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Jun 06, 2022

Lowe’s shareholders vote for pay-gap report

Disney shareholders backed similar proposal earlier this year

Shareholders in home improvement company Lowe’s have backed a proposal seeking a report on pay differentials between different employee demographics.

According to a regulatory filing, 58 percent of the votes cast at the company’s May 27 AGM supported a resolution requesting that Lowe’s ‘report on unadjusted median and adjusted pay gaps across race and gender, including associated policy, reputational, competitive and operational risks and risks related to recruiting and retaining diverse talent.’

In its supporting statement, proponent Arjuna Capital writes that such a report could, at the board’s discretion, integrate base, bonus and equity compensation to calculate:

  • Percentage median and adjusted gender pay gap, globally and/or by country, where appropriate
  • Percentage median and adjusted racial/minority/ethnicity pay gap, US and/or by country, where appropriate.

‘Pay inequities persist across race and gender and pose substantial risk to companies and society. Black workers’ hourly median earnings represent 64 percent of white wages. The median income for women working full time is 83 percent that of men,’ Arjuna Capital writes.

It states that more than 20 of the 100 largest US employers report adjusted gaps, and a growing number of companies disclose unadjusted gaps to address the structural bias women and minorities face regarding job opportunity and pay, but that Lowe’s does not report unadjusted or adjusted pay gaps.

‘While Lowe’s reports diversity data, unadjusted median and adjusted pay gaps show, quite literally, how Lowe’s assigns value to its employees through the roles they inhabit and pay they receive,’ Arjuna Capital writes. ‘Pay gap reporting provides digestible, comparable data to determine progress over time.’

Arjuna Capital has sponsored resolutions on gender and racial pay gap disclosure in previous years. Earlier this proxy season, almost 60 percent of votes cast at The Walt Disney Company’s AGM supported one of its proposals, which requested that ‘Disney report on both median and adjusted pay gaps across race and gender, including associated policy, reputational, competitive and operational risks, and risks related to recruiting and retaining diverse talent.’

Disney’s board wrote in the company’s proxy statement that its ‘quarrel with the proposal is not its focus – as the company is fully committed to achieving pay equity – but whether it is a necessary and effective use of company resources given the policies, practices and reporting that the company already has in place to achieve that end. Given the many ongoing initiatives that the company is already pursuing to promote opportunity and equity, the board believes it is not.’

A spokesperson for Disney said in a statement at the time: ‘We appreciate our shareholders’ view on this important issue, and the board accepts the results of today’s vote. The company is committed to pay equity, and we will continue our ongoing work on this front, including addressing interest in greater transparency around our efforts.’

The Lowe’s board opposed the Arjuna Capital proposal, writing in the company’s proxy statement that it had determined the measure is not in the best interests of shareholders: ‘[Our] philosophy for compensation is to provide competitive pay and to drive and reward performance. [Our] current compensation structure and pay decisions are based on our associates’ roles, responsibilities, performance, skills, experience and other appropriate non-discriminatory factors.’

The board also wrote that it believes ‘[our] current compensation practices promote diversity, inclusion and fair pay across our diverse workforce. Further, Lowe’s evaluates and sets its pay structure based on market and benchmark data to promote competitive compensation practices. In addition, pay decisions are regularly reviewed and adjusted, as appropriate, based on the given role, responsibilities, skills, experience, performance and other appropriate non-discriminatory factors.

‘Accordingly, while Lowe’s welcomes continued engagement with shareholders on these issues, the board believes that adoption of this proposal is not advisable in light of our existing practices.’

A request for comment from the company was not returned immediately.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...