Nearly 50 activist and/or sustainability public pension funds, labor unions, asset managers, faith-based organizations, and shareholder advocacy groups, including CalSTRS, CalPERS, NYC Comptroller, AFL-CIO, LGIM, SHARE, and ICCR, reportedly sent letters to all Fortune 500 boards seeking their voluntary proxy statement disclosure of supplemental information about their company's workforce to provide context on - and in connection with - the required CEO pay ratio disclosure.
Specifically, the form of letter (which we reviewed) requests companies consider these types of supplemental disclosures that the investors characterized as "best practices," which purportedly were included in varying degrees in companies' 2018 disclosures:
- Identification of the median employee's job function
- Breakdown of the workforce by job function and/or business unit
- Geographic location of the median employee
- Country-level breakdown of global employee headcount
- A breakdown of full time vs. part time employment status
- Use of temporary or seasonal employees
- Use (or non-use) of subcontracted workers
- Tenure and experience of the workforce
- Workforce education levels and skill sets
- Company's overall compensation philosophy
- Employee compensation mix (benefits and incentives)
- Alignment of CEO pay practices with pay practices for other employees
The letter posits that the requested supplemental information will help investors put the median employee pay disclosure in context as respects the company's approach to human capital management, and that company CEO pay ratio changes over time help inform their views on internal consistency and alignment of CEO pay with the company's overall employee compensation philosophy.