UPDATE Feb. 21, 2025 8:00 A.M.: Fox Business reports on NLPC’s skepticism about the legitimacy and sincerity of PepsiCo’s alleged rollback of its DEI policies:
Not everyone is convinced that Pepsi is committed to turning away from DEI. Paul Chesser, director of the Corporate Integrity Project for the National Legal and Policy Center, which has a shareholders proposal calling on the brand to end DEI metrics consideration in their executive bonuses, says that the soda-maker’s moves are just “optics.”
“If you check their website it still has DEI [crap] all over it… they’re just pushing it below the surface,” he said.
ORIGINAL POST Feb 20: Bloomberg is reporting today that PepsiCo is the latest American company to announce it is rolling back its diversity, equity and inclusion policies:
The company will abandon workforce representation targets, no longer have a dedicated Chief DEI Officer, and expand its supplier diversity program to include all small businesses, among other changes, according to a memo from Chief Executive Officer Ramon Laguarta (pictured above).
He said the company had been refining its approach over the past year “to ensure it is aligned with our long-term business strategy, responsive to local markets, and focused on the principles that drive sustainable growth.”
NLPC, an investor in PepsiCo, will present a shareholder proposal at the company’s annual meeting, likely in early May. As with similar proposals we have submitted to eight other companies, we ask the company “to revisit its incentive guidelines for executive pay, to consider eliminating discriminatory DEI goals from compensation inducements, to reduce risk exposure.”
Embedded in many corporations’ pay formulas for its top executives are a percentage for attaining often ill-defined “corporate goals,” which almost always include a percentage for DEI — which has meant hiring quotas based upon race and gender. As we explained in our proposal for PepsiCo, from information we obtained from the company’s own materials and disclosures about its ESG initiatives — which it has branded “pep+” — its DEI goals include the following:
…by improving diversity of representation at the managerial level, maintaining pay equity, and developing inclusive leaders. We achieved 45% women in management roles globally. In the U.S., we achieved 9.2% Black managerial representation and 10.3% Hispanic managerial representation. In 2020, we announced our aspirational representation goals to increase the U.S. Black and Hispanic managerial population to 10% by 2025 to mirror the workforce availability of the communities where we work. We remain on track to meet this goal with respect to U.S. Black managerial representation, and we will strive to maintain our U.S. Hispanic managerial representation to mirror workforce availability.
PepsiCo further adds that the Company incentivizes leadership to attain these DEI employment goals: “As pep+ is integrated into our core business strategy … all executive officers have ESG goals incorporated into their individual performance objectives….”
So if PepsiCo and Ramon Laguarta were actually eliminating DEI, one would think that the company would also eliminate any DEI-related considerations from its executive pay formulas — but the company has not done so. Instead, PepsiCo has informed us that NLPC’s proposal will be considered at the annual meeting and that the company will oppose it. The company has supplied us the statement (subject to change, they say) it plans to include in the proxy statement in opposition to NLPC’s proposal, which says in part:
PepsiCo is an Equal Employment Opportunity Employer. Our 2025 compensation programs for our executive officers do not include representation metrics. It is our policy to take steps to assure that all employment decisions — including but not limited to hiring, promotion and compensation — are made without regard to race, color, age, sex, religion, national origin, or any other protected category under applicable law…
The Compensation Committee undertakes an annual review of program components to help ensure the link between PepsiCo’s business strategy and incentives remains relevant and strong. Performance objectives are tied to each Faster, Stronger and Better aspiration to drive forward our broader vision…
We strongly believe that the long-term success of our Company is intrinsically linked to a healthy planet,
resilient food systems, and the holistic well-being of our people and the communities we serve. This is why we invest in sustainability programs, which we believe will help future-proof and strengthen our business for the long-term.
There’s plenty of corporate-speak there to divert attention from what the truth is, which is that PepsiCo is hanging on to DEI so it can bump up its executives’ pay with some easy money at the Board of Directors’ discretion.
PepsiCo has done nothing to abandon the policies, as it has announced nothing of that nature in any press releases, nor submitted any disclosures in reports to the Securities and Exchange Commission, nor removed any DEI-focused materials from its websites or online reports.
Companies that claim to eliminate DEI are lying for optics, when really all they are doing is ending use of the acronym, calling it something else like “belonging,” or just hiding it better from the public and shareholders. See also Disney, McDonald’s and Walmart as three other examples.
