Like most large companies, iHeartMedia’s (IHRT) executive compensation plan includes some form of long-term performance-based compensation; if management reaches a certain threshold of performance (revenue or margin targets, for example), management gets a bonus, whether that be cash and/or equity.
Often, these targets tend to be tied to either share price performance or other financial / operational targets.
However, iHeart, recently announced new longterm incentive RSU grants driven primarily by 1) cost savings and 2) ESG priorities. These are the company’s first longterm equity incentive grants since emerging from bankruptcy
80% of the RSU grants for this upcoming year are related to cutting costs, including operating expense savings.
The remaining 20% is where things get interesting…
The remaining 20% of the long-term RSUs are to be split 10% “Diversity” and 10% “ESG” Hence, executives will be financially incentivized to meet the following goals:
- Distribution of Black Information Network programming on a 24/7 basis on at least 20 iHeartRadio radio stations
- Build out of Black Information Network capabilities in at least 10 of the 20 affiliated stations to provide full Black Information Network local news coverage and reporting
- 50% of the new podcast shows launched after July 1, 2020 are produced and/or hosted by women and/or minority creators
- Diversity in radio programming
- Employee diversity training
- Environmental awareness
As America struggles with the challenges of creating a racially equitable and just society, it’s promising to see companies create change from within.
There’s precedent for iHeart’s actions, as companies such as Uber and Intel in recent years have included ESG and diversity goals into compensation plans in attempts to improve company culture.
These moves further endorse the idea that ESG is a core corporate initiative; investors demand it, and now management is being incentivized to see it through.
It’s clear iHeart is taking a positive step forward for social responsibility and sustainability – though it remains to be seen if the company can become a post-bankruptcy success and make its diversity and ESG push into something more than just a marketing ploy to capture the current zeitgeist.