Five-Year ESG LTI Award Tied to Performance Goals

Xylem Inc. (NYSE:XYL) is a leading global water technology company with 2021 revenue of $5.2 and some 17,300 employees worldwide. Xylem designs, manufactures, and services highly engineered products and solutions across a wide variety of critical applications, primarily in the water sector and also in energy.

In its 2022 proxy, Xylem highlights its commitment and philosophy on sustainability:

“Xylem approaches sustainability as a way to generate economic value while also creating value for society. Accordingly, we leverage sustainability in our decision-making toward long-term value creation for our shareholders, customers, employees, and the communities in which we operate. Xylem is helping to create a water-secure world while creating economic and social value in the following three ways: Building a Sustainable Company, Empowering Communities, and Serving Our Customers.”

Xylem’s commitment to sustainability is further evidenced by the granting of a one-time special ESG long-term award based on five of Xylem’s 2025 sustainability goals. This special grant comprised 20% of total long-term incentive (LTI) compensation. Each measure is equally weighted at 20% and will be judged on a simple pass or fail at the end of a five-year performance in 2025.

Five Special ESG Award Measures

2025 Sustainability Measure

Goal

Women in Leadership

Achieve 33% women in leadership by 2025

Process Water Recycling

Use 100% process water recycling at 20 of our 22 major facilities

CO2 Reduction

Reduce customer’s CO2 footprint by over 1.7MM metric tons

Pollution Prevention

Prevent 4.2B cubic meters of polluted water from flooding communities or entering local waterways

Non-Revenue Water Reduction

Eliminate 2.4B cubic meters of water lost due to leaking infrastructure, broken meters, or unauthorized use

 

Xylem’s special grant is unique from other ESG programs that Farient has highlighted in our weekly ESG Spotlights. While most companies have introduced ESG measures into existing programs, often as part of the short-term incentive (STI)  award, Xylem is focusing executives using a one-time long-term award with a five-year measurement period. The time frame for this award is also unusual when compared to common practice. This special grant serves to highlight the longer-term ESG goals, aligning awards to the same time frame.