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Advanced Micro Devices, Motorola and Regions Financial are among a dozen companies that have removed diversity criteria from executive bonus plans this year after pressure from conservatives, as the political backlash to the initiatives continue to divide US boardrooms.
The 12 companies were among 60 that dropped environmental, social and governance incentives from their executive pay plans after pressure from Strive, the anti-ESG asset manager founded by Donald Trump ally Vivek Ramaswamy. Launched in 2022, Strive has more than $1.6bn of assets under management.
Matt Cole, Strive’s chief executive, applauded the companies’ moves away from DEI and ESG measures, and said the decision improved executive incentives.
“It’s not surprising to see corporations struggle when their executives are incentivised in ways that don’t improve and often impair financial performance,” he said in a statement to the Financial Times. “Several bold corporations have improved how they incentivise their executives this year, by moving away from DEI and ESG measures. I expect more corporations to follow in their footsteps.”
Amid increasing pressure from Republicans on corporate DEI initiatives, companies have scrambled to cut them. Tractor maker Deere said on Tuesday it would roll back various DEI initiatives such as supporting external “social or cultural awareness parades”, and reaffirmed it had no “diversity quotas” or “pronoun identification” in the business. In June, retailer Tractor Supply said it would eliminate all its diversity roles.
Deere’s statement came days after DEI became a central theme in Republicans’ attack on the US Secret Service following the assassination attempt on Trump. Even before the shooting, Republicans had seized on DEI as a Democratic tool for affirmative action. Speaking at the Republican National Convention this week, Florida governor Ron DeSantis said DEI “really means division, exclusion and indoctrination and it is wrong”.
DEI, and ESG more broadly, gained favour in executive pay plans in recent years but some asset managers have criticised these provisions as “fluffy” and unaligned with financial performance.
Vanguard last year said it was concerned “poorly constructed ESG metrics could result in inflated pay relative to performance”.
As of June, 66 per cent of S&P 500 companies included metrics for diversity and inclusion in executive pay, according to an analysis by ESGauge and the Conference Board. That is down from 75 per cent in 2023, but up from 52 per cent in 2021.
ESG or DEI incentives typically comprise a sliver of total executive pay, compensation consultants have said.
This year, IBM included a “diversity modifier” in executive bonuses that would increase pay if certain targets were hit. Advance Auto Parts included a “DEI modifier” in its pay plan.
AMD, the California semiconductor maker, included a DEI metric in the annual cash bonus for executives in 2023. But that was cut in 2024 and replaced with “workforce strategic objectives”. Telecoms company Motorola and Regions Financial, the Alabama-based bank, also dropped DEI from pay plans.
Strive voted against the companies’ pay plans in 2023, but voted for them this year.
AMD and Regions declined to comment. Advance Auto Parts, Motorola and IBM did not respond to requests for comment.
Companies were facing pushback on DEI pay metrics in part because asset managers pushed them to get more specific about defining DEI goals, said Michael Kesner, a partner at Pay Governance, a consultancy. “There was a push for quantification,” he said. “I think companies were channelled into quantifying.”
As political pressure on DEI continues, companies that had quantifiable DEI metrics would generally stick with them, he said, adding that jettisoning DEI pay goals could draw fire from employees and customers.
Companies that have not adopted DEI in pay “will remain on the sidelines”, Kesner said.
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