Davis Polk partner Kyoko Takahashi Lin was quoted in Agenda discussing the use of nonfinancial measures in companies’ annual incentive plans.

“This year’s usage of nonfinancial measures is reminiscent of how companies addressed uncertainty in their pay programs during the Covid-19 pandemic,” Kyoko said. “The pandemic made it very difficult for many companies to set their annual targets using only financial measures, so they looked more closely at nonfinancial measures as a way to appropriately remunerate their executives during turbulent times.”

That challenge has continued into 2025. “For example, the sudden rise in tariffs and foreign exchange fluctuations have made it yet again difficult for companies to set only financial measures,” she explained.

The article noted that the prevalence of diversity and inclusion measures has declined significantly over the past two years.

“After the Supreme Court case in 2023 ruled that affirmative action in college admissions is unconstitutional, many boards reviewed their human capital strategies, including associated annual bonus plans, for similar goals. If there was a metric that looked potentially problematic, they eliminated or modified it,” Kyoko said.

She added, “This development only accelerated following the executive orders of earlier this year, which took the view that many corporate DEI programs were illegal.”

“Boards Tap Strategic Pay Metrics to Ease Uncertainty,” Agenda (December 15, 2025) (subscription required)

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