ESG Pay Metrics are Out, But What's In?
Fewer metrics and back to basics with EPS and TSR — and maybe a dash of AI
Airbnb’s proxy out last week saw it strip out all of its “stakeholder” metrics for 2026 to focus on just revenue growth and margins in its short-term executive pay. It is reflective of the trend to simplify pay plans, scrub what seems ESG-related, and focus on financials — especially for companies where share performance has lagged behind. While including sustainability metrics may have signaled a company’s “purpose,” Airbnb execs earning perfect 100% scores on every category in 2025 and near-perfect in 2024 also shows how easy it is to game the goals.
Placing this in context, so far 80 of the S&P 100 have issued a 2026 proxy. From this, certain trends are emerging — and they point in a consistent direction.
The ESG cull is real
Across the S&P 100 companies that have reported, sustainability metrics are the single most-removed incentive pay category: a net reduction of 10 across the index, with zero companies adding new sustainability metrics.
The removals are concentrated in short-term incentive (STI) plans, where ESG metrics had been easiest to introduce in the first place: as low-weight modifiers, scorecard line items, or qualitative adjustments typically worth 5–10% of the STI. Coca-Cola’s 2026 showed it redistributed its sustainability-related pay metrics equally to Revenue, EPS, and Free Cash Flow. RTX is the most dramatic single case: its STI dropped from six metrics to two — Adjusted Net Income and Free Cash Flow — eliminating Employee Retention, Total Representation, GHG Emissions, and Water Usage in one sweep.
DEI and human capital metrics are following the same path. RTX, Coca-Cola, Deere, and UnitedHealth all removed diversity, inclusion, or workforce metrics from their incentive designs. In most cases, the language in the proxy is oblique — references to “strategic and culture goals” replace explicit diversity targets — but the directional read is unambiguous.
Back to financial basics… mostly
The substitution is as telling as the removal itself. Across the 80 companies, the net additions by metric category are: EPS (+4), AI/New Tech (+4), and Revenue/Sales (+3). The implicit message from boards is clear — pay should be anchored to what can be objectively measured, audited, and defended to shareholders.
EPS additions are almost entirely in long-term incentive (LTI) programs, where companies are increasingly making earnings per share the primary or co-primary anchor for three-year performance grants. EPS is at least a harder target to game. Companies can use share buybacks to juice EPS by reducing the share count. The widespread use of “adjusted” or “non-GAAP” EPS as the actual measurement metric adds another layer of discretion. Still, as a replacement for a sustainability scorecard that executives could score 100% on while the stock fell, it is a more credible anchor.
Relative Total Shareholder Return (rTSR) continues its ascent. It was present in 46 of companies with disclosed LTI data in 2024 and 51 in 2025 — roughly two-thirds of those running formal performance equity programs. Several companies that previously used absolute financial metrics as standalone LTI drivers (ROCE, ROIC, absolute EPS) are folding them into rTSR-primary designs or moving them to modifier status.
The overall count picture, however, is more nuanced than a straight simplification story. Of the 75 companies with comparable data across both years, 57% made no net change to their total metric count, 27 reduced, and 11 added. The median company is staying put — it’s the active changers on both ends that are interesting.
Underperformers are simplifying
The clearest test of whether pay metric changes reflect performance pressure — rather than political or reputational positioning — comes from looking at the 30 companies that have disclosed details on their 2026 incentive plans. While many companies are cutting back on pay metrics, the companies whose shares have underperformed over the past year were much more likely to have pared back metrics for 2026. An interesting side note is that the companies that underperformed in 2025 were also more likely to have added new metrics in 2025 versus the year before – something to unpack another day…
Among the 15 underperformers in this cohort (those below the S&P 100’s median 1-year return of 15%), 47% cut their net metric count. Among the 15 outperformers, only 27% did so. Underperformers were also more likely to change their plans in any direction — 67% made some adjustment compared to 40% of the stronger performers.
The companies doing the cutting are recognizable. Uber stripped five metrics from its STI in a single move, replacing a wide scorecard with Non-GAAP EPS and Gross Bookings. Honeywell eliminated its performance share unit program entirely. Home Depot, Verizon, Intuitive Surgical, and 3M each made smaller simplifications. The pattern is boards acknowledging — through the structure of pay itself — that the prior year’s complexity was not working, and that executives need clearer, harder targets.
The three underperformers that added metrics rather than cutting are also instructive: Salesforce (down 33%), Danaher (down 10%), and Lockheed Martin (up 7.5%) all made structural additions. Salesforce added and updated its AI product metrics; Danaher added RSUs and an adjusted EPS component to a previously TSR-only LTI.
Lockheed Martin is very interesting in that it is making changes to its 2026 pay program to directly address the Executive Order (EO) titled “Prioritizing the Warfighter in Defense Contracting.” The EO prohibits tying incentive pay to short-term financial metrics that can be manipulated by capital allocation (like buybacks) and requires a pivot to operational metrics, including on-time delivery. So clearly the current administration has a view on playing games with executive pay metrics!
The future is AI
The next trend may be the appearance of AI-specific metrics in executive pay.
Countering that it will not be part of the SaaS-pocalypse in the face of its significant share price drop, Salesforce added AI-related metrics for its FY2026 pay (the company has a Jan. 31 year end). It then further refined its FY2027 LTI option award to split out Agentic Work Units (AWUs) and Agentforce & Data Cloud 360 ARR.
While sustainability-linked pay may no longer be on trend, there’s always AI to signal a company is with the times.
Analysis based on proxy statements filed by 80 S&P 100 companies as of 28 April 2026. Metric classification uses keyword matching on disclosed incentive plan descriptions and is conservative. Data compiled using Canbury Insights’ ProxyPro platform.
This post is provided for informational purposes only and does not constitute investment advice, financial guidance, or a recommendation regarding how to vote on any proxy proposal. While the analysis and figures presented are derived from public SEC filings and company reports and are believed to be accurate at the time of publication, they are provided without guarantee or warranty. Readers should conduct their own independent research and consult with a qualified professional before making any financial or voting decisions.