Sempra Executive Comp 2011
|Filer||Laborers' International Union of North America|
|Resolved Clause Summary||Executive compensation linked to ESG|
RESOLVED: That the shareholders of Sempra Energy (“Sempra” or “Company”) request the Board's Compensation Committee, when setting senior executive compensation, include sustainability as one of the performance measures for senior executives 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 boards of directors and management that operate their companies with integrity and a focus on the long term are much more likely to prosper than ones that are dominated by a short-term focus. The best means of demonstrating a company’s commitment to the concept of sustainability is through incorporating it as a performance measure in the Company’s annual and/or long-term incentive plans.
We note that the Company has consistently affirmed its commitment to the concept of sustainability. Sempra’s 2009 Corporate Responsibility Report is entitled, “Powering Our Changing World.” In it the Company states:
Powering Our Changing World is Sempra Energy’s second annual corporate responsibility report. It describes our performance on key environmental, social, and economic issues and provides detail on the actions taken to develop sustainable energy solutions for today, and the future.
In response to stakeholder feedback, we made several changes and additions to this year’s report including:
The key performance indicator table on pg. 36 summarizes our corporate responsibility performance.
Our reporting continues to be informed by the Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines, a standardized framework for disclosing an organization’s environmental, social, and economic performance.
The CEO Letter serving as introduction to the report states:
In Powering Our Changing World — Sempra’s second corporate responsibility report — we outline how we are translating our commitment to corporate citizenship and long-term energy sustainability into action.
While these words are laudable, incorporating them into the Company’s senior executive compensation program would give them real impact. Yet today, neither the Company’s annual incentive plan or its long-term incentive plan utilizes any performance measures related to sustainability. We believe that this represents a serious shortcoming.
Other companies have added sustainability to the metrics that they use when determining executive compensation. British utility company National Grid announced last year it would partly base executive compensation on meeting targets for reducing carbon emissions. In addition, Xcel Energy in its 2009 proxy statement discloses that certain annual incentive payments are dependent on green house gas emission reductions alongside the weight given to meeting earnings per share targets. Also Intel Corporation calculates every employee’s annual bonus based on the firm’s performance on measures that include energy efficiency, completion of renewable energy and clean energy projects, and the company's reputation for environmental leadership.
We urge shareholders to vote FOR this important compensation reform.