Banks Experiment with Tying Executive Pay to Diversity Goals

American Banker
Monday, May 24, 2021

When Black Lives Matter protests spread across the nation last year, many banks responded with splashy pledges to do better, in part by hiring and promoting more people of color. Now some of those banks are tying executive pay to certain diversity and inclusion metrics. A recent analysis of 60 companies' executive pay packages suggests that more banks are incorporating diversity, equity and inclusion factors into executive pay decisions this year than in the past. While the details can vary from bank to bank, the basic intent is still the same: if diversity is going to play a more prominent role in the business strategy, then banks need to hold executives accountable for those efforts, and pay is one way to do that.