BlackRock and State Street Corp are at the forefront of social investing. Over the past few years, these billion dollar investment funds have used their influence to promote diversity at the executive level and environment friendly causes. “BlackRock for instance has already disclosed it switched sides and helped pass a measure on climate risk reporting at Exxon Mobil Corp’s annual meeting in May. State Street says it voted against directors at 400 companies this year that had no female board members and showed no signs of changing, part of a campaign for gender diversity that also included the placement of the famed “Fearless Girl” statue on Wall Street.”
But despite the support of these very important issues, one issue has somehow fallen under the rug even among the most socially conscious investment funds.
Corporate Pay Gap!
According to Reuters, in 2016 “Chief executives of S&P 500 companies surveyed were paid on average $13.1 million last year, 347 times the pay of the average U.S. worker, according to the AFL-CIO, the largest federation of U.S. labor unions.” Although singling out industry leaders like BlackRock and State Street is a bit unfair, it also proves the extent to which the issue is being ignored. If the largest and biggest supporters of fairness are not looking at the corporate pay gap, who is?
To be sure, the S&P 500 index’s 9.5 percent rise in 2016 made it easier for many boards to justify pay raises for their leaders. Ira Kay, a corporate pay consultant, said the fact that companies win the vast majority of the advisory votes on pay, even as they lose on other issues, shows their pay plans work as designed.
Still, it would seem that the big issue in America concerning the pay gap of the elite and the middle and lower class is continuing to increase. How we solve this problem, only time will tell.