusinessesandthattheyshouldbemeasurable,transparent,andappropriatelystretchedwhenlinkedtoexecutiveincentives.

Forgreenhousegas(GHG)targetstobemeaningfulinthecontextoftheglobalclimatecrisis,savvyinvestorslookforthemtobesetnotaccordingtoapercentagereductionoverprioryears,butinalignmentwiththeroadmapsetbythe2015ParisAgreement.Therearevariousbodiesthatcertifysuchapproaches,including,mostprominently,theScience-BasedTargetsInitiative(SBTi)whichoffersspecificguidanceontypes,orscopes,ofemissions,dependingontheindustryandthesizeofthecompany.

BeyondGHGemissions,investorsalsolookforevidenceofperformancemetricstiedtosignificantcommercialorindustrialmilestonesascontainedincompanies’climatetransitionstrategies.Thesemightincludepercentageofenergyfromrenewablesourcesorshiftingproductmixfromcarbon-intensivetolow-carbonorcarbon-freealternatives.Thereisnoone-size-fits-allapproach,soeachcompanyshouldidentifyindicatorsthatreflectthespecificcircumstancesofitssector,geographyandbusinessmodel.

Investorsalsoexpectcompaniestodemonstratetheappropriatenessandextentofclimatemetricsthroughmarket-leadingdisclosure.Theyarecautiousnottoapplaudcompaniesjustbecausetheyhaveincludedaclimatemetricandareskepticalwhendisclosuredetailislacking.Aswiththeadoptionofanynon-financialmetric,disclosuresshouldexplainhowtheboardandmanagementevaluatethemeritsofclimatemetricsversusdilutingtheimpactoffinancialandoperationalmetrics,strikingabalancebetweenshort-termfinancialreturnsandenablingstrategictransformationaimedatdeliveringlong-termsustainablevaluecreation.

Business,investorand

Bestpracticesindrivingclimate

Marketinsights:Climatemetricsin

regulatorycontext

objectiveswithexecutivecompensation

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

“Ifaclimatemetricisusedasanunderpin,itmustbesufficientlystretchedtohaveanyimpactonacompany’sclimatetransitionplan.Shouldabonuspayoutatallifyouarenotachievingyournetzerostrategy?”

“Whatislong-termintheexecutivecompensationworldisshort-termintheclimateworld.Companiesshouldbreakdowntheirtransitionstrategyintomilestonesthatarealignedwithatypicalperiodofalong-termincentiveplan.”

“Executivecompensationcannotbedetachedfromrecruitmentandhavingtherightleadershipteaminplace.Itisimportanttohavethecultureandleadershipteamtodelivertheclimatestrategy.”

Industrydeep-dives

10

“Weworrymanyfocusonthisareaastokenismratherthanrealchange.Wehopetomakerealchange.”

“ItistheboardandtheCEOthatguidethedirection.Whathasbecomeapparentnowisthatclimateneedstobeembeddedintostrategy.”

“Mostmetricsforclimatechangeareyettobeestablishedotherthanwaste/water/emissions.Timeisrequiredtoensurethatwhatevermetricsareconsideredtietothesuccessofthebusiness.”

Climateasanorganizationalpriority

Infeedbackfrom89boardmembersacross14countriesandmultipleindustries,wefoundthatasubstantialandgrowingnumberofglobalboardmembersthinkclimatechangeisasignificantelementoftheircompanies’overallESGandstrategicpriorities.

Manyorganizationshavebeguntointegrateclimatechangeintotheirbusinessstrategies,butmostacknowledgethattheyarestillonasteeplearningcurve,withmanagementonlynowdevelopingtheskillsneededtoformulatetherightclimatestrategies.Climatedisclosures,especiallythoserelatingtohowexecutivepayislinkedtoanorganization’sclimatetransitionagenda,remainintheirinfancy.Thisisanareawhereinvestorsareurginggreatertransparency.

Boardmembersexpectclimateprioritiesandcommitmentstobecascadedtothebroaderemployeepopulationsothattheybecomeengrainedinorganizationalculture,andtheyspecificallylooktoincentivestohelpdrivethatculturalchange.Althoughaccountabilitystartsfromthetop,ourresearchindicatesthatsomedirectorsholdthepeoplefunctionresponsiblefordrivingchangeandensuringthattheentireorganizationisalignedtonewprioritiesandcommitments.

