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The CEOs of American Airlines, McDonald’s, and Starbucks were among the executives who earned over $50,0000 in short-term incentives tied to diversity, equity, and inclusion (DEI) programs last year, an analysis has revealed.
According to the findings produced by executive compensation consultancy Farient Advisors and reported by Bloomberg, 28 executives at S&P 1500 Index firms hit the threshold, totaling around $5million in collective payouts.
The majority of the 28 executives were white men.
Several US firms including Ford, Harley Davidson, Tractor Supply, and Jack Daniels have cancelled DEI programs this year amid pressure from anti-diversity activists who argue such programs are discriminatory against white males.
Who are the CEOs earning over $50,000 in DEI payouts?
The S&P 1500 CEO who earned the highest payout tied to short-term DEI incentives was Robert Isom, chief executive at American Airlines.
The CEO earned a whopping $520,000 in DEI-related bonuses. In June, the airline was hit with a lawsuit from black passengers who alleged they were subject to racial discrimination from the airline’s employees.
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In a letter to his employees at the time, Isom stated that he and his leadership team were keen to address the “unacceptable incident,” writing that he was “incredibly disappointed by what happened on that flight and the breakdown of our procedure.”
The CEO pledged to create an advisory group and improve incident reporting mechanisms, after previously disbanding an earlier advisory council set up to deal with racial incidents in 2023.
Elsewhere, Chris Kempczinski, CEO of McDonald’s earned a staggering $396,300 and Coca-Cola CEO James Quincey received $320,000.
Laxman Narasimhan, Starbucks’ former chief exec, was paid $281,100. Starbucks has come under pressure for its inclusion policies, with Florida Attorney General Ashley Moody launching an investigation by the state of Florida into its DEI practices in May.
Moody criticized the coffee chain for a policy running from October 2020 to March 2024 which tied executive compensation to progress against DEI goals.
The company indicated the policy has been scrapped earlier this year, meaning new CEO Brian Niccol will likely not make next year’s list.
Similarly, outgoing Boeing CEO David Calhoun earned $280,000 in DEI bonus payouts; a windfall that may well not be replicated in 2024 for new CEO Kelly Ortberg, who has just sanctioned the dismantling of its global DEI department.
The embattled airplane maker had previously increased efforts to improve the representation and inclusion of Black employees in its business.
Two females made the list: Adena Friedman, CEO of Nasdaq, who took home $375,000, and Beth Wozniak of nVent Electric, who earned $79,000. Narasimhan (ex-Starbucks), Michael Hsu (Kimberley-Clark), Henry Fernandez (MSCI Inc.), and Frank Clyburn, (ex-International Flavors & Fragrances Inc.) were the four non-white CEOs to make the list.
Leadership support for DEI
The report prompts a discussion about the scale of incentives being paid to executives, while also highlighting inequity that still exists at the highest level of US corporations.
There is certainly an argument that business leaders must be bought into the need to drive DEI progress. Lindsay-Rae McIntrye, Chief Diversity Officer at Microsoft, told HR Grapevine in a recent interview that senior leadership must also be encouraged to embrace transparency around DEI goals.
“[It takes] an unwavering commitment from the senior leadership through the organization,” McIntyre said. “We build accountability and rhythms into all of the executives who are reviewing the work in their organization.”
But the executive also emphasised that a clear, data-driven case on the human need and business case for DEI, rather than the prospect of a bonus, should be the motivator for business leaders.
“Embracing data shines the light on how diverse and inclusive teams outperform homogenous teams, and that continues to be a compelling piece of the conversation for business leaders who are focused on outcomes,” she said.
Brian Bueno, the head of Farient’s environmental, social and governance (ESG) practice, predicted that while only a select few companies have ditched DEI-related bonuses, more employers will do so next year.
