Diageo has eliminated environmental, social, and governance (ESG) targets previously linked to executive compensation, signaling a shift in priorities under its new chief executive. The decision means that long-term incentives for CEO Dave Lewis and his senior team will now be determined solely by the company's financial performance.
Last year, ESG targets accounted for 20 percent of the metrics used to calculate executive bonuses at the FTSE 100 company. These included objectives related to ethnic diversity representation and programs aimed at educating the public on the risks of underage drinking and driving under the influence.
This move by Diageo is the latest in a trend of major corporations re-evaluating their commitment to ESG targets tied to executive pay. Companies such as BT and Haleon have also reduced or removed diversity targets from their award schemes. Additionally, fashion label Burberry has postponed its net-zero emission targets by a decade.
Dave Lewis, who took the helm in January, has introduced a £740 million cost-cutting initiative expected to unfold over the next three years. His strategy involves a renewed focus on canned cocktails as a means to revitalize sales for the maker of Guinness.