October 10, 2024
DEI Metrics: Most of S&P 500 Maintained Status Quo
Teneo’s analysis of recent S&P 500 proxy filings found that more companies have added DE&I metrics (16 companies) to compensation plans than removed them (10 companies) in 2023. But Teneo’s data suggests that many companies are saying less about their use of DEI metrics in their public disclosures (a sort of DEI-hushing?). Here are some specific data points from the summary of Teneo’s analysis in the HLS blog:
The majority of companies maintained the status quo with respect to DE&I pay metrics. Of those that disclosed DE&I pay metrics in 2022, 55% provided the same level of detail and did not indicate significant changes in 2023.
However, a third of companies scaled back the disclosure of DE&I pay metrics, or de-emphasized DE&I, while still maintaining it as a pay factor. Those that maintained DE&I pay metrics, but reduced disclosure, often did so by removing mention of the specific metrics and / or goals used. Other means of de-emphasizing DE&I as a metric include using related terms other than diversity (e.g., inclusion, belonging, etc.) or broadening the metrics used (e.g., from a diversity component to a talent component). …
Representation goals, often targeted by “reverse discrimination” cases, declined by six percentage points, but nevertheless remained the most commonly disclosed DE&I pay metric, cited by 33% of companies in 2023. Meanwhile, metrics for diverse talent development and broad DE&I strategies, such as establishing DE&I goals or action plans, each increased from 6% to 8% from 2022 to 2023.
In 2023, 42% of companies formalized the impact of DE&I performance on pay as a separate weighted component or modifier, up from 38% in 2022. Most often, DE&I metrics determined between 5% and 10% of incentive payouts.
We’ve previously noted that the impact of the Students for Fair Admissions cases was not fully reflected in the 2024 proxy season, given the timing of the opinion (released after most 2023 compensation decisions). Debevoise recently reported that companies have since revisited DEI metrics — meaning that we may see more movement in the 2025 proxy season — but are unlikely to walk away from DEI goals altogether given their importance to workforce strategies and long-term performance.
– Meredith Ervine