It has been reported that a UK banking group, CYBG plc, owner of Clydesdale Bank and the Yorkshire Bank, has linked improvements in gender diversity to executive remuneration after publishing its gender pay gap for the first time.
CYBG revealed a 37% gender pay gap which they say is mainly driven by a larger number of men in senior roles. While the majority of the workforce are women, women make up 63% of the bank’s lowest pay quartile and, at the end of September, just 37% of employees in the top pay quartile were female.
This situation has led to CYBG taking a number of steps to increase gender diversity. These changes included increasing minimum salaries for full time workers and the launch of a wider inclusion strategy, aiming to develop strong female representation at all levels. In March, CYBG also signed up to the UK Government’s Women in Finance Charter, a development that we covered in an earlier newsletter here, and has committed to achieving the target of having at least 40% female representation in senior management roles by 2020, with a long-term goal of reaching a 50:50 balance in senior management.
The key development with regard to remuneration and incentive is the introduction of gender diversity objectives within the senior executive Long-Term Incentive Plan. This development links part of executive performance-related pay to the achievement of higher levels of diversity at senior levels.
A number of financial services firms linked the improvement of gender balance at the board and senior management level to annual bonuses when they signed up to the UK Government’s Women in Finance Charter a couple of years ago. It is not clear from the press coverage of Clydesdale / Yorkshire Bank initiative whether the performance condition is focussed on the proportion of women in senior positions or reducing the gender pay gap (which will clearly be impacted by more women in senior positions). We expect firms will be considering whether they will be to change their performance conditions which relate to gender diversity to include reference to improving their gender pay gap for annual bonus and/or long term incentives.
We are sending this to all our newsletter readers, not just our readers in the UK, because gender pay reporting is coming to the fore in many countries where businesses operating in those countries need to report on some aspects of gender diversity and may wish to consider whether or when to include gender targets in some aspects of their incentive arrangements global policy, not just the UK or other countries which now have mandatory gender pay reporting.
City and Financial will be holding its second Women in Finance Summit in London at the end of February. Janet will be speaking on the impact of Gender Pay Gap regulations. If you would like more information about the conference when it becomes available, let us know.
If you have any questions about this, or anything else, please do get in touch.
Janet and Matthew