Human Capital Remains Key Feature in Executive Incentive Plans Despite ESG Reframing, Wtw Study

By GlobeNewswire On Jan 23, 2026

U.S. investors and the market continue to reframe environmental, social and governance (ESG) policies and initiatives to focus on sustainable and responsible business practices that drive business value creation. As a result, companies have refined their approach to executive incentive plans by establishing quality metrics that are aligned with stewardship of shareholder value, especially with a focus on human capital, according to a new global study by WTW , a leading global advisory, broking and solutions company. The annual study also revealed the prevalence of metrics related to diversity, equity and inclusion (DEI) declined in light of recent Court rulings and Executive Orders, yet human capital remains the most prevalent non-financial metric category in executive incentive plans.

Despite continued reframing, three-quarters of S&P 500 companies (76%) reported in this year’s proxies that they incorporated at least one ESG metric in their executive incentive plans, a 1% decline compared to last year. Only 9% of these metrics are included in the long-term incentive (LTI) plans.

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Globally, 80% of companies incorporated at least one ESG metric in their executive incentive plan, a moderate decrease from the previous year. Three-quarters of global companies reported using ESG measures in their short-term incentive (STI) plans while 32% reported using ESG measures in their LTI plans.

According to WTW’s study, the prevalence of metrics related to DEI dropped in the U.S. considerably as a result of Court rulings and policy shifts. However, based on disclosures filed in 2025, 34% of S&P 500 companies continue to pay a portion of executive incentives based on these metrics, a decline from 55% last year (a 21% decline). Furthermore, 23 (5%) of the S&P 500 companies disclosed plans to remove DEI metrics from their executive incentive plans for the current plan year. This trend is expected to continue as most companies do not disclose forward-looking changes to their incentive programs.

Human capital metrics remains a top business priority despite less emphasis on DEI. In North America, 71% of companies included at least one people-related metric while 81% of companies in Europe did. Some of the common people-related metrics in executive incentive plans include employee engagement, succession planning, culture and employee retention.

“The broad use of people metrics is consistent with the focus of boards as they continue to prioritize their role in the oversight and governance of people risks, investments and opportunities,” said Kenneth Kuk, senior director, Work and Rewards, WTW. “They are concentrating on developments in labor markets, skill shortages, employee retention, and labor costs, all of which they view are critical to company strategy and competitive advantage amidst geopolitical shifts and technology-driven business transformation.”

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