Ralph Lauren has replaced sustainability targets with artificial intelligence (AI) metrics in its executive bonus scheme for 2026, making it one of a small number of publicly listed retailers to link senior leaders’ pay directly to AI adoption.

The fashion company removed its sustainability measure from its short-term incentive plan after four years, according to a June filing with the US Securities and Exchange Commission. AI goals now sit alongside sales growth and operational costs among the factors used to adjust annual incentive payouts.

A Ralph Lauren spokesperson said the new target reinforced “opportunities for leveraging AI to enhance our work”. The spokesperson added that sustainability initiatives had made meaningful progress and that the company’s work in this area had matured and become operationalised throughout its business.

Data from the Conference Board and ESGUAGE shared with Reuters shows that 12 per cent of S&P 500 companies disclosed AI-related goals in executive incentive plans in 2026, up from five per cent in 2024. However, consumer businesses remain behind sectors such as financial services and communications in incorporating AI into executive compensation.

Cory Morrow, a partner at Korn Ferry who leads its consumer and retail executive pay practice, told Reuters that linking bonuses to AI was an “emerging practice”. He said companies were still establishing measurable baselines for AI performance, while financial indicators such as sales growth and profitability would continue to account for most executive incentive plans.

Ralph Lauren said its fiscal year 2026 incentive plan, which covered the year to March, was designed to focus executives on “AI literacy and enablement”. The company reported “strong performance of our AI metrics” during the period, contributing to maximum payouts for top executives, according to its regulatory filing.

The company’s decision follows wider efforts by retailers to incorporate AI into business operations, including inventory management, pricing and customer-facing shopping assistants. Ralph Lauren added AI to its chief digital officer’s title last year, while US retailer Target appointed its first chief AI officer in August.

Despite the growing interest, AI-linked executive compensation remains uncommon across listed companies. Compensation adviser Pearl Meyer found that just two per cent of public companies had incorporated AI into executive incentive structures, based on a review of 2,500 proxy statements filed in 2026.

Patrick Haggerty, a managing director at Pearl Meyer, told Reuters that Ralph Lauren was “probably ahead of the curve” in its approach. Matteo Tonello, head of data benchmarking and analytics at the Conference Board, described the move as notable for the retail sector but cautioned that it did not yet indicate a broader industry-wide shift.

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