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Strive Asset Management's Push to Decouple CEO Compensation from ESG and DEI Metrics
- Directors' Institute
- Jun 25
- 10 min read
In today’s boardrooms, one topic has quietly vaulted to the front lines of governance battles: CEO compensation tied to ESG compensation and DEI metrics. The centerpiece of this clash? Strive Asset Management, an outspoken activist investor challenging mainstream formulas for executive incentives.
Strive has ignited a movement, quietly but forcefully, to decouple CEO compensation from ESG and DEI metrics—arguing that non-financial targets misalign incentives and risk collateral damage. Today, more than 75% of S&P 500 companies tie executive compensation to ESG broadly, with a specific increase in DEI goals, yet their prevalence is shrinking. Between Q1 and Q2 2024, DEI pay linkages fell from 33% to 28% across major US firms—56 of them, including Best Buy, Chipotle, and Johnson & Johnson, either dropped or downplayed DEI weightings.
Rather than grandstanding, many of these changes happened behind closed doors, after confidential engagement with Strive. That signals a tone of authority—governance redefined without theatrics.
This blog unpacks the Strive Asset Management campaign, explains why decoupling CEO pay from ESG compensation isn’t just ideological, highlights real-world DEI metrics CEO pay reversals, explores governance best practices, and leaves boards armed with clarity—and a touch of healthy skepticism.
The Rise of ESG and DEI in CEO Compensation
Over the past decade, ESG and DEI metrics steadily made their way into CEO performance reviews. The idea was straightforward—incentivize purpose, not just profit. CEOs were rewarded for measurable actions on climate, employee well-being, diversity, community engagement, and corporate ethics.
By 2023, around 75% of S&P 500 companies had embedded some form of ESG or DEI metric into their executive pay structures. Whether via emissions targets, board diversity ratios, or employee engagement scores, the message was clear: CEOs were expected to lead ethically and sustainably.
But was this shift as effective as hoped? Critics, including Strive, began to question whether these metrics were truly driving change—or simply enabling companies to signal virtue without delivering results.
Who Is Strive Asset Management—and Why Are They Disrupting the Game?
Strive Asset Management, launched in 2022 by entrepreneur and former presidential candidate Vivek Ramaswamy, is now led by CEO Matt Cole. With approximately $1.8–1.9 billion in assets under management , Strive embodies a corporate governance philosophy rooted in shareholder primacy, meritocracy, and financial outcomes—explicitly rejecting agendas tied to environmental, social, or diversity targets.
Their mission is unapologetically activist: they aim to use board governance best practices and shareholder influence to shift compensation frameworks toward growth and value, not external mandates. Their campaign has influenced over 60 companies to remove climate or diversity objectives from CEO pay packages.
Strive’s brand is sharply defined—labeled the “anti-ESG fund” in Bloomberg and credited by the Financial Times for accelerating boardroom reconsideration. But while critics paint them as ideological, Strive frames its campaign as a return to disciplined, financially material incentives—no wake-tabbing needed.
The Origins of Incentive Innovation: Why ESG and DEI Entered the Pay Equation
To fully grasp the motivations behind Strive’s rebellion, it’s essential to understand how ESG and DEI found their way into CEO pay in the first place. This wasn’t a random inclusion—it was the result of a decade of evolving pressure from a mix of institutional investors, regulators, proxy advisors, and the public.
2.1 The Shift from Shareholder to Stakeholder Capitalism
In the 2010s, governance narratives began evolving from strict shareholder return maximization toward stakeholder capitalism. This meant that companies were being asked to deliver value not just to shareholders, but also to employees, communities, and the environment. Linking ESG goals to executive pay was seen as a credible way to signal that these broader obligations were being taken seriously.
2.2 Influence of Large Asset Managers
Firms like BlackRock, State Street, and Vanguard began urging companies to include ESG metrics in executive compensation as part of their stewardship priorities. In annual letters to CEOs, these firms routinely encouraged boards to tie pay to sustainability and DEI targets as part of responsible capitalism.
