This report examines CEO remuneration across Danish C25 companies, focusing on the compensation structure, specifically remuneration linked to financial vs. ESG-related KPIs. Despite the fact that ESG is gaining traction, financial performance still drives the majority of executive compensation. Half of the companies include short-term ESG targets, but only 17% have ESG tied to long-term incentives—and that number hasn’t changed since 2023. Even when ESG goals are included, they’re usually easy to hit. In 2024, 75% of companies exceeded their long-term ESG targets, and none fell short. Financial KPIs, on the other hand, are consistently met or surpassed—suggesting these targets are designed to pay out.
What does this tell us? At present, ESG-linked compensation often appears more symbolic than impactful. For ESG to become a meaningful part of executive pay, companies must adopt more ambitious, measurable targets—and ensure they’re directly tied to leadership accountability.
Report Structure:
Executive Summary
- Key insights and recommendations
I. Components of CEO Remuneration
- Structure of executive pay (fixed vs. variable)
- Trends in base salary and additional compensation
- Year-over-year comparisons (2023–2024)
- Company-specific examples (DSV, Novo Nordisk, ISS, Rockwool)
II. Remuneration Targets
A. ESG Inclusion in CEO Pay
- ESG target adoption (short-term vs. long-term)
- Achievement distribution for ESG and financial KPIs
B. Comparison of Financial and ESG KPIs
- Short-term targets: 2023 vs. 2024
- Long-term targets: 2023 vs. 2024
C. Remuneration Tendencies
- Trends in overperformance
- ESG underperformance and stagnation
- Long-term vs. short-term incentive structures
III. “Good” ESG Remuneration Targets
A. Defining Effective ESG Targets
- Characteristics of strong vs. weak ESG KPIs
- Alignment with strategy and measurability
B. Environmental ESG Targets
- Carbon & Climate examples
- Waste reduction goals
- Company-specific cases (Novo Nordisk, Ambu, Vestas, Tryg)
C. Social ESG Targets
- Gender diversity
- Workplace safety
- Target evolution from 2023 to 2024
IV. Preliminary Findings
- Financial KPIs dominate CEO pay
- ESG incentives remain static
- ESG target quality varies significantly
- ESG pay is not a core driver of performance
For more information, please reach out to Kristjan Jespersen (kj.msc@cbs.dk).
