The Advisors' Blog

– Liz Dunshee

I’ve blogged a couple of times about companies announcing that they’re planning to link diversity metrics to executive pay. This Semler Brossy memo captures the trends that we’re seeing emerge on this topic among Fortune 200 companies. It includes a chart that tracks the metrics by company, industry, weight and performance outcome – with a link to the disclosure. Here are its key takeaways:

• 20 companies have incorporated Diversity and Inclusion metrics in their incentive compensation programs

• Of these companies, the metrics tend to be assessed qualitatively and are more operational in nature

– 19 of the 20 companies studied have incorporated these metrics within their annual incentive plan, and one incorporated it within their long-term incentive program

– Amongst the companies studied, typical Diversity and Inclusion weightings make up approximately 5%-30% of metrics within annual incentive plans

• We expect the prevalence of Diversity and Inclusion metrics to rise in 2021 as multiple stakeholders call for greater oversight/progress on HCM topics and the nature of the metrics to evolve to be more strategic