Cevian Capital AG
Cevian Capital: Cevian Capital Requires ESG Targets in Management Compensation Plans
DGAP-News: Cevian Capital AG
/ Key word(s): Strategic Company Decision
Press Release Cevian Capital Requires ESG Targets in Management Compensation Plans Stockholm, Zürich and London, 03.03.2021 – In today’s world, strong ESG principles and performance are fundamental to sustainable and long-term value creation for all stakeholders, including shareholders. Most companies are making at least some progress in various areas of ESG, thanks in part to their own initiatives and pressure from investors, asset owners and other stakeholders. However, such progress is commonly piecemeal, uneven, or half-hearted. In many cases, box checking is used to give the perception of progress when real advances are not being made. In other cases, laudable statements are made about long-term intentions, such as on carbon emissions, but are not supported by tangible shorter-term measures. In order to accelerate and secure meaningful ESG progress, there must be strengthened alignment between the desired outcomes and the companies and individuals we expect to produce them. Significant, measurable and transparent ESG targets should form part of senior management compensation plans for all European public companies. Therefore, Cevian Capital is today calling upon European public companies to start, or accelerate, the development of such ESG targets for integration into compensation plans to be put to shareholder vote at AGMs in 2022. Lars Förberg, Cevian Capital Managing Partner and co-founder said: Christer Gardell, Cevian Capital Managing Partner and co-founder said: Cevian is raising this now, as most companies approach 2021 shareholder meetings, to give companies clear and reasonable notice of our expectations: Companies should use the coming quarters to consider and develop their own proposals. They should consult with shareholders on tangible proposals for incorporating ESG into incentive plans in time for their AGMs in 2022. To advance this, Cevian will hold companies and their directors to account through its engagement, and, if necessary, a combination of voting on director elections and compensation plans, as well as advancing shareholder motions on this issue, as appropriate. Today, only a small minority of companies have a link between ESG and management compensation that is fit for purpose. Some companies have inserted ESG into a long list of items in opaque “individual performance” categories. Others have “ESG targets” that are focused specifically on important but narrow metrics such as employee health and safety. This is insufficient to meaningfully drive companies to capture the opportunities and address the challenges of ESG. We believe it is in the interests of all stakeholders, including asset owners and other long-term investors, for companies to create this alignment and transparency and invite others to adopt this stance. Background Cevian’s conviction is that there is no conflict between “values” and “value” – in fact in today’s world, they are fully symbiotic. ESG considerations impact companies’ business opportunities, revenues, costs, risks, employee engagement, societal attitudes and corporate valuations. The extent of this impact will increase over time. Thus, Cevian advances ESG initiatives at its companies for two reasons:
ESG considerations are integrated into Cevian’s fundamental analyses to identify investment opportunities, value-creation potential and possible risks. Cevian advances ESG initiatives to increase the long-term and sustainable value of its companies. ESG is a core part of Cevian’s value-creation toolkit (alongside its other value-creation tools, e.g. improvements to operations, corporate strategy, organizational structure and financial management). For Switzerland:
Cevian Capital acquires significant minority ownership positions in European public companies and uses its expertise to advance long-term and sustainable value creation. It works in a hands-on and constructive manner to advance improvements at its portfolio companies in operations, corporate strategy, organizational structure, financial management, corporate governance and ESG more broadly. These initiatives are designed to increase their long-term competitiveness, profitability and sustainability, and to create real long-term value that benefits all stakeholders, including shareholders. Cevian was founded by Lars Förberg and Christer Gardell in 2002 to continue the active ownership investment strategy they initiated and have executed together since 1996. Cevian’s long-term capital base is provided primarily by leading pension funds, endowments, foundations and sovereign wealth funds. Its current investment fund was launched in 2006 and is an evergreen vehicle. Cevian Capital is advised by Cevian Capital AB (Stockholm), Cevian Capital AG (Zürich) and Cevian Capital LLP (London).
03.03.2021 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |