Diageo Removes Responsible Drinking Targets from Executive Bonuses
Diageo has removed responsible drinking and diversity targets from its executives' long-term incentive plans as part of a broader strategy shift under CEO Sir Dave Lewis. Previously, these environmental, social, and governance (ESG) goals accounted for 20% of performance metrics in executive compensation. The company will now focus solely on financial indicators such as earnings per share growth, free cash flow, and return on invested capital to determine bonuses. This move aligns with a growing trend among corporations reducing the emphasis on ESG criteria within executive pay structures. Companies like BT and Haleon have also taken similar steps in recent years. Diageo's decision comes amid weak sales performance, including a 2% decline in organic sales for the year ending June, driven by underperformance in North America and China. Despite removing these targets from compensation metrics, Diageo stated it will continue its responsible drinking initiatives and retain overall diversity goals outside of executive pay. The shift is part of an extensive restructuring plan expected to generate $1 billion annually.
Topics: Diageo diversity ESG executive bonuses