Boardroom Battles Ahead Over Resolutions Seeking Median Pay Equity for Women
Arjuna Capital, an investment firm specializing in sustainable and ethical investing, had asked a dozen bank and tech companies to reveal their median pay gaps.
March 07, 2019 at 05:40 PM
5 minute read
The latest battlefield over equal pay for women will be in U.S. boardrooms, as investors seek shareholder votes on resolutions demanding that nearly a dozen companies reveal their “global median gender pay gaps.”
Arjuna Capital, an investment firm specializing in sustainable and ethical investing, had asked a dozen bank and tech companies to reveal their median pay gaps. So far only Citigroup Inc. has complied, in a Jan. 16 release that showed the median pay for women globally was 71 percent of the median pay for men.
So Arjuna's managing partner, Natasha Lamb, guided shareholders to file resolutions demanding the data from the other 11 companies, identified as Adobe, Amazon.com Inc., Intel Corp., Facebook Inc., Google Inc., Bank of New York Mellon Corp., Bank of America Corp., Wells Fargo, American Express Co., JPMorgan Chase & Co., and MasterCard Inc.
Median pay is what the employee who is right in the middle of a company's pay scale earns, without any adjustments for type of work, experience or other factors. The shareholders want to know what the gap is between the median pay for females and for males, because that number arguably shows how much women are underrepresented in higher paying positions at a company.
Under Lamb's plan, at this year's annual meetings all shareholders would vote on the resolutions to determine whether or not the organizations must disclose the median pay information, along with any associated risks.
Wells Fargo and Bank of America both asked the U.S. Securities and Exchange Commission to block the resolutions, arguing that the proposal was really two proposals in one, and that the shareholders were trying to “micromanage” the company. The SEC disagreed Feb. 21, and told the banks the resolutions were acceptable.
MasterCard also objected, and its request to block the resolution is pending before the commission.
Lamb was not available for comment Thursday. But Amherst, Massachusetts attorney Sanford Lewis, who represents the shareholders before the SEC, told Corporate Counsel that median pay “is a good way to compare companies to see what's the distribution of highest paid positions. A big gap between median male and female pay tells you that men are getting promoted and women are not.”
Lewis said such a gap raises an important investor question “over the perception created internally that women are not eligible for the highest paid positions.” He told the SEC that the pay gap can make it difficult to retain talented women employees and can create public policy risks based on the efforts of countries like the United Kingdom, which has passed rules to help close the gender pay gap.
Spokesmen for Bank of America and Wells Fargo declined comment. They were represented by Ronald Mueller and Elizabeth Ising, of Gibson, Dunn & Crutcher. Mueller said the law firm would not comment on the issue.
Corporate attorney Annette Tyman, a partner at Seyfarth Shaw in Chicago, co-leads the firm's pay equity group and is a member of its complex discrimination litigation practice. Though she could not disclose what her corporate clients are saying about the median pay gap, Tyman said, “Let's just say I'm very familiar with the issue.”
Tyman said her concern is “about what the median pay number actually shows. It is simply just the middle and doesn't take into account a global analysis of different jobs in different countries. The question is really about context. It's not an apples-to-apples comparison.”
Tyman said most employers are already thinking about how to achieve pay equity. But she argued that how a person gets promoted has to do with choices that an employee makes in his or her life—where to go to school, what skills to acquire.
“It's a much broader issue than just equal pay for equal work,” she said. “Median pay information can be misconstrued unless you understand what the data is telling you, and what it is not telling you.”
Lewis agreed that raw median pay “is a different thing” from adjusted figures for equal pay for equal work. “The thrust of the resolution is really to determine what are the opportunities for women to be promoted within a company,” he said.
And that appears to be how Citigroup saw it as well. In its January statement, the bank said its 71 percent median pay gap “reiterates the importance of our goals to increase representation of women and U.S. minorities in senior and higher-paying roles at Citi.”
The bank said its goals include increasing representation at the assistant vice president through managing director levels to at least 40 percent for women globally and 8 percent for black employees in the U.S. by the end of 2021.
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