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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 following pressure from conservatives, as political backlash to the initiatives continues to divide U.S. boardrooms.
The 12 companies were among the 60 that fell environmental, social and governance incentives from its executive compensation plans following pressure from Strive, the anti-ESG asset manager founded by Donald Trump ally Vivek Ramaswamy. Launched in 2022, Strive has more than $1.6 billion in assets under management.
Matt Cole, CEO of Strive, applauded the companies’ decision to move away from DEI and ESG measures, saying the move improved incentives for executives.
“It is not surprising to see corporations struggle when their executives receive incentives that do not improve and often hurt financial performance,” he said in a statement to the Financial Times. “Several bold corporations have improved the way they incentivize their executives this year, moving away from DEI and ESG measures. I expect more corporations to follow suit.”
Amid mounting pressure from Republicans on corporate DEI initiatives, companies have been quick to scale back. Tractor maker Deere said Tuesday it would roll back several DEI initiatives, such as supporting outside “social or cultural awareness parades,” and reaffirmed that it had no “diversity quotas” or “pronoun identification” in the business. In June, retailer Tractor Supply saying would eliminate all of its diversity roles.
Deere’s statement came days later DEI became a central theme in the Republican attack The U.S. Secret Service has been highly critical of the attempted assassination of 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 Gov. Ron DeSantis said DEI “really stands for division, exclusion and indoctrination and it’s wrong.”
DEI and ESG more broadly have gained popularity in executive compensation plans in recent years, but some asset managers have criticized these provisions as “spongy” and are not aligned with financial performance.
Vanguard Last year he said He was concerned that “poorly constructed ESG metrics could result in inflated salaries relative to performance.”
In June, 66 percent of S&P 500 companies included diversity and inclusion metrics in their executive payaccording to an analysis by ESGauge and the Conference Board. This is down from 75 percent in 2023, but up from 52 percent in 2021.
ESG or DEI incentives typically represent a small portion of total executive compensation, compensation consultants have said.
This year, IBM included a “diversity modifier” in executive bonuses that would increase pay if certain goals were met. Advance Auto Parts included a “DEI modifier” in its compensation plan.
AMD, the California semiconductor maker, included a DEI metric in its annual executive cash bonus in 2023. But that was removed in 2024 and replaced with “strategic workforce objectives.” Telecom company Motorola and Regions Financial, the Alabama-based bank, also removed DEI from pay plans.
Strive voted against company pay plans in 2023, but voted in favor of them this year.
AMD and Regions declined to comment. Advance Auto Parts, Motorola and IBM did not respond to requests for comment.
Companies faced resistance to DEI pay metrics in part because asset managers pressured them to be more specific in 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 driven to quantify.”
As political pressure on DEI continues, companies that had quantifiable DEI metrics would generally stick to them, she said, adding that scrapping DEI pay targets could draw criticism from employees and customers.
Companies that have not embraced DEI in compensation “will be left behind,” Kesner said.