February 27, 2025
The Pay & Proxy Podcast: DEI Disclosures and Metrics Following Executive Orders
In late January, President Trump signed two Executive Orders — “Ending Radical and Wasteful Government DEI Programs and Preferencing” and “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” — which direct federal agencies to terminate federal contracts related to DEI within 60 days and the Attorney General to submit a report by May 21 with recommendations “to encourage the private sector to end illegal discrimination and preferences, including DEI.” As John shared on TheCorporateCounsel.net, a Maryland federal court entered a preliminary injunction enjoining enforcement of certain provisions of the two orders on Friday, but that injunction didn’t cover the part of the Executive Orders that directs the agencies to identify up to nine potential civil compliance investigations of organizations.
Shortly after the Executive Orders were announced, the Attorney General’s office released a memo regarding the implementation of these Executive Orders. It directs the DOJ’s Civil Rights Division and Office of Legal Policy to jointly submit a report to the AG’s office with recommendations for enforcing federal civil rights laws and include “proposals for criminal investigations” in addition to the up to nine potential civil compliance investigations of entities listed in the second Executive Order, including publicly traded companies.
Many companies took a close look at their DEI programs to ensure compliance with federal civil rights laws after the Students for Fair Admissions v. Harvard decision and private sector cases involving Section 1981 and Title VII of the Civil Rights Act. Now, public companies are considering what disclosures regarding DEI (including DEI metrics in executive compensation plans) should be provided in SEC reports and ESG/sustainability reports in light of these Executive Orders, the vacatur of Nasdaq’s “disclose or comply” board diversity rule and announcements by the proxy advisors.
In this 27-minute, latest episode of The Pay & Proxy Podcast, Latham’s Maj Vaseghi and Betty Huber and Compensia’s Mark Borges discuss:
– Students for Fair Admissions v. Harvard and private sector cases involving Section 1981 and Title VII of the Civil Rights Act
– The recent Executive Orders including the directive to federal agencies to identify potential “compliance investigations” aimed at deterring DEI programs constituting “illegal” discrimination
– How companies are considering legal risk, political risk, talent risk and business risk in preparing disclosures
– Companies, especially government contractors, weighing changes to the use of DEI metrics in compensation programs
– Disclosures regarding DEI metrics in compensation programs
– Human capital management disclosures in Form 10-Ks
– Required and voluntary board diversity disclosures in proxy statements after vacatur of Nasdaq’s “disclose or comply” board diversity rule
– ISS’s announcement that it will indefinitely halt consideration of certain diversity factors in making vote recommendations on director elections
– Voluntary proxy disclosures on DEI policies and practices
– Looking at committee charters and corporate governance guidelines
– Weighing whether to maintain the timing or delay publishing voluntary ESG reports
– Setting metrics for 2025 compensation programs
As always, if you have a topic you’d like to discuss on a podcast, please reach out to me at mervine@ccrcorp.com!
– Meredith Ervine