2.3 Proxy Advisor and Regulatory Pressure
Leading proxy advisors such as ISS and Glass Lewis began rating companies based on how well executive compensation aligned with ESG values. Meanwhile, Europe’s regulatory bodies began enshrining ESG accountability into law—including disclosure expectations that eventually shaped board priorities.
2.4 Market Signaling and Reputation
From the board’s perspective, ESG-linked pay wasn’t just about compliance—it was also optics. Companies wanted to show they were doing the right thing. Tying bonuses to sustainability scores or DEI benchmarks became part of the brand promise.
But herein lies the issue Strive raised: if these metrics were more symbolic than strategic, were they truly serving shareholders? Or were they being gamed, poorly measured, and inconsistently enforced?
Understanding this historical context shows that ESG-based compensation structures were not created overnight—nor will they be undone without consequences.
The Heart of the Debate: Why Decoupling Matters
The Rise of ESG Compensation
Modern CEO compensation routinely includes environmental targets (e.g., emissions reduction), social benchmarks (e.g., workforce safety), and governance goals.
In 2023, ~75% of S&P 500 linked pay to ESG or DEI metrics—a dramatic jump reflecting investor, regulator, and societal pressure.
The promise? Raise the bar on sustainability and equity by formally incentivizing purpose.
Strive’s Pushback
Strive argues that embedding non-financial metrics dilutes focus on shareholder value and introduces legal risks—especially amid politicized DEI debates.
They posit that vague metrics can be symbolic window dressing, easily achieved yet rewarded, without real strategic progress.
Counterpoints and Nuance
Proponents of ESG pay suggest well-constructed metrics catalyze meaningful action—especially where sustainability, supply chain ethics, or workplace culture is strategically material.
However, backlash is real: political pressure has pushed US companies to hide DEI targets or soften reporting—Goldman Sachs and Meta recently stripped DEI from public disclosures.
Moreover, regulators, particularly in the EU, increasingly demand ESG disclosure—creating complexity when pay is decoupled.
The Boardroom Dilemma
Boards today are navigating a governance minefield. On one side, they must deliver on financial performance, preserve investor confidence, and ensure CEO accountability. On the other, they face growing expectations to reflect stakeholder values and social responsibility through tangible leadership action.
This tension is not just philosophical—it’s operational. Should boards tie executive incentives to climate risk management? To DEI hiring goals? Or should they return to the fundamentals of financial performance alone? There is no one-size-fits-all answer.
Strive’s campaign has underscored a crucial inflection point: when does ESG-linked pay become a distraction from strategy—and when is it essential for it? Boards are now being asked to confront that question head-on. The challenge is not simply whether to include ESG in pay—but how to do so in a way that’s strategic, material, defensible, and aligned with long-term value creation.
This dilemma will define boardrooms for years to come.
Case Studies: Companies That Made the Shift
Here are examples of firms that decoupled CEO compensation from DEI metrics, often under Strive’s radar:
Starbucks
In 2023, 30% of executive bonus potential was tied to ESG/DEI goals. By 2024, that weighting dropped to 25%, and numeric quotas were replaced with broader “belonging” targets. Strive was allegedly involved via private outreach.
McDonald’s
One of the most publicly targeted firms: McDonald’s quietly removed explicit diversity targets for workforce and suppliers. They scaled back DEI in communication, citing political and shareholder pressure, and Strive’s early involvement.
John Deere & Tractor Supply
These industrial titans quietly restructured executives’ scoresheets—dropping DEI and ESG from bonus goals. Tractor Supply later faced shopper surveys showing 78% positive reaction to scrapping DEI initiative.
Best Buy, Chipotle, Johnson & Johnson, Carnival, Ally, AMD, Motorola, Regions Financial
These 12 companies (“blue-chip” and mid-cap alike) reoriented executive pay, removing diversity criteria. Strive switched from opposing CEO pay plans one year to supporting them the next, a telltale sign of its influence.
