The link between CEO pay & ESG investing evolves

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman discuss Former Bridgewater co-CEO Eileen Murray’s recent comments on CEOs meeting ESG targets.

Video Transcript

JULIE HYMAN: For years now, there has been a lot of talk about ESG and holding companies and investments to particular standards, but really, call it in the past year, there's been a little bit more attention to consequences, right? Whether it is the activist campaign in Exxon or some other measures, and Brian Sozzi also has some thoughts and has been talking to some folks about consequences or accountability when it comes to ESG.

BRIAN SOZZI: Right, Julie, and your Exxon example is spot on. And that is probably the best example of executives not really delivering any form of ESG plan to its board. And if they did, certainly not executing upon it because you are, in fact, an oil company. Now yesterday, we talked at length with Bridgewater's former co-CEO Eileen Murray. And I really like what she said about what should happen if a CEO doesn't hit ESG goals.

EILEEN MURRAY: I think that progress is what's important, not-- it's a journey, not a destination. And so I think that CEOs need to be held accountable and-- for their goals over time. And I think that if they don't meet those goals over time, yeah, they should be shown the door. That's the whole point of being a CEO, to basically move the company forward based upon its strategic goals and objectives, and to do that in a manner that is responsible and is under the auspices of good governance. And if a CEO doesn't perform over time, I don't think they should remain in the role.

BRIAN SOZZI: And these are just some of the issues that Murray is thinking about. Now she sits on the board of HSBC, Guardian Life Insurance. She's also the chair of FINRA. But look, some of these executives, to her point, should be shown the door. Because if you're not delivering on ESG goals and many other goals, why do you still have that top job?

And let's keep in mind, too. Look, CEOs earned big-time cash last year. According to [INAUDIBLE] data, median CEO pay for S&P 500 companies hit a record $12.7 million, the average median CEO for S&P 500 companies pulling $12.7 million last year in total compensation. That was up 5% year over year. The average worker digging that ditch or looking for gold or whatever they might do in the office or showing up in the office, or if they're working from home last year, that average worker pulled in $71,000 last year. That was a 2% year over year decline.

So you're still seeing CEO pay compared to the average worker, that gap continues to widen. And I think it really shows that a lot of the executives that even if they're not hitting the ESG goals, they're still getting big, fat compensation. I think it's time for some accountability.

JULIE HYMAN: Yeah. forget about ESG. I think there's a long-standing problem about sort of coziness between boards and executives that prevents accountability on a host of different issues, aside from ESG as well. So here's hoping that will start to improve.