Over on CompensationStandards.com, Liz blogged about the National Legal and Policy Center (NPLC) shareholder proposals aimed at eliminating diversity metrics from executive incentive plans. Remember DEI goals and metrics in executive comp plans rose in popularity along with corporate DEI initiatives. Those compensation metrics are now under fire recently – in the form of shareholder proposals. Liz says:
“Although the wording varies, each resolution follows this general format:
‘Shareholders request the Board of Directors’ Compensation and Management Development Committee to revisit its incentive guidelines for executive pay, to identify and consider eliminating discriminatory DEI milestones from compensation inducements.’
…despite the wording of the proposal and the practice of companies revisiting their annual incentive metrics every year, the Corp Fin Staff didn’t agree that the proposal could be excluded based on company arguments of ‘substantial implementation.’ While no-action responses are always fact-specific, this suggests companies may not be able to sidestep these proposals simply because they revisit their metrics each year – and that the bar for excluding these proposals under Rule 14a-8(i)(10) may be higher than some hoped.
… NLPC’s net is wide. If it continues to pursue this proposal, a company may find itself dealing with it even if the incentive plan doesn’t expressly incorporate DEI targets or refer to ‘diversity’ – for example, if disclosures outside the CD&A discuss diversity programs or if the basis for non-financial incentives is unclear. The good news is that the companies that received the proposal this year have provided a good framework for statements in opposition.”
I wrote last month that companies are indeed opposing efforts by a similar organization with a similar name (National Center for Public Policy Research), although those results are reflected in shareholder vote counts rather than Corp Fin proposal exclusions.
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