4.1. Numbers That Speak
CEOs without DEI-linked pay rose from ~65% to over 70% of S&P 500 by late 2024. 29 companies dropped DEI from pay in 2024 vs. 20 in 2023—evidence of acceleration in the backlash.
Not every board was theatrical. Many moves were quiet and measured, reflecting internal nuance. Starbucks, for example, retained DEI language—just more qualitative—and still emphasizes diversity via culture and recruitment. This reality raises the question: Has the shift been substantive or merely cosmetic?
Understanding Strive’s Playbook: Governance Without Theatrics
Strive’s influence isn’t always loud—but it is methodical. Here’s how they operate:
5.1. Voting Equilibrium
Strive votes against CEO pay plans containing ESG/DEI metrics; once removed, it votes for. That binary signaling has pushed boards to reassess.
5.2. Private Engagement
Their team has held confidential discussions with at least a dozen companies, including high-profile firms like Southwest Airlines, warning them of activist votes.
5.3. Public Campaign Amplification
Media has spotlighted their efforts: Bloomberg called Strive “anti-ESG,” and FT credited them with reshaping compensation practices.
5.4. Product Strategy & Brand Leverage
Strive’s launch of an anti-ESG direct indexing product—available via Fidelity and Charles Schwab—targets retail advisors and amplifies their core narrative.
5.5. Institutional Signal
Strive’s growth trajectory signals a rising investor segment focused on shareholder primacy. Institutional holders and proxy advisors are now taking note.
The Risks & Oversights of a Flat Cut
Decoupling CEO compensation from ESG and DEI isn’t cost-free. Boards must weigh:
6.1. Strategic Risks
Not all ESG/DEI initiatives are trivial—some are deeply material (e.g., climate transition, workforce culture, supply chain security).
Over-correction may dilute meaningful oversight (e.g., human capital, succession planning, sustainability).
6.2. Reputational and Stakeholder Cost
Employees, customers, and investors who prioritize purpose may see decoupling as backsliding.
Notable pullbacks—like those at Meta and Goldman—prompted backlash amid broader public discourse.
6.3. Regulatory Inconsistency
EU’s Sustainable Finance Disclosure Regulation (SFDR), Germany’s Lieferkettengesetz, and potential US equivalents still require robust ESG reporting—even absent compensation links .
6.4. Oversight Gaps
Vague “belonging goals” without metrics can undermine accountability. Some boards may misinterpret Strive’s critique as a mandate to abandon all measures—which risks masking actual deficiencies.
Boardroom Toolkit: CEO Pay in an ESG‑Evolving World
Directors navigating this terrain will benefit from a flexible, proven toolkit:
Step 1: Conduct Materiality Mapping
Use frameworks (e.g., SASB, TCFD) to identify ESG/DEI factors genuinely tied to performance, risk, and culture.
Step 2: Ensure KPI Integrity
Focus on measurable, strategic metrics—like workforce turnover, emissions reductions, or gender/labor diversity tied to performance, not buzzword press releases.
Step 3: Embed Flexibility
Build in gating mechanisms and adapt goals post‑M&A or after market shocks—ensuring incentives stay aligned.
Step 4: Appreciate Mixed Compensation
Balance short-term metrics with long-run incentives. Consider tying meaningful ESG/DEI targets to LTIP rather than annual bonus, when warranted.
Step 5: Governance Documentation
Record engagement with activists like Strive and how boards responded—this creates transparency and accountability.
Step 6: Stakeholder Communication
When targets are removed, proactively explain why and describe alternative oversight methods.
Step 7: Monitor & Evolve
Continue to survey investor sentiment, workforce input, and regulatory signals. Quickly pivot if new strategic or reputational inflection points emerge.
