DSM Ties Executive Bonuses to Social Responsibility | Case Study

Performance Indicators for Tying Bonuses to Environment Performance

Case Study

Dutch group seeks to tie executive bonuses to social responsibility 

By Richard Miln and Micheal Steen

DSM wants focus on “People, Profit, Planet”

Two Dutch companies have proposed linking top mangers’ pay to broad measure of environment sustainability and worker and customer satisfaction, giving a novel twist to the debate on how to reward executive performance.

DSM, the Dutch life sciences group, will announce today that half the bonuses for its management board will be tied to targets such as the reduction of greenhouse gas emission and energy use, the introduction of new environmentally friend products and improvements in workforce morale. This week TNT, the Dutch mail operator, unveiled similar plans that also included customer satisfaction.

Source: Excepts from Richard Milne & Michael Steen ‘Dutch group seeks to tie executive bonuses to social responsibility’. The Financial Times

Question 

1.The company that employs you is a manufacturing firm. It is considering following the lead of DSM and development some performance indicator to tie executive bonuses to environment performance. Outline what some of these might be

2.Document measures of performance relating to social issues, such as employee and consumer relations that should also be considered. Explain your answer.