It’s no secret that there’s a pay gap in the finance industry. Female personal financial advisors, for example, earn about 59% of what their male counterparts do, according to the Bureau of Labor Statistics.
But data about pay gaps at specific firms is hard to come by, which is an issue not only for firms that want to attract and retain more female employees and promote more women into leadership positions but also for investors in those firms.
Companies with three or more women in executive leadership positions tend to have higher profits and stronger stock price growth than other firms, according to McKinsey & Co.
On Tuesday, in commemoration of International Equal Pay Day — the day that women’s average pay equals that for men in the previous year — Arjuna Capital, a boutique wealth management firm, in conjunction with Proxy Impact released the Gender Pay Scorecard (GPS) for 33 leading U.S. companies, including 13 financial firms.
The scorecard is based on corporate disclosure of gender pay gaps, which is not required in the U.S. but is required in the U.K. In the U.S., many firms report gender pay numbers adjusted for such variables as job category, seniority and geography even though they’re not required to do so. Firms operating in the U.K. must report the median pay and median bonuses for women compared to men.
Five of the 13 financial firms graded by the scorecard received a failing grade: Goldman Sachs, MetLife, Key Corp. Progressive Insurance and Discover Financial Services, primarily due to “lack of qualitative reporting, commitments toward equal pay and global coverage of employee pay,” according to the report.
(Related: Record Number of Women Became CFPs in 2017)
Metlife and Goldman Sachs did disclose median pay and bonuses for U.K. employees, but women working full time there earned about two-thirds the pay of men, and their bonuses were about 40% smaller.
“Some of the biggest and best known companies in the world are still behind the curve on equal pay,” says Natasha Lamb, a co-founder and managing partner of Arjuna Capital in a statement and co-author of the GPS. “It’s not enough to pay lip service to pay equity, to simply say that women are paid fairly; investors expect meaningful disclosures and goals to close the gender pay gap.”
In 2018 Arjuna Capital filed gender pay equity shareholder proposals at nine financial firms. Three of those firms merited the top A-minus grade in the company’s gender pay scorecard: Wells Fargo, Bank of New York Mellon and JPMorgan. Two got Bs: Bank of America and Mastercard, and three received a C: Citigroup, American Express and Reinsurance Group. (Progressive was the only firm that received a proposal and failed in the scorecard.)
JP Morgan, BNY Mellon and Wells Fargo had virtually no adjusted pay gaps between female and male employees, nor racial pay gaps, and JPMorgan and BNY Mellon, which have U.K. operations, paid female employees there above average compared to their peer group for hourly and bonus pay.
Bank of America, Mastercard and Citigroup had adjusted pay gaps of 9 to 10 cents on the dollar compared to men, and American Express and Reinsurance Group committed to disclosing pay information by the end of 2018.
“Disclosure is key, transparency is key, otherwise there is no accountability, Lamb told ThinkAdvisor.
Arjuna Capital, which specializes in impact investing for accredited investors, has $200 million in assets under management, Lamb said.