COMP NEWS – Mastercard is expanding its policy of tying executive bonuses to environmental, social, and governance (ESG) goals to apply to all employee bonuses. The company hopes that this will encourage all employees to get behind the current ESG programs that are in place.

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 is focusing on reducing its carbon footprint as well as improving pay equity amongst its employees. Progress toward these goals will affect the compensation amount for employee bonuses.

“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.

However, based on the previous ties to executive bonuses, it is unlikely that ESG goals will play too significant of a role in Mastercard’s employee bonus amounts, as it could only raise or lower bonus payouts by up to 10 percent. The remainder will still be based on other aspects of individual and company performance.

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.

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