A Balanced Perspective on the Strive-Led Shift
The recent wave of decoupling CEO compensation from ESG and DEI metrics reflects a disruptive reordering of modern governance thinking—carrying both compelling rationale and unintended consequences. Here’s a clear-eyed view:
What’s working: The movement has forced boards to re-examine the materiality of executive incentives. It’s pushed companies to rethink tokenistic metrics and cut out DEI goals that were too vague, cosmetic, or easily gamed. In many cases, that discipline was overdue.
Where it backfires: Some companies have responded by overcorrecting—abandoning initiatives that were not just PR-friendly, but strategically critical. The risk is that performance blind spots re-emerge, especially in areas like leadership pipeline diversity, workforce culture, and long-term sustainability.
The label game: There’s also a growing trend to swap language—replacing “diversity” with “belonging” or “people impact.” While this may ease scrutiny, it can obscure actual accountability if not grounded in measurable, consistent targets.
Global misalignment: Regulatory frameworks in Europe and parts of Asia are expanding ESG reporting requirements. A sharp pullback in ESG-linked pay in the U.S. could create compliance mismatches and strategic dissonance for multinationals.
The bottom line? Decoupling can be a smart governance move—but only when it's informed by a structured materiality analysis. Where non-financial factors remain strategically relevant, it’s better to retain them—with clarity, precision, and alignment to enterprise value—than to remove them reflexively.
Investor Fragmentation and the Future of ESG-Linked Pay
While Strive’s anti-ESG stance has gained traction, the larger investing ecosystem remains highly fragmented. This division among shareholders is creating a complex operating environment for boards, one where there is no longer a unified investor voice on ESG-linked compensation.
9.1 Competing Shareholder Philosophies
For every activist investor urging decoupling, there’s an institutional fund demanding stronger ESG commitments. BlackRock, for instance, still supports ESG-linked KPIs in certain contexts, while Strive insists they should be removed altogether. Proxy voting trends have revealed increasing divergence in ballots cast—some favoring climate and diversity disclosures, others opposing them outright.
This polarization means that boards often face conflicting shareholder expectations within the same reporting cycle. One group rewards purpose-driven leadership; the other penalizes it as “mission creep.”
9.2 Generational Pressures
Younger investors and employees continue to prioritize ESG goals. Surveys from 2023 and 2024 show that millennials and Gen Z investors are more likely to withdraw funds from firms that publicly walk back diversity or sustainability targets—even when those changes are tied to compensation.
Boards, therefore, must also manage reputational capital beyond the proxy vote—especially when ESG rollback stories make headlines.
9.3 The Middle Ground: Customization
Rather than binary choices—include or exclude ESG/DEI from pay—some boards are experimenting with custom hybrid models. These include:
Weighting ESG/DEI goals at 5–10% of the total bonus (instead of 30%)
Converting quantitative quotas into qualitative progress indicators
Using ESG metrics only at the long-term incentive plan (LTIP) level
These moves attempt to balance stakeholder pressures with performance-based rigor.
9.4 Looking Ahead: Volatility as the New Normal
The conversation around CEO pay and ESG will not settle anytime soon. As politics, markets, and climate realities evolve, so will the pressures on boards. What’s emerging is a governance world that requires more dexterity, not less.
Boards will need to engage more deeply with their shareholders, transparently communicate compensation rationales, and revisit incentive structures annually—if not more often.
In a fragmented investment landscape, the ability to defend your design choices with clarity and context will be the true governance advantage.
Conclusion
Strive Asset Management has challenged the status quo, arguing that ESG compensation and DEI metrics tied to CEO pay often misdirect energy and undercut shareholder-aligned incentives. Their campaign has shifted corporate strategy: over 60 companies have dropped such targets, and DEI weighting fell notably within the S&P 500.
But the road to decoupling is not unidirectional. Boards must ensure they don’t jettison accountability when strategic needs demand it—especially amid increased regulatory expectations.
The takeaway: Strive’s campaign is a wake-up call—not a manifesto. Boards need a materiality-driven, nuanced recalibration of incentives, not an ideological purge.
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