The Advisors' Blog

To mark Equal Pay Day earlier this month, Arjuna Capital & Proxy Impact issued their 5th annual “Racial & Gender Pay Scorecard” – which shows that 7 companies now earn an “A” grade out of the 57 surveyed. That’s up from 5 last year. The companies that appear in the scorecard have all at one point received shareholder proposals to improve their public pay equity disclosures. Over the past 7 years, 143 proposals have been 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.

On the scorecard, “F” grades are awarded to companies that don’t disclose quantitative racial & gender pay gaps. 24 companies fall in that category. Another 9 companies received lower scores than the prior year because they had previously committed to report information and, according to Arjuna, haven’t followed through. 13 companies improved their scores year-over-year. The Scorecard grades companies across 5 categories, looking at performance within industry sectors as well as across all sectors:

1. Racial Pay Gap

2. Gender Pay Gap

3. UK Pay Gap

4. Coverage

5. 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 & outcomes (I blogged a couple of weeks ago about a notable approval). Also check out this Orrick page that shows pay equity & 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 & inclusion on our brand new site, PracticalESG.com. Check out Ngozi’s blog yesterday about helping women overcome imposter syndrome in the workplace – and register today for our upcoming free DEI workshop series.

– Liz Dunshee