Improved Remuneration Structures

Equities and Bond Portfolios

Triodos Investment Management promotes balanced and fair remuneration policies and practices by limiting excessive CEO pay and reducing the pay gap in listed companies. Over the past three years, we have therefore engaged with companies in our Impact Equities and Bond portfolios that have been identified as having excessive remuneration.

In 2023, we engaged with four companies for the third and last time: Adobe, Nike, Cisco and Prologis. All four have made improvements since we started engaging with them, as shown in our scoring sheet.

Since all four companies have improved their remuneration structure, now achieving satisfactory scores, we decided to keep them in our investable universe after successful engagement. However, challenges and room for improvement remain. This is mainly related to the level of CEO pay and narrowing the gap between CEO and median worker pay.

Remuneration improvements



Most important improvements made

Adobe has introduced an ESG metric in its short-term incentive plan (STIP), related to people, organisation and culture, including diversity and inclusion. CEO-specific goals are: (1) role model a culture of feedback, learning and growth; (2) continue to make progress toward Adobe’s representation goals; and (3) communicate, inspire and engage to activate Adobe’s values and culture.

Remaining areas for improvement

  • Adobe does not address shareholder concerns on remuneration in its proxy statement.
  • The objectives as part of Adobe’s ESG metric are rather vague and poorly quantified.
  • Adobe has no performance metrics related to cash flows and capital efficiency.
  • Performance-based payout in the long-term incentive plan (LTIP) is solely related to relative total shareholder return (TSR). We would prefer other metrics, and more diversity in metrics.


Most important improvements made

  • Cisco has extended its claw-back policy to the STIP awards, whereas before it applied only to the LTIP. In addition, the policy is not limited to financial misstatements but now also applies to ethical misconduct.
  • In the STIP, Cisco has reduced the maximum potential payout as a percentage of target from 240% to 200%. This results in a lower chance of excessive payments.
  • Cisco has included an ESG metric in its STIP. Remuneration is now partly based on the CEO’s efforts towards providing an inclusive, safe, and healthy work environment, as part of Cisco’s ‘Conscious Culture’ program. This metric is included in the CEO’s individual performance factor (IPF) scorecard.

Remaining areas for improvement

  • It is not exactly outlined how the ESG factor score is derived.
  • Cisco has no performance metrics related to capital efficiency.


Most important improvements made

  • Nike will over time increase the proportion of performance-based pay in the LTIP mix from 30% to 50%.
  • Nike has integrated an ESG metric in its LTIP. This metric considers Nike’s progress towards its 5-year Purpose targets. These include increasing the representation of women and racial and ethnic minorities, operating more sustainably with respect to carbon, waste, water and chemicals, and improving responsible manufacturing in its supply chain. As we also engage with Nike on the payment of living wages in its supply chain, it is positive that CEO pay is now also partly tied to this topic.

Remaining areas for improvement

  • The Board has discretion to adjust performance metrics and award payouts after the performance period has ended.
  • Options still make up a considerable part of the LTIP payout. Due to its non-linear payout structure, this may encourage excessive risk-taking.
  • Nike has no performance metrics tied to cash flows and capital efficiency.
  • Performance-based payout in the LTIP is solely tied to relative TSR (notwithstanding the ESG adjuster). We would prefer other metrics, and also more diversity in metrics.
  • The payout of the ’People & Planet’ modifier is holistic and not quantitative.


Most important improvements made

  • There was shareholder backlash at the 2023 AGM after the CEO was awarded a USD 48 million payout. In response, Prologis has decided to cap the CEO annual payout at USD 25 million. Although still high, this is a step in the right direction.
  • The Prologis Outperformance Plan was eliminated, simplifying the company’s remuneration structure.
  • The company has become more transparent in disclosing how exact payouts are derived under its incentive plans.
  • LTIP awards are no longer at the discretion of the board.
  • ESG now has a 10% weight in the STIP. Before, the weight was more arbitrary.
  • Prologis has extended its claw-back policy to its STIP awards, whereas before it applied only to the long-term awards. Also here, the policy is not limited to financial misstatements but also applies to ethical misconduct.
  • Due to the addition of a new member, we now consider the Compensation Committee to be majority independent.

Remaining areas for improvement

  • Prologis can further simplify its remuneration structure by also eliminating the PPP.
  • Increasing the proportion of base salary, which is now a symbolic USD 1.

The other companies we engaged with in 2023 are Gen Digital (for the second time) and AT&T (first time, new in portfolio). And although the company was not part of our remuneration engagement program, we also discussed executive remuneration with Corbion. We are the lead investor on behalf of the Dutch institutional investor organisation Eumedion. Some positives are that Corbion now has:


  1. incorporated FCF as a new STIP metric,
  2. increased the weight of ESG in the LTIP (from 12.5% to 25%),
  3. increased the weight of ROCE in the LTIP (from 12.5% to 20%),
  4. decreased the weight of relative TSR in the LTIP (from 35% to 30%),
  5. removed full accelerated vesting of the LTIP in case of a change of control within the first term of appointment of an executive.

Continued monitoring

Even if we concluded our engagement on this topic with several companies last year, we will keep monitoring their pay levels and structure. As with the companies still in our engagement program, we will keep urging them to reduce the gap between executive pay and median worker pay. In the end, that’s our main objective.

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