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When shareholders want to talk about pay equality, but companies don’t

Walmart employees stock the shelves at a Walmart store on February 19, 2015 in Miami, Florida. (Photo by Joe Raedle/Getty Images)

Across the country, conversations about the gender pay gap are gaining prominence. In Washington, the Paycheck Fairness Act got a big push from Democrats before ultimately stalling in Congress last year. President Obama also signed two executive actions to boost pay transparency among federal contractors. Meanwhile, in Hollywood, a bizarre cyberattack revealed that even big-name female stars get paid less, prompting actresses to speak out on the disparity — such as Patricia Arquette who gave a rousing speech on equal pay at the Oscars.

And in company boardrooms, the issue could get pushed onto annual shareholder meeting agendas. As proxy season begins, three major companies — eBay, ExxonMobil and Wal-Mart Stores — have each been hit with proposals from shareholders calling for them to publicly disclose any pay disparities between male and female employees.

Not surprisingly, all three companies are opposing the proposals. Wal-Mart and ExxonMobil have asked the Securities and Exchange Commission for permission to exclude the measures from their proxies, the forms that determine what's covered during their annual meeting.

In recent years, companies have received shareholder proposals for greater gender diversity on their boards, yet these proposals for pay-difference disclosure appear to be a new tactic. According to sustainable investment firm Arjuna Capital, the proposal at eBay marks the first time that the gender pay gap has been put to the proxy ballot of a U.S. company. The effort aims to get eBay to publicly report any difference in pay between male and female employees and then set goals to close the gap.

Arjuna, which filed the resolution, said eBay is opposing it. A spokeswoman for eBay said in an e-mail that the company would not comment further on proposals ahead of its proxy filing, but "remains committed to fostering all types of diversity including gender diversity."

Natasha Lamb, who directs equity research and shareholder engagement for Arjuna, said she targeted the proposal to eBay not because it's any worse than its peers — precisely the opposite. Its diversity numbers are actually higher than many of the tech companies that have shared the percentage of women and minorities in their ranks. "[EBay is] a company that’s working on gender equality issues, and they have an opportunity to address this even larger issue of gender pay equality," she said. The "issue is endemic to Silicon Valley and eBay has the opportunity to be a leader." 

Eve Sprunt, a former energy industry executive and geophysicist, said she filed her proposal at ExxonMobil because she felt its massive size and position as an industry leader could help shine a spotlight on the topic. Still, she's aware its odds of passing are "nonexistent"— that is, if it even gets on the ballot.

"It brings attention to the issue, and that’s what I want," Sprunt said. "I’m a veteran in the trenches and have seen a huge amount of change for women over the years. What I’m trying to do at this point in my life is pay it forward."

Sprunt's proposal calls for ExxonMobil to annually report to shareholders the percentage of women in several different percentiles of compensation, such as how many women comprise the top 50 percent and top 10 percent of earners in the organization.

In a letter to the SEC, ExxonMobil's lawyers said the proposal was related to general employee compensation and "deals with matters related to the company's ordinary business operations," and thus requested that the SEC take no action against ExxonMobil if it omits the proposal from its proxy. Spokesman Scott Silvestri said in an email that the company already shares its progress on diversity in its annual Corporate Citizenship Report, "which provides a better illustration of its commitment to diversity than the reporting of additional pay data as requested in the proposal."

Wal-Mart, meanwhile, is fighting a proposal filed by Cynthia Murray, an employee at a store in Laurel, Md., and a member of the OUR Walmart organization that's pushing the company on better work schedules and pay increases. The proposal asks that the retail giant "set a goal of eliminating gender-based pay inequity" and give shareholders an annual report "on actions taken and progress made toward that goal."

"We want to see the statistics," Murray said.

Like ExxonMobil, Wal-Mart wrote in a letter to the SEC that it was seeking to exclude the proposal from its proxy because it relates to the company's "ordinary business operations" — in this case, namely its litigation strategy over pending lawsuits that have alleged gender-based pay discrimination.

"A shareholder proposal that interferes with this obligation is inappropriate, particularly when the company is involved in pending litigation on the very issues that form the basis for the proposal," the company's letter states. Wal-Mart spokesman Randy Hargrove also said the company offers female associates advancement, training and mentoring opportunities and increased its representation of women at the store management level in 2014.

All three proposals have almost no chance of getting a majority vote from shareholders. For one: Even when shareholder resolutions actually make it onto the ballot, they rarely see high levels of support, particularly if they're opposed by the company's management. Secondly, such resolutions are not binding, so the company can choose to ignore them even if they rack up plenty of votes.

"I would be surprised if any of these proposals got in excess of five percent of the votes," said Chris McGoldrick, research manager at the executive pay and governance data firm Equilar. "Most of the time, these shareholder proposals are focused on large-cap companies, and these groups just want to bring awareness around an issue."

Moreover, these investors aren't exactly prodding out-of-touch boards to adopt overdue governance changes or slash executive perks that other firms have long been embarrassed to continue. Rather, they're urging these companies to lead where others haven't yet, by publicly revealing numbers that most companies don't willingly share.

Disclosing pay-gap data is so unusual, in fact, that when retailer Gap Inc. announced audited results last year that its male and female employees are paid equally, it generated headlines. (A reminder that good personnel practices can also make for good P.R.)

Though expectations are low for companies to follow through on these shareholder proposals, Gap's move did raise the bar, said Fatima Goss Graves, vice president of education and employment at the National Women's Law Center. "The argument that it is too hard to take these steps is gone," she said. Also, many employers that are federal and state contractors, she added, already have to collect and now share summaries of their pay data with the government — which shows that sharing this information is indeed feasible for organizations. 

Goss Graves said that getting shareholders involved is critical to the overall strategy and the broader fight for equal pay. "There is a real business case against allowing gender-based pay disparities to fester," she said. "Shareholders are the exact right body to receive that message."

Research has shown that when employees aren't paid fairly, as Gross Graves pointed out, performance and worker satisfaction can suffer. "To the extent that a pay disparity is going to mean you have poorer worker performance," she said, "that’s something that shareholders are going to want to know about — and should know about, too."

Read also:

Better negotiators are not the answer to resolving equal pay

At Gap, selling a place to work, not just khakis

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