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Apr 2018

Value creation, CEO incentives and remuneration: evidence from integrated reporting adopters

This study is motivated by the growing importance of Integrated Reporting <IR> as an innovative reporting initiative to foster representation of sustainable value creation over time.

The project aims to collect evidence on and analyse the current practices of <IR> and Integrated Thinking, specifically, with a primary focus on executive remuneration and incentives. In particular, we assess whether the following hold true:

  • First, compared to non-adopters, <IR> adopters are more focussed on long-term, non-financial goals as a first signal of the incorporation of Integrated Thinking in firms’ practices; 
  • Second, <IR> adopters have a more ‘integrated strategy and management’, namely, an overarching sustainability oriented vision and day-to-day decision-making processes as additional evidence related to Integrated Thinking. 
  • Third, firms that embrace <IR> and Integrated Thinking have higher Integrated Performance (economic and ESG). 
  • Fourth, <IR> adopters use IR as preferred reporting vehicle to be transparent regarding executive remuneration, incentives, and the link between executive compensation and firm ability to create value in the short, medium and long term.

92% of adopters link CEO compensation to at least one non-financial ESG (environmental, social and governance) target.

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Value creation, CEO incentives and remuneration: evidence from integrated reporting adopters