Want More Diversity? Some Experts Say Reward C.E.O.s for It

Founders like Mark Zuckerberg of Facebook and Sergey Brin and Larry Page of Alphabet do not receive cash bonuses or stock-based compensation. But they control so much of their companies’ voting stock that they could pretty much single-handedly approve the inclusion of diversity targets in executive compensation. Facebook, for example, valued the 2019 compensation of its chief operating officer, Sheryl K. Sandberg, at $27 million.

Facebook said it had made “bold goals to build a more diverse and inclusive workplace,” adding that leaders were evaluated on inclusion and recruitment in their performance reviews. Google declined to comment.

That said, some tech companies have linked pay and diversity.

Achieving diversity goals helps determine one-sixth of the cash bonus of Microsoft’s chief executive, Satya Nadella, a bonus that last year totaled $10.8 million. “This is an important demonstration of executive commitment to creating an inclusive workplace, and we find this helps ensure there is shared accountability to make progress,” the company said in a statement.

Uber, which in the past was criticized for a cutthroat work culture, perhaps goes further than any other company. Diversity targets are embedded in the stock compensation of its chief executive, Dara Khosrowshahi, accounting for a fourth of his performance-based stock awards. Uber valued his performance award for last year at $6.25 million. The goals include achieving growth in the percentage of workers who are from underrepresented ethnic groups at the senior analyst level and above over a three-year period that has not ended.

Bo Young Lee, Uber’s chief diversity and inclusion officer, said the policy had “really crystallized what we’re trying to achieve, and gave something for us to pivot off of, and explore other aspects of our diversity and inclusion strategy.”

But diversity-related goals may end up having less bite than advertised because they might be relatively easy to achieve, which can be hard to evaluate when companies do not disclose details about their goals. In addition, even companies that use this approach do not let it determine a sizable portion of overall pay.

Article source: https://www.nytimes.com/2020/07/14/business/economy/corporate-diversity-pay-compensation.html