Retail Executives' Bonuses Now Tied To AI Goals; Executives Begin Calling Everything AI, Including The Thermostat

NEW YORK—Retail executives who will now be paid partly on how well their companies use artificial intelligence spent Monday hunting through headquarters for things that could plausibly be called AI, a search that by midafternoon had reached the thermostat.

Modern Retail reported that retailers are still working out how to tie AI goals to executive pay. Ralph Lauren added "AI metrics" to its incentive plan, according to Reuters and a 131-page SEC disclosure, and about 12% of S&P 500 companies disclosed AI goals in incentive plans, up from 5% in 2024.

The hard part, compensation consultants said, is measuring it. "If you tie a bonus to revenue, you count the revenue," said Harlan Voss, a fictional pay consultant. "If you tie a bonus to AI, you count whatever the executive points at and says the letters A and I. We had one man point at a sandwich."

At one fictional apparel retailer, the chief operating officer announced that the company's HVAC system had "autonomously optimized ambient conditions in 312 stores." It had been set to 68 degrees in 2017. The board approved a 40% payout.

Things Executives Reclassified As AI Before Bonus Season

The thermostat	44%
Spellcheck	39%
An intern named Al	23%
The automatic door	18%
A Magic 8 Ball in the CFO's office	9%

Source: The Daily SKU Compensation Committee Observer; 140 executives, all of whom said this was a great question

"We had one man point at a sandwich."

Another executive said her team had deployed an "AI-powered decision engine" for markdowns. Questioned by auditors, it was revealed to be a spreadsheet with a cell that turns red. "The cell is very smart," she said. "It knows when to turn red."

Shareholder advocates urged caution, saying metrics should reward real outcomes. Executives agreed, and said their real outcome this quarter was renaming the outcomes.

Proxy season is expected to bring more such disclosures. At press time, one CFO had begun referring to his calculator as "a numerical agent," and his assistant, a human named Al, had been asked to start speaking in a slightly more robotic voice through March.