Official and Unofficial Company Accounts At Odds – Claim of 99.7% Parity Challenged by Internal Employee Database Showing Wide Gaps; Google 1 of Only 2 Tech Giants Unresponsive on Issue.
BOSTON, MA. September 27, 2017 After shooting down gender pay equity shareholder proposals for two years running, and now in the wake of contradictory data about the treatment of women at the U.S. tech leader, the board and management of Alphabet Inc./Google must present a detailed report on their gender pay gap data, according to a letter sent to Executive Chairman Eric E. Schmidt by Arjuna Capital Managing Partner Natasha Lamb. The full text of the letter is available online at http://bit.ly/ArjunaGoogle.
Last year, nine leading U.S. tech companies faced shareholder resolutions and seven took action by disclosing their gender pay gaps and committing to gender pay equity. Google was one of just two target companies, including Facebook, which failed to take meaningful action in 2016 on its gender pay gap.
In the letter to Schmidt, Lamb writes: “On behalf of our clients and fellow investors, I would like to express my continued concern over Alphabet’s management of gender pay equity …The disclosures we have sought and continue to seek have become common practice in Silicon Valley and amongst your technology peers. Yet Alphabet has refused to disclose the company’s gender pay gap in a transparent, quantitative manner. Instead the company has relied on platitudes that there is no gap, trust us.”
Lamb writes: “Today, Alphabet is under fire for its lack of transparency on gender pay equity, making it subject to federal, class action, and shareholder actions. In two successive years, Alphabet’s male-dominated management team has voted against gender pay equity proposals. And the recent episode of a Google engineer issuing a blatantly anti-women ‘manifesto’ can be seen as a reflection of a corporate culture Google has advanced. At the same time, the Department of Labor has alleged ‘extreme’ gender pay disparity.”
Citing two contradictory accounts in the New York Times, Lamb continues: “And most disturbingly, the New York Times recently made public leaked employee-gathered data suggesting major gender pay gaps across Google … In particular, the recent revelation reported in the New York Times gives us cause for concern. The 1,194-person employee-led and then leaked spreadsheet provides a snapshot of base salary data for six pay levels, revealing a gap across five of the six levels, and higher bonuses for men in four of the six levels. And while I understand this is an incomplete measure of company data, investors are left relying on such disclosures in the absence of company transparency and accountability.”
“Now, we read in the New York Times that Google is claiming near 100-percent gender pay equity. However, the single statistic—that women make 99.7 cents for every dollar a man makes—was provided in isolation with no context on how the figure was derived, qualified, limited or otherwise “shaded.” And while this is the kind of disclosure Arjuna Capital has sought for two years, the circumstances and delivery of that fragmentary disclosure leaves us with more questions than answers. Particularly when the same publication printed data from non-official Google sources that contradicts management’s claim.”
Lamb continues: “Now that Google has made this material and contradictory disclosure to the Times, claiming near 100 percent gender pay equity, it is incumbent on the company to come forward with a formal report so that investors may judge its accuracy and meaning. This is of particular importance, as the employee data is at complete odds with the single number the company quoted to the Times. A formal report would clear up any possible perception that Google’s disclosure to the New York Times is in some way a distortion or misstatement of material fact. Failure to do so could be considered an omission of a fact of material interest to shareholders who have long-term wealth at risk.”
Lamb outlines six questions Google management should answer about the single statistic they disclosed to the New York Times:
- Why was that data provided to the New York Times not disclosed prior to or at the annual meeting in response to our shareholder proposal, given the analysis was conducted in January?
- Why was only 95% of the workforce reported on?
- Why were highly-paid vice presidents and above in the C-suite excluded from the analysis?
- Why did Alphabet refuse to provide a breakdown of how it arrived at that calculation?
- What is the formula that you used to arrive at your statistic about gender pay equity?
- Why is there such a disparity between the employee data leaked to the Times, the allegations from the Department of Labor of “extreme” pay disparities, and the company’s own disclosure to the New York Times?
Lamb concludes as follows: “Alphabet should welcome the opportunity to clear the air on the issue of gender pay equity and move forward with whatever corrective steps are necessary, including formal reporting. Stalling tactics do nothing but confirm suspicions that the company has either something to hide or such a callous attitude toward women that it can’t be bothered to address the issue of gender pay equity at the level and in the manner it deserves.”
Payscale reports that Google has a 13 percent mean gender pay gap and Glass Door reports a $25,000 gap at the senior engineering level. For 2 years, Arjuna Capital and co-filers Baldwin Brothers Inc. and Proxy Impact have filed proposals (http://arjuna-capital.com/wp-content/uploads/2017/04/2017-GOOGL-Shareholder-Proposal_Gender-Pay-Equity.pdf) calling for a detailed report to assess Alphabet’s strategy and performance with respect to gender pay – one that includes the percentage pay gap between male and female employees, policies to address that gap, and quantitative reduction targets.
At Alphabet, approximately 30 percent of the company’s employees are women, yet women account for just 21 percent of the firm’s leadership. A large body of evidence suggests gender diversity in leadership leads to better performance. McKinsey & Company states, “the business case for the advancement and promotion of women is compelling” and has found companies with highly diverse executive teams boasted higher returns on equity, earnings performance, and stock price growth.” Mercer finds actively managing pay equity “is associated with higher current female representation at the professional through executive levels and a faster trajectory to improved representation.” The Harvard Business Review reports 41 percent of highly qualified scientists, engineers, and technologist in entry-level positions are female, yet 56 percent of midcareer women leave the field at mid-level positions.
While the gender pay disparity is narrowing, on a national level, women, who are paid an average of 79 cents for every dollar men earn, will not reach pay parity until 2058. In the technology industry, which struggles to recruit and retain a diverse workforce, recruiting firm Dice reports men earned nearly $10,000 dollars more than women on average in 2014.
Arjuna Capital led the successful shareholder fight last year in getting seven of nine targeted tech companies — eBay, Intel, Apple, Amazon, Expedia, Microsoft and Adobe — to upgrade their standards and transparency on gender pay disparity in the workplace. This year, Arjuna Capital has taken the same campaign to six top banks and credit card companies: Wells Fargo, Citigroup, Bank of America (in partnership with Baldwin Brothers Inc.), JP Morgan, MasterCard, and American Express.
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