CEO pay should include diversity & inclusion metrics—why it’s a tough sell


Diversity and inclusion (D&I) are strong factors for would-be clients and consumers, as well as job prospects—so why aren’t top execs held more accountable for their own D&I actions when their salaries are being negotiated?

More than half (52 percent) of board directors say diversity and inclusion metrics should be a factor in determining compensation decisions for their top executives, according to new research from board education group Corporate Board Member and executive pay consulting firm Compensation Advisory Partners.

Yet fewer than 10 percent of companies currently use non-financial metrics in their incentive program, the survey of 258 public company board members found.

The findings come amid a growing push in the corporate governance community to emphasize diversity as a key goal in the nation’s companies—especially in leadership positions.

Why D&I metrics remain a challenge

“Shareholders—especially large institutional shareholders—have been pushing for companies to make progress on D&I initiatives,” said Melanie Nolen, research editor at Corporate Board Member, in a news release. “But companies are data-driven, and measuring non-financial metrics poses a great challenge to compensation committees.”…