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Mastercard to Tie All Employee Bonuses to Meeting ESG Goals

Mastercard to Tie All Employee Bonuses to Meeting ESG Goals

Mastercard Inc. said it’s expanding an earlier push to tie executives’ bonuses to the company’s environmental, social and governance goals. 

The firm will now link all employees’ compensation to those goals after earlier only doing so for those at the executive vice president level and above, Chief Executive Officer Michael Miebach said in a memo to staff on Tuesday. 

Mastercard will focus specifically on those targets it has toward reducing its carbon emissions, improving financial inclusion and reaching gender-pay parity. The Purchase, New York-based company will incorporate the goals into its so-called annual corporate score, which also takes into account revenue and earnings, and is one of the metrics used in determining bonus levels. 

“We’re tying compensation to emissions, financial inclusion and the gender pay gap because we have a substantial impact in these areas and because they closely align with our vision,” Miebach said in the memo.

Mastercard in November committed to reach net-zero greenhouse-gas emissions by 2040, a decade sooner than it had previously planned as it reduces its carbon footprint. The company also has made progress toward closing its gender pay gap, with female employees now making 93 cents for every dollar male employees earn on average, an improvement from the 92.4 cents it reported in 2020.

In its proxy statement last year, Mastercard said the move to formulaically link executives’ annual incentives to its environmental, social and governance goals could raise or lower payouts by as much as 10 percentage points, depending on how the firm performed on those targets.

©2022 Bloomberg L.P.