This report examines how US public companies use financial and nonfinancial performance metrics in executive incentive plans, including where they appear, how heavily they are weighted, and what they signal about changing board priorities. Across short-term incentive (STI) and long-term incentive (LTI) plans in the Russell 3000 and S&P 500, the data point to greater selectivity in nonfinancial measures rather than a broad retreat from them.

Trusted Insights for What’s Ahead®

• Nonfinancial metrics are common and extend beyond environmental, social & governance (ESG) measures, although boards are becoming more selective about their usage.
• In 2025, just over half of Russell 3000 and S&P 500 companies used both financial and nonfinancial metrics in STI plans, while exclusive reliance on nonfinancial STI metrics remained rare outside health care and the smallest companies.
• The STI metric mix is becoming more discerning: broad ESG-labeled metrics, environmental metrics, and human capital metrics have declined, while governance, social, cash flow, and expense metrics, as well as use of board discretion, have increased.
• For individual nonfinancial and ESG-related STI categories, S&P 500 companies report materially higher use than those in the broader Russell 3000, even though both indexes have similar shares of companies using a mix of financial and nonfinancial STI metrics.
• When companies use both financial and nonfinancial STI metrics, financial measures still carry most of the payout opportunity, typically weighted about 70% to 75%.
• LTI plans remain much more financially led, with total shareholder return (TSR), profit, return, and revenue dominating and nonfinancial metrics used selectively.

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