Yesterday, McDonald’s Corporation filed a Form 8-K, announcing the details of the payout structure for its 2021 Target Incentive Plan (“TIP”) awards for executives, as approved by its Compensation Committee. In addition to the financial metrics, 2021 TIP payouts to the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, President, McDonald’s USA, and President, International also include metrics that measure the company’s success in certain aspects of human capital management in general and diversity and inclusion in particular.
In addition to strong financial performance, the Company believes it is important to hold executives accountable for making progress in diversity, equity and inclusion. Therefore, for 2021 TIP, executives will be measured on four quantitative metrics related to championing the Company’s core values, improving diversity representation for women and underrepresented groups, and creating a strong culture of inclusion among employees.
The 2021 STIP metrics will be operating income growth (42.5%), systemwide sales growth (42.5%) and human capital metrics (15%). The maximum 2021 TIP award that any of the above individuals can earn is 200% of the target award.
McDonald’s is not alone, of course, in linking executive pay to ESG, HCH, and/or D&I, but it certainly is one of the largest and most high profile companies to do so. Experts refer to this as a trend.
-Mike Melbinger, CompensationStandards.com February 19, 2021
