To mark Equal Pay Day on March 15th, Arjuna Capital and Proxy Impact issued their fifth annual “Racial and Gender Pay Scorecard,” which shows seven companies now earn an “A” grade out of the 57 surveyed. That’s up from five last year.
The companies appearing in the scorecard have, at one point, received shareholder proposals to improve their public pay equity disclosures. Over the past seven years, 143 proposals were filed at more than 80 companies, according to a press release from Arjuna.
This was a hot topic during our “Top Compensation Consultants Speak” webcast last week. Panelists noted that many companies have reported strong “pay equity” performance (equal pay for similar job levels). Now, investors and regulators are pushing toward the next frontier – “unadjusted pay gap” disclosure – which compares median pay without regard to job level and may be indicative of barriers to advancement. The unadjusted pay gap remains less transparent and persistently large – and was exacerbated by the pandemic.
“F” grades are awarded to companies that don’t disclose quantitative racial and gender pay gaps. Twenty-four companies fall in that category. Another nine received lower scores than the previous year because they had committed to report information and, according to Arjuna, haven’t followed through. Thirteen companies improved their scores year-over-year.
The scorecard grades companies across five categories:
- Racial Pay Gap
- Gender Pay Gap
- UK Pay Gap
- Coverage
- Commitment
Here’s how the scores are calculated:
The Racial & Gender Pay Scorecard assesses companies’ pay equity data against best-practice pay equity reporting standards, which consist of two important elements: (1) unadjusted median pay gaps, assessing how jobs are distributed by race and gender and which groups hold the high-paying jobs, and (2) statistically adjusted gaps, assessing pay between minorities and non-minorities, men and women, performing similar roles. While statistically adjusted gaps provide one piece of the story, median pay gaps are a tougher and more revealing standard. Median pay gaps show, quite literally, how the company assigns value to its employees through the roles they inhabit and the pay they receive.
It’s worth flipping through the 29-page report, because it summarizes recent regulations on this topic, as well as investor initiatives and outcomes (I blogged a couple of weeks ago about a notable approval). Also, check out the Orrick page that shows pay equity and pay transparency laws by state and tracks how companies have responded to pay equity shareholder proposals.
As workforce issues continue to take the spotlight, visit our “Gender & Racial Pay Equity” Practice Area on this site for a library of resources to tackle this evolving challenge. We’re also covering the broader topic of advancing diversity, equity and inclusion on our new site, PracticalESG.com. Check out Ngozi Okeh’s blog on March 28th about helping women overcome imposter syndrome in the workplace, and register now for our free DEI workshop series that starts April 13th.
— Liz Dunshee, CompensationStandards.com, March 29, 2022
