A slew of 2024 proxy studies have reached the same conclusion: the prevalence of DEI in executive compensation is “not only widespread, but increasing in prevalence.” So what, if anything, is changing?
Metrics up, detail down: According to a new Teneo study, some (not all, not even most) companies are disclosing less detail in order to pacify anti-DEI activists, but this risks angering investors.
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Of those disclosing DEI metrics, 55% provided the same level of detail as last year while a third scaled back disclosures. This included removing the specific metrics or goals used, changing the term to inclusion or belonging, and broadening from diversity to talent.
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About half of companies still use objective, rather than subjective, DEI metrics, and these companies were less likely to reduce the level of detail disclosed.
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Although representation metrics remain by far the most common, others included inclusive culture, supplier diversity, belonging scores, talent initiatives and DEI strategy execution.
What’s next: Semler believes DEI prevalence may soften in response to political pressure, while Teneo argues that investor and proxy advisor constraints make this unlikely.
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As this NACD blog notes, the majority of successful anti-DEI initiatives have been directed at diversity trainings, fellowships, grants, and the like, rather than the use of reasonable DEI metrics in executive pay.
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However, some risk remains – clearly state the connection between use of DEI metrics and business objectives “to minimize the chance that such efforts appear performative.”
