We explore the director labor market consequences of social media use. Specifically, we identify directors in S&P 1500 firms who are active on Twitter and examine various director labor market outcomes. We find directors, particularly females and minorities, on Twitter are more likely to gain an additional directorship, a larger directorship and a directorship in a new industry each year than those who are not on Twitter. These results hold when controlling for time invariant unobserved director characteristics and when using an instrumental variable approach to control for endogeneity. They are strongest for directors, primarily females and minorities, who engage more with other directors via social media. Shareholders show more support for social-media-active directors through a greater (lesser) percentage of votes casts “For” (“Against”) their election and through a greater stock price reaction to the announcement of first-time director appointments. These results suggest that social media can play an important role in reducing traditional labor market frictions and facilitating more opportunities for minority and female directors.

I develop a novel structural model for analyzing the financial and non-financial implications of CEO compensation contracts that include incentives tied to non-financial performance. By applying this model to green incentives, I find that they motivate CEOs to reduce carbon emission intensity by 1.8% per year but at a financial cost of 1.3% of firm value annually. As green performance is an imperfect signal of CEOs’ actions toward green outcomes, a “green moral hazard” arises: the principal should offer CEOs a premium for the risk added by green incentives. I estimate that this green moral hazard is substantial, accounting for $1.72 million of the total moral hazard cost of $2.05 million. These results suggest that green incentives pose an important economic trade-off: while green incentives can lead to meaningful environmental improvements, they impose substantial costs on the firm.

We document that executive compensation contracts with ESG metrics are more likely to feature other financial and non-financial metrics and a higher proportion of equity-based compensation than contracts without ESG metrics. Companies introduce ESG metrics in areas where they have experienced good performance; however, these metrics have limited impact on actual executive payouts or the sensitivity of pay to market, earnings, and ESG performance. Similar to metrics linked to operating performance, ESG metrics are most prevalent in companies with recently appointed CEOs, new active blockholders, and those that have experienced dissent in say-on-pay votes. All metrics increase shareholders’ support in say-on-pay votes, reduce dissent on management proposals, and decrease the number of shareholder proposals, and ESG proposals in particular. Overall, the evidence suggests that ESG metrics, like all other metrics, aim to build shareholder consensus on executive compensation and corporate strategy.