Target is first company to earn perfect score on ‘Racial and Gender Pay Scorecard’
Target Corp. has gone to the head of the class, but Starbucks is close behind.
Five retailers earned top grades on the 6th annual “Racial and Gender Pay Scorecard” from Arjuna Capital and Proxy Impact. Of the 68 companies examined, 13 — including Target, Starbucks, Lowe’s, Best Buy, and Home Depot — received an “A,” while 25 companies receive an “F.”
The scorecard, a quantitative accounting of current pay disclosures, performance, and commitments focused on racial and gender pay, was released to mark Equal Pay Day on March 14. (The other companies to receive an “A” were Mastercard, Microsoft, Pfizer, Bank of New York Mellon, Citigroup, Adobe, American Express and Visa.)
The grades are based on quantitative disclosures (versus qualitative assurances). The 68 companies in the ranking have all been engaged by investors through shareholder proposals and asked to improve their pay equity disclosures.
Target is the first company in the history of the scorecard to earn a perfect score: A+.
“Target’s score of A+ is really something to celebrate this Equal Pay Day,” said Natasha Lamb, managing partner of investment management firm Arjuna Capital. “Racial and gender pay gaps are structural and persistent, but the scorecard holds up those companies that are doing the real and honest work to create pay equity.”
“Women and people of color are almost always deeply underrepresented in higher paying positions,” added Michael Passoff, CEO of Proxy Impact. “Median pay gap data sheds a light on that problem, and studies show that companies that disclose pay gaps are more likely to fix them.”
Key findings from the report are below:
• The first perfect score: Target received the 1st perfect score of A+ on the “Racial and Gender Pay Scorecard,” with Starbucks close behind. Both companies report 100% racial and gender pay equity on both an adjusted and unadjusted median basis for 100% of their employee population, assessed on all components of compensation — base, bonus, and equity.
• Leading Sector: Consumer companies led the way on pay gap disclosures, with the sector comprising 38% of companies awarded an “A” score. Five consumer companies — Target, Starbucks, Lowe’s, Best Buy, and Home Depot — report median pay gaps. According to PayScale, 58% of retail and customer service companies plan to conduct a race or gender pay equity analysis in 2023.
• Rising stars: Fifteen companies improved their scores year-over-year. Lowe’s and Best Buy saw the largest score increase from an F to a B, as they began disclosing comprehensive adjusted and unadjusted median racial and gender pay gaps.
• Median Pay Disclosure Gaining Momentum: While many companies only disclosed statistically adjusted pay gaps in the past, more and more companies are disclosing unadjusted median racial and gender pay gaps beyond their U.K. data, which is mandated.
Of the 68 companies covered by the scorecard, 18 companies currently disclose or have committed to disclose in the next year. This includes: Target, Starbucks, Lowe’s, Best Buy, Home Depot, Chipotle, Mastercard, Bank of New York Mellon, Citigroup, American Express, Pfizer, Microsoft, Adobe, Visa, Disney, Amalgamated, BlackRock, and Thermo Fisher.
The “Racial and Gender Pay Scorecard” assesses companies’ pay equity data against best-practice pay equity reporting standards, which consist of two important elements: (1) unadjusted median pay gaps, assessing how jobs are distributed by race and gender and which groups hold the high-paying jobs, and (2) statistically adjusted gaps, assessing pay between minorities and non-minorities, men and women, performing similar roles.
While statistically adjusted gaps provide one piece of the story, median pay gaps are a critical and more revealing standard. Median pay gaps show, quite literally, how the company assigns value to its employees through the roles they inhabit and the pay they receive.