Paying for the Planet — Redesign the CEO Bonus at Lumière Materials

A four-round, advanced corporate-governance simulation set on the remuneration committee of Lumière Materials NV, a Brussels-listed (Euronext) building-materials and insulation maker with EUR 4.8B revenue, 14,000 staff and a 2030 decarbonization thesis institutional investors buy the stock for. Last month the say-on-pay vote scraped 68% support — a near-revolt — because the CEO's EUR 4.2M package (70% variable, ~EUR 2.94M under redesign) links pay almost entirely to financials with a token 5% ESG modifier proxy advisors called 'window-dressing'. Two of the three largest holders (22% of shares) and both proxy advisors (ISS/Glass Lewis equivalents) will vote against the chair next AGM unless CEO pay is credibly tied to verifiable, CSRD-auditable climate targets — without making the package unwinnable and losing the CEO who drove the turnaround. Chairing the committee you (1) diagnose why the policy failed — token ESG and weak pay-for-performance alignment, not disclosure alone; (2) set the financial-vs-ESG weighting (90/10, 80/20, 70/30, 60/40), split it across the annual bonus and the long-term incentive where climate targets belong, and choose standalone-weighted vs a modifier; (3) pick 2-3 ESG indicators (absolute Scope 1+2, carbon intensity, low-carbon revenue share, an SBTi-validated milestone, TRIR safety, diversity) and set the payout cap (150/175/200%), a financial gate, and malus/clawback; and (4) defend the policy to a coalition of the two large investors and a proxy advisor, deciding which CEO-retention and investor pushback to accommodate and projecting the AGM vote. The math rewards material-but-verifiable ESG in the LTI with a cap, gate and clawback, and punishes the five classic errors — token ESG, soft over-weighting on unauditable metrics, easy intensity metrics while absolute emissions rise, no cap or gate, and chasing investors until the CEO walks. Final KPIs track Investor Approval (say-on-pay %), Policy Credibility, CEO Retention and the EUR materiality of the ESG-linked variable pay.