This paper examines how firms design environmental, social, and governance (ESG) performance goals in CEO incentive plans (“ESG pay”) following heightened ESG controversies. I argue that a rise in ESG controversies prompts boards to adopt ESG pay. Such reactive adoption of ESG pay is typically characterized by a narrow scope, reliance on boards’ subjective evaluation, and inclusion in short-term incentive plans. The hypotheses are supported by a sample of U.S. public firms from 2007 to 2019. Firms are more likely to reactively adopt ESG pay when CEOs’ existing ESG incentives are weaker, particularly under the conditions of poor financial performance, low ESG-related legislative pressure, and a weak corporate culture of integrity. Additionally, reactive adoption of ESG pay is associated with positive shareholder reactions and a reduction in ESG controversies in the long run. This study contributes to the literature on corporate governance, incentive design, and ESG by highlighting how firms adapt their governance design in response to emergent ESG risks.