January 6, 2022 Executive Compensation ESG & Human Capital Management Reports

Diversity, Equity, & Inclusion Metrics in Incentives Across the S&P 500

Semler Brossy’s research on ESG and incentives across the S&P 500 in 2021 indicated that 28% of companies included DE&I as a metric in executive incentive design. This report evaluates the level of specificity disclosed around DE&I metrics for a representative sample of those companies companies*, exploring whether an outside reader can understand (a) the goals and resulting performance and (b) how performance flowed through to payouts. Note: Specificity as a framework for evaluating disclosure quality does not necessarily indicate goal rigor or quality.

Key DEI findings

  • Most companies with DE&I metrics in their incentive design disclosed them in broad terms with low levels of specificity (89% of the sample)
  • Few disclosed discrete and specific DE&I metrics (4% disclosed both goal targets and design mechanics and 8% disclosed one or or the other)
  • Companies frequently characterized performance without detail on pre pre-set goals i.e., “NEO contributed towards progress on diversity”
  • DE&I metrics were often grouped with strategic metrics or as a subset of a discretionary component of incentive design
  • 26% of companies added DE&I metrics to incentives in the most recent year reviewed, likely a response to Covid Covid-19 and calls for racial e quality

Contributors

Blair Jones

Margaret Hylas

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