The Financial Times recently covered how National Legal and Policy Center’s campaign to remove diversity, equity, and inclusion incentives from executive pay has made progress, with notable wins at several big name companies:
PepsiCo and Mastercard recently ended a plan to connect DEI-related metrics with executive pay. Both companies were under pressure from the conservative-leaning National Legal and Policy Center over past DEI pay policies.
“The primary reason for the drop is that DEI is polarising in today’s political environment,” said Kyle Eastman, a partner at Compensation Advisory Partners. “Boards want to avoid becoming part of the national debate.” Only 23.3 per cent of S&P 500 companies tied executive pay to DEI metrics this year, a steep decline from 41 per cent last year, according to ISS-Corporate.
“A lot of the low-hanging fruit has already been picked. The holdouts may even grow more entrenched, as they try to position their support for DEI as a competitive advantage,” said Luke Perlot, associate director at the National Legal and Policy Center…
Some companies have stripped DEI language from proxy materials but replaced it with “inclusion” or “employee engagement”.
Last year, Microsoft included culture, diversity and sustainability as a consideration for executive pay. But it removed references to diversity and sustainability in its proxy statement that it released in October, but retained “inclusion” as a priority area for determining executive compensation.
Perlot, at the National Legal and Policy Center, said that his organisation had identified some companies that were dropping the DEI name while keeping the “DEI substance”.
“Our objective is to raise public awareness of the word games companies are playing and put pressure on them to follow through on their promised changes,” Perlot said.
“That may include pressing companies like Boeing, Pepsi, or John Deere, who have already made public retractions, to provide more verification that they’re living up to their commitments.”
The Financial Times article can be viewed here.
