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24 February 2025 / Quick Take
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Copy LinkCorporate diversity, equity & inclusion (DEI) efforts in the US face increasing political, social, and legal challenges and may now be impacting executive compensation, at least among the country’s largest publicly held companies. Between 2021 and 2023, the percentage of companies listed in the S&P 500 and Russell 3000 tying executive pay to DEI outcomes increased by 44% and 69% respectively, including about half of the Russell 3000 and three-quarters of the S&P 500 companies that disclosed executive compensation metrics. In 2024, however, executive pay linked to DEI declined by 10% and 16% respectively (Figures 1 and 2), and while 2025 filings are limited, early indicators suggest an even steeper reduction.
DEI backlash and increasing political pressure on diversity programs have caused many corporate leaders and their counsel to review initiatives for legal and reputational risk. Research from The Conference Board and others suggests that while some leaders may be backing off diversity initiatives, they are largely staying the course in terms of the overall resources and effort dedicated to their diversity-related programs. The shift away from linking executive pay to DEI and pay equity goals and toward other elements of human capital management (HCM) may be part of that broader staying-the-course strategy.
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