Big banks are next tar­get over pay gap

The Washington Post Sunday - - CAPITAL BUSINESS - BY JENA MCGRE­GOR jena.mcgre­gor@wash­

Last year, the in­vestor Ar­juna Cap­i­tal helped urge seven tech com­pa­nies to do some­thing un­ex­pected: pub­lish the per­cent­age pay gap that ex­ists be­tween their male and fe­male em­ploy­ees and com­mit to clos­ing it.

Now the wo­man be­hind that push is tak­ing aim at an­other in­dus­try known for its male­dom­i­nated work­place: the fi­nan­cial sec­tor.

Natasha Lamb, man­ag­ing di­rec­tor of Ar­juna Cap­i­tal, which fo­cuses on sus­tain­able and so­cial im­pact in­vest­ing, said Thurs­day she had filed pro­pos­als at six fi­nan­cial com­pa­nies urg­ing them to pre­pare a re­port ad­dress­ing their goals at re­duc­ing the gen­der pay gap and in­clud­ing the per­cent­age gap be­tween the pay of men and women. The banks and credit card firms tar­geted are Cit­i­group, Wells Fargo, Amer­i­can Ex­press, MasterCard, Bank of Amer­ica and JPMor­gan Chase.

“It makes no sense to hold Amer­ica’s top tech com­pa­nies to a high stan­dard on gen­der pay eq­uity and then pre­tend that banks should be al­lowed to dis­count the is­sue and op­er­ate with no trans­parency,” Lamb said in a con­fer­ence call with re­porters.

Lamb said she was go­ing after the ma­jor banks in part be­cause fi­nan­cial ser­vices is such a male­dom­i­nated in­dus­try. In the pro­posal, she cited data from the Bureau of La­bor Statis­tics, which shows fe­male fi­nan­cial ad­vis­ers were paid 61.3 per­cent of what men in the field were in 2014, the widest of oc­cu­pa­tions re­viewed, as well as a 2016 study from the man­age­ment con­sul­tancy Oliver Wyman show­ing it will take three decades be­fore women make up 30 per­cent of the in­dus­try’s ex­ec­u­tive com­mit­tees. Other re­search cited showed links be­tween risks and re­wards for in­vestors in com­pa­nies that have di­verse ex­ec­u­tive teams.

Lamb said she has been in di­a­logue with all the com­pa­nies in ques­tion, but most of the fi­nan­cial firms have been more op­posed to her pro­posal. “We’ve seen a night and day dif­fer­ence in the tech and fi­nan­cial worlds,” Lamb said.

All but one of the six com­pa­nies have come out against the pro­posal, Lamb said; she has not got­ten an an­swer from MasterCard. Among the nine tech com­pa­nies she worked with last year, only three for­mally op­posed the res­o­lu­tions in their prox­ies, one of which was eBay, where an un­usu­ally high num­ber of share­hold­ers voted in fa­vor of the pro­posal and the com­pany said it would share its anal­y­sis pub­licly.

Of course, the tech com­pa­nies re­vealed nearly nonex­is­tent pay gaps when an­a­lyz­ing peo­ple work­ing in sim­i­lar jobs, which may have made them more will­ing to share the in­for­ma­tion. Those num­bers also over­look the in­dus­try’s po­si­tion gap: Men and women may earn roughly the same in the same jobs, but men are more fre­quently in high­er­pay­ing roles in both of th­ese in­dus­tries.

Mean­while, four of the banks — Wells Fargo, Bank of Amer­ica, Amer­i­can Ex­press and Cit­i­group — de­fended their num­ber of fe­male lead­ers and their pay prac­tices in lengthy sec­tions of their proxy state­ments. In them, the com­pa­nies high­lighted a range of in­ter­nal ef­forts to pre­vent bias and im­prove the num­ber of women and mi­nori­ties. They also noted their use of third-party con­sul­tants to check for pay eq­uity and the recog­ni­tion they’ve re­ceived for di­ver­sity and lead­er­ship in­volve­ment in di­ver­sity pro­grams. As a re­sult, Lamb’s pro­posal was de­scribed by the com­pa­nies as un­nec­es­sary.

In an emailed state­ment, Cit­i­group spokesman Mark Costiglio added, “We have had pro­duc­tive dis­cus­sions with Ar­juna Cap­i­tal on their pro­posal and look for­ward to con­tin­ued en­gage­ment on this is­sue.” JPMor­gan has not yet re­leased its proxy, and a spokesman de­clined to com­ment, though Lamb said she ex­pects the com­pany to op­pose the pro­posal, pend­ing fur­ther di­a­logue.

A spokesman from MasterCard, which also hasn’t re­leased its proxy, said in an emailed state­ment that it would be pre­ma­ture to com­ment on the res­o­lu­tion but that the com­pany “strive[s] to en­sure gen­der pay par­ity. We reg­u­larly ex­am­ine pay prac­tices and, at our com­pany, both in the U.S. and glob­ally, men and women in the same level earn equal pay for equal per­for­mance.”

Ar­juna is not the only in­vestor to pro­pose votes about the gen­der pay gap this year; in­vestors Pax World and Zevin As­set Man­age­ment have also filed pro­pos­als, though some have been with­drawn after di­a­logue with com­pa­nies.

How bank in­vestors will vote on the mea­sure won’t be clear un­til com­pa­nies hold their an­nual meet­ings in the com­ing weeks. Votes for “so­cial” res­o­lu­tions like th­ese are typ­i­cally low — last year, just 5 per­cent of in­vestors voted in fa­vor of a gen­der pay gap pro­posal from Tril­lium As­set Man­age­ment. But Lamb says her pro­posal is not as “pre­scrip­tive” as the one at Cit­i­group last year and be­lieves her suc­cess at eBay shows there may be more in­ter­est in the topic.

Be­ing trans­par­ent, Lamb be­lieves, “is in the en­light­ened best in­ter­est of th­ese com­pa­nies.” As in­vestors be­come more and more at­tuned to the data link­ing di­ver­sity and fi­nan­cial re­turns, it’s be­come clearer “this is not a niche is­sue. It’s a main­stream in­vestor is­sue, and that’s be­cause there’s a busi­ness case to sup­port it.”


JPMor­gan Chase is one of six fi­nan­cial com­pa­nies be­ing urged by Ar­juna Cap­i­tal to pre­pare a re­port pub­li­ciz­ing their gen­der pay gap and goals for re­duc­ing it.

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