Citi just revealed unflattering pay data. Will other banks follow suit?

Posted February 7, 2019 11:50 a.m. EST

— The number wasn't great. But it also didn't come as a complete shock: Women at Citigroup made nearly 30% less than men worldwide last year.

Citi released the statistic last month, becoming the first major US bank to make public global pay data that hadn't been adjusted for factors such as education, experience and location. Now the question is whether Citi's peers will follow.

JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley declined to answer questions from CNN Business about whether they would release similar information. And JPMorgan's Jamie Dimon recently questioned how much the data would help companies actually solve issues of pay equity, saying that there are different ways to interpret the figures.

"If you're going to use numbers like that, you have to use them wisely," he said at the World Economic Forum in Davos, Switzerland, last month.

But there are several factors that could compel those banks to join Citi, even if top executives are hesitant.

They're all competing for the same pool of talent. Plus, the United Kingdom requires similar disclosures anyway, per a recent mandate that covers big banks operating in the country.

Shareholder pressure is a big part of it, too. The activist investment firm Arjuna Capital, which has stakes in Citi, JPMorgan, Bank of America and Wells Fargo, wants more companies to follow Citi's lead. It is filing more than a dozen resolutions this shareholder voting season.

"It's in the company's competitive advantage to be ahead of it, to be proactive," said Natasha Lamb, managing partner at Arjuna Capital. "To say you need to be selective in the data you release shows you have something to hide."

Behind the data

Arjuna Capital has pushed for more pay data before. Last year it asked several US banks to release adjusted pay statistics that compared the compensation of men and women, as well as minorities and non-minorities. Citigroup, JPMorgan, Bank of America and Wells Fargo all obliged.

That data looked at how men, women and minorities were paid after the banks controlled for differing roles, divisions and offices. The goal was to make sure the banks weren't comparing apples to oranges — management positions in Tennessee aren't equivalent to entry-level jobs in New York, for example.

Each of the four banks released different versions of the information. Some data covered workers around the world, and some was confined to the United States and other countries with a large financial presence, like the United Kingdom and Germany.

But the data all said that women in 2017 made about 99% of what men made. In the United States, minorities were said to have made at least 99% of what non-minorities made.

Arjuna Capital said that data is essential to track and benchmark. But it's not enough for the firm, which says "raw" pay gap data — like the kind Citi just released — is necessary to tell the entire story. Unlike the adjusted data banks have been releasing, the raw data allows outsiders to analyze the full scope of the pay gap problem.

Citi's latest numbers found that women earned 29% less than men in 2018. The company also said that median pay for American minorities is 93% of the median for non-minorities.

That disparity indicates that women may not be adequately represented in senior roles or certain lines of business, said Ariane Hegewisch, program director of employment and earnings at the Institute for Women's Policy Research. Put simply, it might be a talent pipeline problem.

In banking, women are likely to be working in lower-revenue units, Hegewisch added.

"Women tend to be more concentrated in retail banking, while men are more concentrated in wealth management," Hegewisch said. She noted that the latter sector usually sees the highest amount of revenue — as well as larger bonuses.

In Davos, Dimon said median gender pay gaps are a problem if they exist because women aren't being promoted. But he also suggested that the data Citi released is more nuanced than what the published numbers imply.

"Unadjusted is for most companies you're going to find — and Citi came out, it's going to be around 70% — that's because for most companies, you have far more female receptionists and female tellers," Dimon said. "Those are good opportunities to people. And in and of itself [that] is not a bad thing, but it could be bad."

Growing pressure

Activists, including those at Arjuna, say the release of this kind of data can spur action. "What gets measured gets managed," Lamb said.

When Citi released its raw pay figures last month, for example, it also detailed how it plans to address pay disparities.

The company said that by the end of 2021, it wants to increase representation at the assistant vice president and managing director levels to at least 40% for women worldwide, and 8% for black employees in the United States.

Arjuna, which filed a shareholder resolution with Citi in November, withdrew its proposal after the announcement.

The firm declined to name the other companies it's targeting. A spokesman said US banks, tech firms and retailers are all a focus.

More data from the big banks would round out the details they've already released.

Following new legal requirements in the United Kingdom last year, Goldman Sachs reported a mean gender pay gap in the country of about 56%, and a median gender pay gap of about 36%. JPMorgan Chase had a mean gender pay gap of about 36%, and a median gender pay gap of 26%. Citi, Wells Fargo, Bank of America and Morgan Stanley had to publish this information as well.

Banks could be more willing to publish this info in the United States or globally now that the UK data is public, Hegewisch said, adding that the financial institutions are "already under some scrutiny."

Hegewisch also cited the pressures that banks have to nab talent in a competitive labor market. Transparency and pay equity resonate with many younger recruits, she said.

Whether those factors resonate in the same way with industry executives remains to be seen.