Ralph Lauren Ties Executive Bonuses to AI Metrics as Retail Lags

Ralph Lauren has added AI metrics to the factors that adjust annual incentive payouts for its executives, one of the first major retailers to do so, according to a Reuters report published earlier this month. Reuters found the change buried in a 131-page SEC disclosure. A Ralph Lauren spokesperson told Reuters the change reinforced to executives "opportunities for leveraging AI to enhance our work."

The fashion house is ahead of the curve. Reuters reported that "about 12% of companies in the S&P 500 index disclosed AI-related goals in their executive incentive plans this year, up from 5% of companies in 2024." Most of them, though, are technology companies such as Salesforce or IBM. In retail specifically, tying AI to executive pay remains mostly unheard of.

Why is AI so hard to tie to pay?

The short answer: retailers are still experimenting. Adoption has exploded — Walmart, Target and Kroger have all launched AI shopping assistants in the past one to two years, and platforms like ThredUp have built AI search tools into their sites and apps. But few brands can clearly connect the technology to revenue, beyond cutting costs.

"Even though we're definitely in an AI boom, it's still early days on how companies are actually utilizing it and seeing massive returns, and I think there's just a push and pull," said Anish Shah, CEO of executive recruiting firm Ruckus.

Behind the scenes, engineers use AI to write code, marketing teams are expected to use it for creative ideation, and nearly every tool a retailer touches — inventory management software, email platforms — now ships with AI built in. Widespread deployment has not yet translated into measurable top-line gains.

What do incentive plans signal?

Incentive plans set the tone for "what is important to the company for this year," said Cory Morrow, senior client partner at Korn Ferry, who focuses on executive pay and governance. Historically, payouts hinged on financial metrics like sales performance. Over the last five or six years, companies have added strategic objectives such as Net Promoter score gains, e-commerce growth and, starting six years ago, diversity, equity and inclusion targets.

Still, Morrow said, "incentive design will always be primarily driven by company financial performance."

Is AI changing hiring and comp?

Not yet, according to recruiters. Shah said every C-suite and VP-level interview now includes questions about how candidates have incorporated AI into their workflows. But much of the conversation centers on cost-cutting. He is seeing more junior hires — a VP of marketing rather than a chief marketing officer — and new leaders arriving with mandates to run leaner teams.

"Let's say, maybe years ago, a CMO might come in and need to have a team of 10. The idea is now, well, maybe you have a team of three or four, and AI can fill in some of those gaps," Shah said.

Executives want candidates "doing more than just using ChatGPT or Claude as a search engine," he added, with hiring briefs increasingly citing "agents running autonomously" or "workflows running autonomously." A parallel worry is growing about AI-generated "slop": Shopify CEO Tobias Lütke warned on a podcast earlier this year about employees lobbing AI "slop grenades" — higher output, lower quality, leaving colleagues to clean up.

The blocker remains measurement. AI may cut costs or generate ad creative at a significantly lower CAC, but the revenue story is not yet mapped out. "Cost cutting can be helpful for a business, but I think everyone's goal is revenue growth," Shah said. Until retailers can show where AI drives significant revenue, executive pay will likely stay tied to the numbers they already trust.