American Express has joined the ranks of major US financial firms pledging to identify and close gender-based pay disparities within their workforce in response to pressure from the activist investor Arjuna Capital. On Wednesday, the credit card company told employees that its most recent pay analysis, conducting with a third-party consultant, “found no evidence of bias in our compensation processes and indicated we were effectively at parity,” Bloomberg reports. The company also told Arjuna that it would report any findings on pay disparities to its shareholders by the end of 2018:
“Women are still 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,” said Arjuna Capital managing partner Natasha Lamb, who filed a shareholder proposal seeking the pay disclosure at American Express and eight other companies this year. Calling equal pay “a critical first step” to retaining top talent, Arjuna withdrew its proposal in response to AmEx’s pledge.
In her withdrawal letter, Lamb said AmEx’s review will include base, bonus and equity compensation, and the company will adjust pay to get to 100 percent equality. It will also disclose its methodology, according to Lamb.
Bloomberg has compiled data showing that women make up 50 percent of American Express’s workforce but just 30 percent of its management.
In the past few months, Arjuna, the activist arm of investment firm Baldwin Brothers Inc, has succeeded at compelling a series of American financial institutions, including Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, Mastercard, and now AmEx to conduct gender pay audits and publish their findings through shareholder resolutions. In each case, Arjuna withdrew its proposal after the companies released their figures.
All of these institutions found very small gender and racial pay gaps of under 1 percent after correcting for factors such as role, geography, seniority, and experience. Neither the raw data nor the specific methodologies the companies used to arrive at these figures have been disclosed. The financial firms and Arjuna have tacitly acknowledged that larger gaps exist in that white men are more likely than women or people of color to occupy senior roles with higher salaries and greater bonus potential. Unfortunately, these group-to-group gaps based on factors like role, seniority, and experience are much harder to close than role-to-role gaps, as they can’t be addressed with pay adjustments alone.