Shareholder proposals on pay equity at Alphabet (née Google) and Facebook are unlikely to gain majority support, but may nonetheless mark a turning point on gender inequality within the tech sector.
April 12th, 2016 was Equal Pay Day — a day that marks when the typical woman’s earnings catch up to what a man earned the previous year. A little over two weeks after this nationally-recognized day, a majority* of eBay’s shareholders supported a resolution requesting that the company prepare a report on its policies and goals to reduce the gender pay gap within the firm.
That this resolution received majority shareholder support was all the more notable given that it was first submitted at eBay just one year prior and received much lower support in 2015. It is fairly common for shareholder proposals to receive low support in the first years after they are introduced. Even the SEC has recognized this fact, and has lower resubmission guidelines for shareholder proposals in the first and second years they are presented at companies. Moreover, prior to 2015, the issue of gender pay equity had not been raised by a shareholder proposal since 2007. As such, it was unsurprising when the eBay shareholder resolution received only 8.5% support. However, just one year later the proposal received support from 51.2% of shareholders.
In 2015 eBay was the only tech company where shareholders voted on proposals requesting reporting on the steps it was taking to reduce the pay gap. However, this year, several of eBay’s peers have also been targeted with this proposal. In the coming weeks, shareholders at Alphabet and Facebook will vote on similar resolutions. Given that both of these are controlled companies and these proposals have been opposed by management, majority support at either company is extremely unlikely. However, this campaign has intensified the issue of pay inequity at major tech companies.
In the past several years, reports have surfaced concerning gender pay inequity at Silicon Valley companies. However, a number of these companies have taken steps to correct this issue. For example, last year Salesforce.com spent approximately $3 million to bring the salaries of its female employees up to the level of their male counterparts. Other companies have also provided statements or reporting on this issue, including one of the companies targeted with shareholder proposals at its upcoming meeting: Facebook has stated that it completed “thorough statistical analyses to compare the compensation of men and women performing similar work” and that it found that “men and women earn the same.” Similarly, Amazon.com has made a statement that a recent survey of its employees found that female workers earned 99.9 cents for every one dollar earned by men in the same positions in 2015. Finally, Microsoft has also stated that women earn 99.8 cents for every one dollar earned by men with the same job title and level in the United States. Microsoft has also expanded its analysis concerning pay equity for racial minorities, finding that racial and ethnic minorities earned the same as Caucasian employees with the same job title and level in the United States.
Although the shareholder proposals at Alphabet and Facebook are not likely to see anywhere near the support seen at eBay, having them on the ballot has intensified the conversation about gender pay inequity at major tech companies. Additionally, many of these companies compete with each other for talent. As such, the fact that most of the major players in the tech industry have taken steps to identify and correct any pay gaps within their respective firms is a good indication that others in the industry will soon move in concert, regardless of the level of support received by these shareholder proposals.
*All vote calculations exclude abstentions and broker non-votes