More U.S. companies tie CEO pay to diversity metrics – study



© Reuters. FILE PHOTO: An office building is photographed from a tourist platform early evening in Frankfurt, Germany January 31, 2017. REUTERS/Kai Pfaffenbach/File Photo

By Ross Kerber

BOSTON (Reuters) – Corporate diversity has become the most common type of sustainability metric used in setting executive pay, a new study found, as companies look to increase the share of women and minorities in their workforces.

Among 61 metrics used by Fortune 100 companies to tie executive pay to environmental, social or governance factors, 14 of them, or 23%, were diversity metrics, according to Nathan Grantz, senior research analyst at compensation consultant Equilar. In all, 44 companies use one or more ESG metrics, including seven that adopted them this year, Equilar found.

The new attention to diversity reflects last year’s Black Lives Matter protests and the social stratification laid bare by the COVID-19 pandemic, said Amit Batish, Equilar director of content.

Both trends made big asset managers more interested in having executives tie pay to new goals, as retail investors pour billions of dollars into funds using environmental, social and governance (ESG) criteria to pick stocks. (https://reut.rs/3eOKOmI)

“Investors and key stakeholders are putting more pressure on companies, and that’s why these ESG metrics are becoming more prevalent,” Batish said.

One company that added diversity metrics is insurer Allstate Corp (NYSE:), which said in an April 12 securities filing that it would measure executives’ progress against factors including “inclusive diversity and equity strategies” when setting their annual cash bonuses. Allstate representatives did not comment.

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Separately, in an April 2 filing, retailer CVS Health Corp (NYSE:) said it would modify, by as much as 10%, certain payouts to senior leaders with a new metric to “assess our progress in achieving greater diverse leadership representation” in 2021.

A CVS representative did not return messages.

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