Partner Melissa Burek says that CEO pay is increasingly tied to customer experience, innovation and ESG. For P&C insurers, this often means culture, diversity and social metrics. This represents a new direction as executive pay has historically been primarily focused on financial metrics. Burek adds that she believes this attention to wider society impact will only increase over time.
Senior Associate Joanna Czyzewski explains that for the insurance industry, 2020 resulted in mixed performance with business-interruption claims, poorer investment results, and benefits of reduced accident frequency. This resulted in an absence of significant modifications to compensation programs when it comes to COVID-related adjustments. Partner Melissa Burek adds that of the companies that made incentive changes, 60% made annual incentive changes, 9% made long-term incentive changes, and 31% changed both incentive plans.
Partner Melissa Burek and Principal Roman Beleuta assess executive compensation programs of large insurance companies, concluding that, although CEO bonus payouts were above target in 2019, the COVID-19 pandemic will have long-term impacts on incentive plan designs.