July 22, 2020

IR Magazine – Rise in management discussion of racism at investor-facing events

by Ben Ashwell

In 2019, 59 companies from the S&P 500 mentioned diversity and/or inclusion in their executive compensation plans, according to analysis from Farient Advisors. When these terms were mentioned, they were often metrics for short-term incentives and bundled with other measures.

Dayna Harris, partner at Farient Advisors, tells IR Magazine that most of the references to diversity and inclusion last year were qualitative, not quantitative.

‘To date, most of these measures have been in short-term incentives and I keep wondering whether it makes more sense to put them in long-term measures,’ she says. ‘You’re talking about a big change, and baking it into a long-term incentive plan could be more sustainable.’

While Harris expects diversity and inclusion to become a more mainstream metric in executive compensation packages, she adds that it’s not likely until 2022. Next year’s executive pay discussions will likely revolve much more around the effect Covid-19 has had on revenue, shareholder return and employee safety. 

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