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SEC sides with activist investor over BofA, Wells Fargo pay gap proposals

The U.S. Securities and Exchange Commission rejected Bank of America Corp. and Wells Fargo & Co.'s attempts to block Arjuna Capital LLC's proposal to disclose the median pay gap between their male and female employees.

Arjuna Capital filed various shareholders proposals that would force the companies to disclose their median pay gap, or an adjusted reflection of the pay difference between men and women working full-time globally.

The SEC's rejection means that BofA and Well Fargo shareholders will have to vote on Arjuna Capital's proposal. The two companies argued that the proposal amounts to micromanaging investors, which falls under the regulatory authority's guidelines for exclusion.

BofA and Wells Fargo also argued that Arjuna Capital was submitting two proposals, not just one, and risks related to recruiting and retaining talent are not related to gender pay equity and providing opportunities for career advancement.

Mastercard Inc. is also trying to block the median pay gap disclosure proposal, though the SEC has yet to come out with a decision in that matter.

Arjuna Capital in 2017 and 2018 filed similar proposals to force various companies to disclose their pay gaps. In February 2018, Citigroup Inc. disclosed that female employees in the U.S., U.K. and Germany are paid 99% of what men are paid and minorities are paid 99% of what non-minorities are paid. BofA disclosed that there is also a 1% pay gap for U.S. and U.K. women and minority employees and Wells Fargo said U.S.-based female employees earn more than 99 cents for every dollar earned by male peers. JPMorgan Chase & Co. also disclosed similar statistics for their female employees.

Given the four banks' disclosures, Arjuna Capital withdrew its respective pay gap disclosure proposals at those banks.

In January, Citi disclosed that though median pay for women globally is 71% of what men earn, though on an adjusted basis, women are paid on average 99% of what men earn. Citi also said there were no statistically significant differences for minorities and non-minorities, but that on an unadjusted basis, median pay of minorities was 93% of what non-minorities earn.