In less than a month, four of the biggest banks and financial institutions in the U.S. have disclosed efforts to remedy gender pay inequity. Responding to shareholder proposals from Arjuna Capital calling for detailed reports and wage data disclosure, the Bank of New York Mellon – the world’s largest custodian bank and asset servicing company – became the fourth bank since January 15th to agree to close both its gender and racial pay gaps. In response, Arjuna Capital withdrew its shareholder proposal at BNY Mellon.
Four of the nine banks and financial companies targeted by Arjuna Capital on gender pay equity have now taken action, measuring and ameliorating pay practices on key measures to the vicinity of 99 percent since facing shareholder pressure. On January 15th, Citigroup took the step of being the first US bank to disclose its gender pay gap through an internal announcement and salary adjustments. Bank of America quickly joined Citi on January 25,th becoming the second leading U.S. financial institution to address shareholder concerns on gender and racial pay equity. Wells Fargo made a similar announcement on Thursday, February 1.
In 2016, six of the originally targeted institutions — Bank of America, MasterCard, American Express, JP Morgan, Wells Fargo and Citi — all rejected shareholder proposals asking for detailed reports on the percentage pay gap between male and female employees across race and ethnicity, including base, bonus and equity compensation, policies to address that gap, the methodology used, and quantitative reduction targets. This year, Arjuna Capital filed gender pay equity shareholder proposals at nine leading financial institutions, also asking Bank of New York Mellon, Reinsurance Group, and Progressive Insurance to publish their gender pay gaps.
Natasha Lamb, managing partner, Arjuna Capital said: “Investors are demanding gender pay equity on Wall Street and we have no intention of easing up. This is not just about paying women a fair wage, it’s about transforming an industry that has overlooked and mistreated women for far too long. Women are 20 percent more likely to leave a career in finance than any other industry—that’s bad for business and it’s bad for investors. Equal pay is therefore a critical first step to retain and attract top talent. And despite recent attention to equal pay in the banking world, we know other problems remain entrenched, such as few women on boards and sexual harassment in the workplace.”
In its disclosure Bank of Mellon said: “At BNY Mellon, we are committed to providing equal pay for equal work. We plan to continue our review of pay practices to further this goal and, if necessary, to make adjustments, as appropriate.”
Lamb continued: “Many women in banking are getting long-overdue raises as this campaign rolls through the banking sector. After engaging these companies for over a year, it is clear that progress is being made. Unfortunately, women still hold the majority of lower-paying positions, while men dominate the executive suite. And while current disclosures show improvement based on an adjusted ‘equal pay for equal work’ basis, there is still work to be done to close the ‘median’ pay gaps at these companies. Step one is paying women fairly for the work they are doing now. Step two is moving those women to higher paying positions and reaping the performance benefits that more diverse leadership affords.”
Today’s step by BNY Mellon is notable for several reasons, including the fact that the historic financial institution – which dates back in part to two of the founders of the United States – handles $1.8 trillion in assets under management and $32.2 trillion in assets under custody as of December 2017.
The Arjuna Capital gender pay shareholder resolution at BNY Mellon is available online at: (http://www.arjuna-capital.com/wp-content/uploads/2018/02/Arjuna_BK-Shareholder-Proposal_Gender-Pay-Equity_2018.pdf). The BNY disclosure letter is available at: (https://www.bnymellon.com/us/en/newsroom/news/company-news/pay-equity-at-bny-mellon.jsp) And the letter withdrawing the resolution at BNY Mellon is available at: (http://www.arjuna-capital.com/wp-content/uploads/2018/02/Arjuna_Bank-of-New-York-Mellon-Withdrawal-Letter_02.05.18.pdf).
In 2015, Arjuna Capital created a model shareholder campaign for addressing gender pay issues in the technology sector. Eight of nine proposals were eventually approved by tech giants to disclose and close their gender pay gaps. Last year, Arjuna shifted its focus to women in finance.
The financial services sector has been under scrutiny for a lack of female representation in senior roles despite the fact women comprise a majority of its employees. In the UK, where employers are required to publish their gender pay gaps by April, banking peers have reported median pay gaps averaging 24 percent.