Should You Sell eBay (EBAY) If the Company Can't Achieve Gender Pay Equality?

A battle over gender pay equity is looming in Silicon Valley. 

An investment management firm is launching proxy fights to force some of the country's biggest technology firms to disclose pay equity disparities between women and men employees. Arjuna Capital, in partnership with financial advisory firm Baldwin Brothers Inc., is hoping to expose embarrassing pay gaps and force tech companies to take concrete steps to correct them.

Arjuna filed shareholder proposals at nine technology firms, ranging from Amazon to Facebook, requesting the issue be put to a proxy ballot.

"Silicon Valley is struggling so mightily with diversity, with discrimination lawsuits and lack of women in top ranks - this is an issue they need to address head on and be bold about it," said Natasha Lamb, director of equity research and shareholder engagement at Arjuna.

Of the nine big-name firms she approached, only two - Intel (INTC) and Apple (AAPL) - have responded with promises to address the issue. 

Last month, Intel released its "Diversity & Inclusion Report," which proclaimed the company had achieved "100% gender pay parity" across all U.S. job types and levels in 2015. "We believe a diverse engineering workforce is critical to driving continued innovation and growth in our industry," said Danielle Brown, Intel's chief diversity and inclusion officer, in the company's blog.

Then, last week, Apple CEO Tim Cook told shareholders at the company's annual meeting that a pay study showed women earned 99.6 cents for every dollar that men earned at Apple's U.S. offices in 2015. 

"It was a powerful message," said Lamb. 

Arjuna Capital has now dropped its shareholder motions at Intel and Apple, given their public commitments to the issue.

However, seven other companies remain in Arjuna's crosshairs: the shareholder proposals are expected to come up for votes at eBay (EBAY) in May, Expedia Inc. (EXPE) in June, Alphabet Inc. (GOOG) in June, Facebook Inc. (FB) in June, and Microsoft Corp. (MSFT) in December. Discussions are continuing at this time with Adobe Systems Inc. (ADBE) while Amazon (AMZN) has asked the Securities and Exchange Commission for permission to exclude the proposal from its ballot, said Lamb. 

Gender pay equity has long been a hot topic, where there's plenty of talk, polite protests and statistics to back up the problem - but little real change. The latest Census Bureau data indicates that women earned 78.6% of what men did in 2014, which is just 0.3% better than the previous year. At this rate, women won't receive equal pay until 2058, according to the National Committee on Pay Equity. 

"This is unacceptable and a sad reflection on society," said Lamb. "We just can't wait another 40 years to achieve fair pay." 

Getting companies to acknowledge there is a problem is the first step. But it often takes some prodding.

"Nobody wants to come out and say, 'Hey, we have a gender pay gap or we're committed to closing the gender pay gap,' because it's kind of like asking somebody, 'When was the last time you beat your wife?'" said Lamb. 

She wanted to confront big companies directly and felt Silicon Valley was an ideal place to start. Other than rockstars like Facebook's Sheryl Sandberg and Yahoo's Marissa Mayer, the tech universe is still largely a man's world.

"Men constitute 60% to 70% of employees in the tech field, and 45% of tech companies don't have a single female executive," said Lamb. "Few women are represented in senior management positions and even fewer appear on company boards."

A February 2015 report by Dice Inc., a tech industry recruiting firm, found that men earned almost $10,000 more than women on average in 2014. However, much of the discrepancy was related to women not being promoted to more senior higher-paying positions, said Dice spokesperson Rachel Ceccarelli. 

Still, the odds of Arjuna's resolutions getting a majority vote from shareholders are slim to none. Historically, shareholder proposals that make it onto a ballot rarely earn much support, especially if management opposes them.

Indeed, only about 8% of eBay shareholders supported a similar proposal when it was presented to them in 2015. Undaunted, Lamb is bringing another resolution before eBay this year.

But even without majority backing, the proposals can have bite just by showing up on the proxy. The bad press and even hints of gender discrimination could tar a company's image and hurt its ability to attract big talent. 

"If these issues make it onto the ballot, it could signal some larger issue within the company," said Dan Marcec, director of content at Equilar, an executive compensation data firm. "They want to get ahead of these things so that they don't show up on the ballot."

Arjuna's ultimate weapon is its investors. 

"If we find a company is truly a laggard, we would consider selling our holdings," said Lamb. "But we would rather encourage leadership in these companies because once you've sold your shares you've lost your seat at the table and your ability to affect change at the company."

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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