Schneider Electric: Linking Pay to ESG

  • Reference: C-804-E

  • Year: 2020

  • Number of pages: 15

  • Geographic Setting: Francia

  • Publication Date: Sep 2, 2022

  • Source: IESE (España)

  • Type of Document: Case

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March 20, 2020 was a day of great concern for the board members of Schneider Electric (Schneider). The rapid spread of COVID-19 pandemic around the world was a source of anxiety not only because of the risk it posed to public health, but also for the dramatic economic consequences of the sanitary crisis. That day, the stock price of Schneider Electric had plummeted to 69.72 euros from more than 100 euros on the day of the last board meeting, February 19, 2020. One of the many worries of Schneider's directors -and especially of the members of the Governance & Remunerations Committee- was the effect of the adverse economic consequences on employee compensation. The remuneration policy included a large portion of variable pay, which -in addition to financial indicators- included a variety of ESG metrics. And the sanitary emergency had hit precisely a few days after the firm introduced significant changes in compensation schemes. The directors of Schneider wondered about how to respond to the challenges posed by the pandemic. Should the board modify or adjust the implementation of their strategy with regards to ESG? Should they modify or adjust the sustainability reporting system? Should they reconsider the compensation policy?

Learning Objective

The case can be used to learn about firms' ESG reporting systems and about firms' compensation schemes, especially in what relates to ESG.

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