Why are public companies facing shareholder proposals on the topic of pay equity?
Despite overtaking men as majority of the U.S. workforce in early 2020 and earning more college degrees than men overall, women continue to earn approximately $0.82 for every dollar earned by men. Women of color have a larger wage gap, and suffer significant cumulative lifetime wage loss as a result. Moreover, an estimate from the Institute for Women’s Policy Research predicts that women will not reach pay parity until 2059. It is predicted that will come even later for women of color, with Black women reaching parity in 2133 and Hispanic women in 2220.
Black men are affected too, with a 2019 PayScale analysis finding that they had largest uncontrolled pay gap relative to white men. That means that even as black men climb the corporate ladder, they continue to make less than equally qualified white men and are the only racial/ethnic group that don’t achieve pay parity with white men at some level.
The impact of these disparities goes beyond the women directly affected. For example, a 2018 World Bank study estimated that the gender pay gap costs the global economy an estimated $160 trillion and that, per capita, gender inequality in earnings could lead to losses in wealth of $23,620 per person globally, with losses largest in OECD countries. Meanwhile, Citi has estimated that $16 trillion has been erased from the U.S. GDP over the last two decades due to racial discrimination, further finding that $5 trillion could be added to the economy over the next five years if the racial divide is addressed.
Last year more than a dozen public companies faced proposals on this topic. This proxy season, boards and management will once again be asked to report on internal pay gaps, and how they are being addressed. Investors will be asked to vote — and will need to understand the issues involved. Glass Lewis’ new Pay Equity report provides crucial context, from background on why these problems arise, to regulatory and shareholder response, to legal ramifications. The report is part of Glass Lewis’ “In-Depth” series, a growing library of ESG-focused literature that illuminates the topics at the top of the agenda for investors and public companies.
In-Depth: Pay Equity is available now. Glass Lewis customers can access the report on Viewpoint via the Help & Resources menu, or Governance Hub, or contact their Glass Lewis Representative for more information.
Not yet a customer? Click on the button below to download.
