Executive Remuneration in the C25 - Financial Incentives, ESG Integration, and Performance Trends: Assessing CEO Compensation Structures and the Role of ESG in Executive Pay

This report examines CEO remuneration across Danish C25 companies, focusing on the compensation structure, specifically remuneration linked to financial vs. ESG-related KPIs. The report highlights significant disparities in incentive schemes: while firms such as DSV and Novo Nordisk integrate ESG-related KPIs with a weighting comparable to financial performance indicators, others, such as Bavarian Nordic and Demant, rely exclusively on financial performance-based remuneration.
ESG-linked remuneration remains secondary to financial KPIs. While 52% of firms included short-term ESG targets, long-term ESG incentives are adopted by only 17%. In 2024, 50% exceeded short-term ESG targets, while 25% underperformed, showing a decline from 2023. Long-term ESG incentives, when present, were largely met, with 75% exceeding targets.
The findings suggest executive pay remains primarily driven by financial performance, with ESG incentives often set at attainable levels. The latter raises concerns about whether ESG targets serve less to drive substantive progress and more to secure additional executive compensation. Hence, this report calls for stronger ESG integration to ensure executive remuneration aligns with long-term sustainability objectives.