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

11

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Bestpracticesindrivingclimateobjectiveswithexecutivecompensation

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

12

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

A

funnelapproach

12toeffectiveclimategovernance

Climatetransition

Governanceof

climateissues

Managementof

climateissues

Climate

disclosure

Climate

metricsin

incentives

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Governanceofclimateissues:Boardsareconstantlychallengedbytheneedtoprioritizewhichclimatetopicsaremostimportant,wheretheyshouldbeaddressed(i.e.,whichcommittee,orthefullboard),howoftentoaddressthemandhowtoprovideeffectiveoversight.Therangeanddepthoftopicscoveredbytheboardshouldalignwithareasthatposethemostsignificantrisksandopportunities.

Managementofclimateissues:Thefunnelbeginswiththewholerangeofclimateissuesthatthecompanyisaddressing;thiswillalwaysbemuchbroaderthanwhatcanbesummarizedfortheboard.However,theboardmaydirectmanagementtoexpand,contractorreprioritizetherangeanddepthofclimateissuesitishandling.

Climatedisclosure:Thenext,narrowersubsetofclimatemattersiswhatthecompanydisclosestoinvestorsandthepublic.Itisimportantformanagementandtheboardtobeinsynchaboutwhatgetsdisclosedandhowitgetscommunicated.Theboardshouldreviewanddiscusstheprogramsandachievementssummarizedinpublicstatements.

Climatefactorsinexecutiveincentives:Theseclimatemetricsmustbeconsistentlymeasuredandtestedbymanagement,reviewedandvettedbytheboard,andshowntobematerialtothebusiness.Theymustalsobeofvaluetoinvestorsandstakeholders.Theyplayacriticalroleindrivingculturalchangeandindividualchoicesthatwilldelivertheclimateandcorporatestrategy.

Marketinsights:Climatemetricsin

Industrydeep-dives

13

executiveincentiveplans

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Guidingprinciplesforeffectiveexecutivecompensationgovernance

ThesefourPrinciplesandElementsofEffective

ExecutiveCompensationDesign13havebeen

repeatedlyvalidatedthroughworkwithcountlessorganizationsanddecadesofresearch.Thisisanimportantframeworkwhendetermininghowclimatemetricscanbeeffectivelyincorporatedintoexecutiveincentiveplans.

Purpose

Captureswhyanorganizationexists,itsmissionwithconstituents,strategyandobjectives

Accountability

Connectspay,organizationalperformanceandindividualactions

Alignment

Ensuresthatmanagementactsinthebestinterestofshareholdersandotherstakeholders

Engagement

Motivatespeople,directsbehavior,fostersattractionandretentionandcreatesperformancedifferentiation

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

14

executiveincentiveplans

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Step-by-stepguidetodrivingnetzeroambitionsthroughexecutivepay

6

Evolveandlearnover

time

Revieweffectivenessandadjustdesign,metric(s)andgoal(s)overtime

1

Alignclimatepriorities

withbusinessstrategy

Climategoalstiedto

Incorporateclearorganizational

2thenetzerovision

climateprioritiesintothefabric

ofthecompany’senterpriserisk

Articulateaclearnetzerovision

andopportunitiesframework

by2050(orearlier)andset

short-,medium-andlong-term

Theboard’sgovernanceroleistochallenge

milestonestowardthevision

managementeachstepofthewayandensure

engagementofallkeystakeholdergroups

5

Tellthestorywith

disclosures

Designandmetricsselectionshouldbedisclosedclearly,alignedwithbusinessstrategyandotherclimateandESGdisclosures

4Fit-for-purpose

incentivedesign

Referencemarketpracticeandthecompany’sownclimateobjectivestofinalizetheincentivedesignmechanismandformula

3Selecttheright

metrics

Consideringcompany’snetzerovision/milestonesandincentivedesign,determinetherightclimatemetrics

Business,investorand

Bestpracticesindrivingclimate

regulatorycontext

objectiveswithexecutivecompensation

Marketinsights:Climatemetricsin

Industrydeep-dives

15

executiveincentiveplans

?2021WillisTowersWatson.Allrightsreserved.ProprietaryandConfidential.ForWillisTowersWatsonandWillisTowersWatsonclientuseonly.

Designspectrum

14toincorporateclimatemetricsintoexecutivecompensation

Lower

impactto

organization,

easierto

implement

Greater

impactto

organization,

more

disruptive

IncentiveDesignDescription

Pros

Cons

Underpin

Includethresholdorbasiclevelofclimate

Appropriatewhenacompanyis

Thresholdclimateperformancemay

performancerequiredforsomeorallofthepayout

first