Agenda: Diversity Incentive Metrics — Often Vague — Proliferate

December 15, 2020

by Alana Pipe

More companies than ever have disclosed that they adopted diversity incentive metrics in executive pay this year, a practice expected to become more prevalent moving forward. However, some investors question whether goal-setting for these types of metrics is as rigorous as it needs to be in order to achieve the lofty diversity pronouncements many companies have made.

Diversity and inclusion are likely to become more prominent components of compensation as a result of the social unrest and heightened focus on racial equity in the corporate environment that has occurred this year, according to Dayna Harris, partner at Farient Advisors.

D&I metrics at S&P 500 companies came in multiple shapes and sizes last year, varying in whether the measures were weighted to the level of specificity disclosed and how much they paid out.Most diversity initiatives are an unweighted component of short-term incentive compensation. Whereas weighted metrics constitute an absolute position of overall executive compensation and have an absolute dollar value tied to them, unweighted metrics are part of a bucket of assorted nonfinancial metrics, making it unclear how much money was awarded due to progress on diversity.

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About Dayna Harris

Partner, Farient Advisors, Los Angeles

Los Angeles: (626) 799-2490

Dayna has served as a consultant on executive and board compensation for two decades, designing incentive programs that align compensation with business strategy and create value for shareholders. Her experience includes advising boards and senior management of public and private companies across various industries. She works with management and boards to reach a consensus on program design that is effective within the context of a company’s organizational structure and situation.

Further, her incentive design work identifies the appropriate frameworks, performance measures, and approaches for goal setting. Before joining Farient, Dayna was a principal at Semler Brossy Consulting Group and held executive compensation consulting roles at Sibson & Company, SCA Consulting, and Mercer.

She frequently speaks on topics including pay and performance, disclosure, and regulatory compliance for the National Association of Corporate Directors (NACD), WorldatWork, the National Association of Stock Plan Professionals (NASPP), the Council of Institutional Investors, and the Society of Corporate Governance Professionals. Dayna is a member of WorldatWork, NASPP, the Council of Institutional Investors, and NACD. For three years, Dayna was named to the NACD Directorship 100, the prestigious annual list of the most influential people in corporate governance and the boardroom. She holds both an MBA and a bachelor’s degree from San Diego State University.

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