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As AI continues to reshape how organizations operate, one important topic in the AI discussion that seems to receive less attention is how compensation and incentive plans will need to evolve to reflect actual performance drivers. For example, one of several questions that begin to emerge: When an executive’s team uses AI to hit a target faster or cheaper, has that executive (and team) actually performed better, or has the technology simply lowered the bar for what “better” looks like? A new memorandum on the Harvard Law School Forum on Corporate Governance suggests most companies have not seriously addressed this question. Based on a review of roughly 2,500 proxy statements filed in 2026, the analysis identified only 58 companies, about 2%, that incorporate AI into executive incentive programs through formal metrics or strategic objectives, and of those, only 12% use an explicit AI metric. Most organizations instead embed AI within broader transformation or workforce objectives rather than naming it directly. The authors note that this gap matters because as AI increasingly drives measurable outcomes, compensation committees and HR leaders will need a clear philosophy and aligned practices. As CHROs and compensation committees evaluate how AI fits into incentive plans, the article offers seven guiding questions.
