Center On Executive Compensation

Quick Survey Results: Pay Equity Practices

Published on: March 26, 2021

Topics: Corporate Governance, Executive Pay Plan Design

This survey explores how companies analyze pay equity internally, communicate pay equity with employees, and address concerns when they arise.

See full results and analysis here.

Survey findings include:

Practices in Pay Equity and Pay Transparency

  • Most Subscribers view their pay equity practices as “approaching progressive” (42%) or “standard/compliance driven” (46%). In this case, progressive practices would be defined as the use of proactive pay equity analyses, public reporting of pay equity data and expansive efforts on pay transparency.

  • Respondents selecting either “most progressive” or “approaching progressive” highlighted significant use of proactive pay equity analyses (97%), increased efforts on pay transparency either internally or externally (61%), and publicly reporting pay equity data (42%).

  • Subscribers were very focused on going-forward plans such as:

    • Partnering with internal partners (Legal/HR) – 86%

    • Increased training on pay equity – 43%

      • This was most common for HR (91%) and manager and senior leadership(each at 71%).

    • Proactively communicating refreshed pay policies, practices, and guidelines with employees (43%)

    • Anecdotal comments discussed actions such as enhanced transparency on the reasons for equity-related pay changes and including a median pay gap metric in senior leadership incentive plans.

  • One question asked Subscribers to note which types of employees had access to which types of pay and diversity related information at the company. The table is in the results below, but the survey found most companies limit the amount of salary range or wage gap information provided to employees and job candidates, and even in HR, only 62% of companies said they make wage gap information available.

Pay Equity Process & Analysis

  • Respondents reported a wide range of actions that could trigger a formal pay equity review:

    • Periodic review as a matter of routine – 79%

    • Federal agency audits – 48%

    • Annual compensation review cycle – 46%

    • Request from leadership – 43%

    • Legal response to a claim – 40%

  • These reviews are most commonly handled by Compensation (97%) and Legal (62%). It is also common to hire an external consultant (39%) or external counsel (32%).

    • Mercer, Aon, and Syndio were commonly cited external consultants but there was significant breadth of providers listed. Please see full results for the list.

  • When conducting a pay equity analysis, Subscribers are most likely to include base pay (95%), bonuses (56%), total direct compensation (52%), and long-term incentives (43%).

  • Surprisingly, more than a third (39%) of respondents said they have conducted a pay equity analysis that is not directed by legal counsel. Our recommendation is to always conduct pay equity audit at the request of legal counsel in order to establish attorney-client privilege.

Remediation Adjustments and Timing

  • 58% of respondents indicated pay equity analyses are conducted annually. Other answers showed that events such as reorganizations, hirings, and promotions could trigger them, or if off-cycle adjustments were made to blocks of employees.

  • More than a quarter (26%) of Subscribers said they explicitly tell an employee that a correction is due to a pay equity concern, though a substantial majority (63%) implement the increase without explicitly commenting.

    • Corrections are approximately equally likely to be made on as-needed basis (41%) as in the standard annual increase (44%).

    • Nearly all discrepancies are corrected on a going forward basis (93%). However, the comments indicate that specific circumstance could warrant a retroactive correction or a make-whole payment.

Thank you to all Center members who took the time to respond to this survey!


Quick Survey Results: COVID-19 Impacts 2020 & 2021
Executive Pay Plan Design

Quick Survey Results: COVID-19 Impacts 2020 & 2021

October 31, 2020 | Publication
Quick Survey Results: Long-Term Equity Grants and 2019 Merit Budgets
Executive Pay Plan Design

Quick Survey Results: Long-Term Equity Grants and 2019 Merit Budgets

December 07, 2018 | Publication
Executive Pay Plan Design

Quick Survey Results: COVID-19 Response

June 12, 2020 | Publication

Continue reading this content with the Center On Executive Compensation Membership package