Clorox Links Executive Pay to Sustainability

Compensation awards for Clorox's CEO, CFO, and other executives will be tied to meeting environmental, social and governance goals.
Matthew HellerOctober 3, 2019

Clorox has unveiled a new strategy for “profitable, sustainable and responsible growth” that includes tying the compensation of its CEO, CFO and other executives to meeting environmental, social and governance (ESG) goals.

Under its IGNITE strategy, the consumer products company is aiming to, among other things, reduce by 50% the virgin plastic and fiber in its packaging by 2030, make all packaging 100% recyclable, reusable or compostable by 2025, and reduce its greenhouse gas emissions.

The strategy “is supported by an unwavering commitment to strong corporate governance, overseen by the board of directors, including compensation awards tied to elements of the ESG goals for members of the Clorox Executive Committee,” Clorox said in a news release.

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The 14 committee members include CEO Benno Dorer, who earned more than $9.3 million in fiscal 2019, and CFO Kevin Jacobsen, who made nearly $2.3 million. They were awarded incentive plan bonuses of $1.2 million and $331,650, respectively.

As MarketWatch reports, Clorox’s “decision to tie executive pay to sustainability goals follows in the footsteps of oil companies Royal Dutch Shell and BP.”

“Now more than ever, a broad spectrum of stakeholders, from investors to consumers, from customers to employees, are increasingly expecting companies to lead in driving positive environmental, social and ethical change, while ensuring they create and deliver value,” Clorox General Counsel Laura Stein said.

However, MarketWatch noted, “Corporate sustainability efforts have had a mixed record.” In a 2018 survey of 297 global companies by Bain, for example, 47% said they had failed to meet even half of their sustainability targets, while only 4% reported achieving or exceeding their goals.

Clorox also said it will “advance the science behind alternative approaches to animal testing,” with the “ultimate goal” of eliminating U.S. Environmental Protection Agency regulations that mandate animal testing for disinfectants.

“As a mission-driven company, it’s important for us to continue integrating ESG into our overall business strategy,” Dorer said.