IOPA Investor Brief on Executive Compensation

Investor Guidance

2023

When pharmaceutical companies set targets for executive performance, and base the amount of their compensation on meeting those targets, they often use profit metrics that are not based on Generally-Accepted Accounting Principles (like “Adjusted Earnings Per Share”) which routinely filter out legal settlement costs and fines from the end result. By excluding the $5 billion in opioid charges from the calculation of its key earnings metric (“Operational Earnings Per Share”), for example, the board at Johnson & Johnson inflated CEO payouts by more than $2 million in 2019 and 2020.

We believe this is a salient issue for investors because performance metrics for executives help incentivize the right level of risk-taking. If they routinely filter out the real-world results of that risk-taking, the incentives are skewed and executives are not held accountable for their decisions.

We support compensation arrangements that incentivize senior executives to drive growth and shareholder value while safeguarding company operations, corporate reputations over the long-term, and the people, communities and environment affected by executive decisions.

Julie Wokaty

Download the brief

Engaging Asset Managers to Responsibly Steward Funds and Assets, and the Systems that Support Them

The ability of asset owners to meet their long-term financial goals is severely challenged by risks such as climate change, persistent income inequality, and the inequitable delivery of healthcare that threaten our planet and its people. Because they impact all economic participants and demonstrate the interdependence of all players, these risks are considered systemic. They […]

Sea-Ze the Day: How Investors Can Reduce Exposure to Human Rights Abuses in Seafood

This new report outlines the widespread human rights abuses in seafood supply chains across major U.S. supermarkets. This is a critical issue for investors. The report details the significant risks that human rights violations pose to supermarkets in investors portfolios. The report provides: Access the full report to understand how to address these critical supply […]

The Importance and Risks of Transition Minerals in Building a Just Transition

ICCR Climate Crisis Issue Brief One, June 2024 The transition to carbon-neutral economies will require a vast quantity of minerals. In essence, we must shift from a fossil fuel-intensive economy to one based on minerals, which are needed to harness and store the energy in natural systems. Due to their importance in new technologies, economic […]

Investor Guidance on Responsible Contracting

This guidance is a resource for investors to use when discussing responsible purchasing and contracting issues with companies.

Leading Lobbying Practices to Drive 1.5C Policy Action

The need to reduce GHG emissions to limit warming and reach net zero by 2050 or sooner has never been more urgent yet climate progress has been hindered for decades by aggressive lobbying on the part of corporations (mainly in the oil & gas sector) and their trade associations. Because investors understand that corporate climate […]

Methods matter: What steps are companies taking to help curb AMR by manufacturing responsibly?

A new report published by the Access to Medicine Foundation. It is becoming increasingly clear that releasing antibiotic waste into the environment can drive antimicrobial resistance (AMR). In helping to curb this rapidly rising global health threat, pharmaceutical companies can ensure the production of their lifesaving antibiotics does not inadvertently contribute to drug resistance. A new […]

ICCR’s Statement of Investor Expectations for Job Standards & Community Impacts in the Just Transition

As long-term institutional investors we recognize that the global shift to net-zero requires an unprecedented economic transformation that will impact industries, jobs, and communities. We call on companies, investors, and policymakers to ensure this is a just transition that supports a racially and economically equitable, decarbonized economy by prioritizing “high-road” jobs, respect for human rights, […]

Human Rights Risks in Xinjiang Uyghur Autonomous Region: Practical Guidance for Investors

The Investor Alliance for Human Rights has released guidance on the human rights crisis in Xinjiang Uyghur Autonomous Region in China (Uyghur Region). Since 2017, the Chinese government has placed an estimated 1.8 million predominantly Turkic and Muslim-majority peoples, including Uyghurs, Kazakhs, Kyrgyz, and Hui, in detention camps, prisons, and factories. “Human Rights Risks in […]

Investor Engagement Guidance On Methane

Due to their climate and health impacts, methane emissions have drawn increasing scrutiny from the public, environmental and health groups, and global policymakers. Unfortunately, a dearth of accurate emissions disclosure, conflicting policy stances and variable operational quality of methane management by the industry interfere with investors’ efforts to gain clarity on climate risks within their portfolios. […]

IOPA Investor Brief on Executive Compensation

More Investor Guidance