harles A. Tribbett III, a consultant who advises large corporations about hiring and compensation, said many executives and board members were discussing whether to link pay to diversity goals, a change he endorsed. “I believe the time is now for that discussion to be turned into action,” said Mr. Tribbett, a managing director at Russell Reynolds.
Deb Lifshey, a managing director at Pearl Meyer, agreed that there was growing interest in the practice, though she said it was too early to say whether it would be sustained. “Whether or not this will have a material impact on how much compensation they’re making is hard to tell,” she said.
Only five of the Fortune 500 companies have Black chief executives, and some of the most successful American companies haven’t significantly increased the number of African-Americans in their senior ranks.
Making diversity targets part of compensation and disclosing them would not just give top executives a financial incentive to hire and promote more Black and Latino people, but also provide a public scorecard that employees and shareholders could use to determine whether companies were following through on their commitments.
FirstEnergy paid out nothing on the diversity-related part of the bonus in 2018 after the company fell short on two of three targets. Last year, it paid out the segment of the bonus for meeting two of the goals: hiring women and people from underrepresented ethnic groups for professional jobs, and including them as candidates in succession plans. But executives fell short on a measure related to how employees responded to questions about diversity in a company survey.