1、 EQUITIES CHEMICALS The Alchemist:Skin in the game(how CEOs get paid)9 JULY 2025 Sector Research Report Production time:05:45*(London time)Research Analysts&Publishing EntitiesResearch Analysts&Publishing Entities In this note we conduct our annual review of management incentives for the 30 companie

2、s under coverage in the Chemicals sector across Europe and North America.Understanding a companys incentive structure and how it correlates to FY25 guidance is an important tool for investors.No significant change to compensation mix Year on year,changes in compensation mix remain subtle,with minor

3、amendments to policy wording and target weighting across our coverage.Variable compensation remains the driver of pay differentials between US and European companies,with fixed pay relatively similar across the board.Compensation up FY24 vs FY23 in Europe,but down in US Average compensation was up y

4、oy globally,driven by Europe.This is primarily off the back of a weak FY23,where a number of management teams were better compensated in FY24.Conversely,the US FY23 included a few anonymous large STI payouts in coatings,impacting yoy regional performance this year.Compensation looks broadly logical

5、relative to incentive metrics STI pay compared to the performance incentive metrics was linear for the European companies.Interestingly,US companies displayed negative correlation.We think this is a reflection of a tough operating environment rather than a lack of rationality for CEO compensation.Mi

6、nimal changes to ESG incentives ESG incentives continue to be the norm in management compensation targets,included in the majority of our coverage.Policies continue to be adjusted to increase weighting as group sustainability becomes an ever-important metric.The notable exceptions include Sherwin Wi