Dominion Resources Executive Comp 2013
|Company||Dominion Resources, Inc.|
|Subject(s)||Governance; Link Executive Compensation To ESG|
|Resolved Clause Summary||Executive compensation linked to ESG|
|Supporting Memo||Download PDF|
RESOLVED: The shareholders of Dominion Resources request the Compensation, Governance and Nominating Committee, when setting senior executive compensation, include sustainability as one of the performance measures under the Company’s annual and/or long-term incentive plans. Sustainability is defined as how environmental, social and financial considerations are integrated into corporate strategy over the long term.
We believe that the long-term interests of shareholders, as well as other important constituents, are best served by companies that operate their businesses in a sustainable manner focused on long-term value creation. As the recent financial crisis demonstrates, those companies that operate with integrity and a focus on the long term are much more likely to prosper than ones dominated by a short-term focus. The best means of demonstrating a company’s commitment to sustainability is through incorporating it as a performance measure in the Company’s incentive plans.
We note that Dominion has affirmed its commitment to the concept of sustainability. Dominion’s Corporate Environmental Policy states:
The company is fully committed to meeting its customers’ energy needs in a manner consistent with a clean environment. We believe it is both good business practice and our duty to protect the natural and cultural resources of the communities we serve. In keeping with this belief, it is our policy to conduct our business in an environmentally responsible manner that protects the public, our employees, and the earth that we all share.
While these words are laudable, incorporating them into the Company’s senior executive compensation program would give them real impact. The 2012 Proxy does not disclose any specific sustainability performance measures, in particular reducing carbon emissions, in the Company’s incentive plans. Addition of sustainability to the performance incentive plans would ensure that long-term sustainability was given appropriate weight in long-term planning and measurement of executive performance.
Many companies have added sustainability to the metrics for determining executive compensation. Intel, Xcel Energy, Alcoa, ING, National Grid, Shell, and Suncor Energy are among the US companies tying executive compensation to sustainability performance, according to the report, “Linking Executive Compensation to Sustainability Performance.” Intel, which has been providing a link between environmental, social and governance (ESG) metrics and compensation since 2005, includes nearly 300 specific issues for executive evaluation, which include the company’s carbon footprint. Alcoa has compensation incentives that reduce carbon emissions and also provides clear disclosure of its ESG metrics and executives’ associated performance against them in annual proxy filings. British utility company National Grid partly bases executive compensation on meeting targets for reducing carbon emissions. Xcel Energy makes certain annual incentive payments dependent on green house gas emission reductions.
As an energy company, Dominion drives local energy development and is also one of the largest carbon emitters in the state. Since energy development and reduction of carbon are integrally tied to both environmental and economic long-term success, Dominion strongly impacts both local and national environment and economy. The example the Company sets by showing commitment to sustainability and carbon emission reduction is thus even more significant.