When the Black Lives Matter protests spread across the country last year, many banks responded with resounding promises to do better, in part by hiring and promoting more people of color.

Today, some of these banks link executive compensation to certain measures of diversity and inclusion.

A recent analysis of executive compensation programs at 60 companies suggests that more banks are incorporating diversity, equity and inclusion factors into executive compensation decisions this year. Although the details may vary from bank to bank, the basic intention is always the same: if diversity is to play a greater role in business strategy, then banks must hold leaders accountable for these efforts. , and payment is one way to do it. do this.

“Boards learn how these incentives work,” said Shaun Bisman, director of consultancy firm Compensation Advisory Partners, who conducted the analysis. “It’s really in the early stages where companies and boards want to see how these incentives work before setting these more quantifiable goals.”

Big banks are likely to emerge as front runners, followed by smaller and regional banks, as regulators, shareholders and the public take a closer look at whether companies are meeting their diversity commitments. Wells Fargo, for example, said last year that it tie executive compensation in part to their progress in improving diversity in the company.

A report Last year, Democratic staff on the House Financial Services Committee blamed the big banks for what they called a lack of diversity among their senior executives and on their boards. The results were based on the results of a survey of 44 large banking companies. While 58% of the employees at these companies were white, 80% of their board members were.

In its analysis of executive compensation, Compensation Advisory Partners looked at public bank holding companies that held more than $ 10 billion in assets and also filed proxies by April 10 of this year.

About a third of those companies have included some sort of diversity, equity and inclusion factors in their executive compensation plans this year, said Kelly Malafis, founding partner of the company. About three-quarters of these banks, or 24% of the overall sample, used a discretionary adjustment related to diversity and inclusion, meaning the compensation committee could choose to adjust the amount awarded based on of the company’s progress or lack thereof. Typically, diversity and inclusion factors relate to annual bonuses rather than long-term incentives.

Although comparable data from previous years is not available, the Malafis said that linking executive pay to diversity and inclusion is a relatively new practice. As a result, companies typically look for qualitative factors, or a range of improvement in certain goals, as opposed to precise numbers, when making salary decisions, she added.

“Part of it is, maybe they don’t know what the correct number is, or they want to look at several different factors. Not just the numbers, but maybe also the promotions, performances and progress, ”said Malafis. “Partly they know it’s the right thing to do, but they don’t know how to measure it.”

Comerica in Dallas this year began incorporating diversity and inclusion metrics into executive compensation, said Meghan Burkhart, director of human resources.

Last year, the $ 86.3 billion asset company created a dashboard it could use to track its progress on a variety of diversity metrics, including succession planning, volunteering, corporate awareness and supplier diversity. For about 320 executives in the organization, a portion of their individual rewards will depend on the bank’s progress on these metrics.

“We believe that linking these metrics to compensation certainly increases the attention given to them and will help us achieve the goals we’ve set for ourselves,” said Burkhart.

Comerica also plans to assess its criteria on an ongoing basis, said Nate Bennett, the company’s director of diversity and head of talent acquisition.

On the issue of supplier diversity, Comerica is now looking not only to find out how much it spends on various suppliers, but also whether that spending keeps pace with overall supplier spending. While Comerica had increased its spending with various vendors, the dollar amount had not kept pace with the overall spending.

“Some of the parts of our dashboard are a moving target and require almost constant discussion on an annual basis,” Bennett said.

KeyCorp, with $ 176.2 billion in assets, considers diversity, equity and inclusion goals among a number of non-financial factors it uses to calculate executive compensation, said Brian Fishel, director human resources.

The company has recently started to become more prescriptive about the factors of diversity and inclusion that it considers, Fishel said. These factors include the representation of women and minorities in the leadership echelons of the company, employee volunteering and engagement in internal programs.

Key, based in Cleveland, also broadened the conversation about diversity to include issues such as mental health, in addition to racial and gender representation, according to Fishel.

More companies are starting to assess the use of environmental, social and governance measures in executive compensation, said Gillian Emmett Moldowan, compensation and governance partner at the law firm Shearman & Sterling. This trend has accelerated over the past year, largely due to the pandemic.

“We see diversity and other social or human capital goals, as well as environmental goals, more often in annual bonus plans than in long-term incentive bonuses, but that can change, and that is something to watch out for, ”she mentioned.

Moldowan said that before last year she had generally seen more compensation plans related to environmental or sustainability measures than to social issues, such as diversity and inclusion. The use of social measures, which could also include employee safety and well-being, in addition to diversity and inclusion, has increased significantly this year, she said.

For now, most bank compensation committees will feel more comfortable awarding diversity and inclusion bonuses when tied to an improvement range of certain diversity metrics, instead to achieve more specific goals, said Malafis of Compensation Advisory Partners.

“It is easy to give a precise number around the representation, but is the representation a complete image? It’s diversity, equity and inclusion, so what does it mean and how do you measure it? ” she said. “This is where the conversations take place. There are companies that do not want to limit themselves to representation, it has to be a more holistic approach. “