Banks experiment with tying executive pay to diversity goals

More companies are beginning to evaluate the use of environmental, social and governance metrics in executive compensation, said Gillian Emmett Moldowan, a partner who specializes in compensation and governance at the law firm Shearman & Sterling. That trend has accelerated over the past year, driven in large part by the pandemic. “We are seeing the diversity and other social or human capital targets, along with environmental targets, more commonly in annual bonus plans than in long-term performance stock incentives, but that may shift, and that’s something to keep an eye on,” she said. Moldowan said that prior to the past year, she had generally seen more compensation plans tied to environmental or sustainability metrics than to social issues, like diversity and inclusion. The use of social metrics, which could also include employee safety and wellness, in addition to diversity and inclusion, has significantly increased this year, she said.