Tying Executive Compensation to DEI Goals: Putting Money Where Your Mouth Is

Diversity, equity and inclusion (DEI) is a relative newcomer to the key performance metrics (KPIs) used to determine executive compensation. The seeds of that trend were planted with the introduction of environmental, social and governance (ESG) in the mid-2000s. As early as 2006, Fortune 500 companies have incorporated ESG metrics into their executive compensation models.  

Accountability through Executive Compensation  

Eighty percent of Fair360’s Top 50 companies have linked executive compensation to representation metrics in 2023. In 2022, 76% of the Top 50 companies made a similar commitment. This demonstrated a growing effort to encourage leadership accountability regarding workplace fairness. 

This trend can be seen in recent changes to compensation models for Top 50 companies. Medtronic (No. 2 on the 2023 Top 50 Companies list) established metrics for monitoring DEI in 2015 but only began tying those metrics to executive compensation in 2022.  

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