Although the integration of corporate social responsibility (CSR) into CEO compensation contracts (hereafter, CSR contracting) has become prevalent in recent years, scholars and practitioners are increasingly concerned about the quality of CSR contracting. Using hand-collected information of S&P 500 firms from proxy statements, I construct an empirical proxy for CSR contracting quality and show that the quality is higher when the compensation committee has more CSR-related expertise. Further, I find that CSR contracting quality is positively associated with future CSR performance, and this effect is stronger when compensation committee CSR expertise is higher. Overall, this evidence highlights the importance of compensation committees’ CSR-related expertise in designing high-quality CSR contracting and improving CSR contracting efficiency.
Data Availability: All data are available from public sources mentioned in the text.