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The gender pay gap is a well established phenomenon: Women who work full time made about 79% as much as full-time male workers in 2007. While the number has narrowed slightly over the decades, it’s an unfortunate, if persistent, fact in workforce economics. The explanations are varied and complex: Women are more likely to leave the workforce for a few years to care for family, sadly don’t do as much negotiating for their pay, and in some industries, don’t always pursue the highest paying roles. And undoubtedly, discrimination still plays a role in some cases.
That said, one place you wouldn’t think a gap would still exist is among CEOs, where pay for performance should eliminate any such bias. But alas, The Corporate Library, a corporate governance research firm, is out with a study today saying that indeed, total compensation for women CEOs lags behind male CEOs after all. According to the latest findings from “The Corporate Library’s CEO Pay Survey: CEO Pay 2008,” female CEO pay packages are only about 85% of male total actual pay (which includes stock option profits and other realized equity) at the median: $1,746,000 compared to $2,049,000. The survey adjusted for size, industry, tenure and performance and included 3,242 U.S. and Canadian-based companies.
Interestingly, the study finds that female chiefs get higher base salaries—103% of median male salaries. But add in cash bonuses, perks and stock compensation—the goodies that really get CEO pay skyrocketing—and the differential is clear. The gap is the widest for female CEOs of the largest companies, who make less than two thirds of their male counterparts.
The study’s authors attempt to explain the differential, but don’t have an easy time. They question whether industry could perhaps play a role: More than 15 percent of women CEOs lead financial services companies, where performance has been pummeled, hurting pay packages, compared to 12 percent of male CEOs. Still, they say, the distribution was not different enough to have a significant or consistent effect. Performance wasn’t enough, either. While relative total shareholder returns by female-led companies “showed a higher proportion underperforming the index than male-led companies” in the shorter term, the difference narrowed over longer-term periods.
Tenure, they concluded, could have some impact on long-term equity payments, as women CEOs have slighly shorter median tenures than men. But in the end, the cause may be a result of the greater problem. “Perhaps it is the number of female CEOs,” speculated Senior Research Associate Paul Hodgson, one of the report’s co-authors. “Less than 3 percent of CEOs were women, so there were nearly 33 times as many male CEOs as there were female CEOs. This is a shockingly low number in any major Western economy, but the small number of women in the sample – only 80 – may be affecting the findings.”
I’d add a couple others, based on a story I wrote a few months ago on some research by a group of researchers at Britain’s University of Exeter and Tilburg University in the Netherlands. They studied bonuses paid to 96 pairs of executive-level men and women in Britain with similar experience. Women, they found, were rewarded less for improved results. They attributed the difference, for one, to women’s risk-taking in negotiating pay packages.
In addition, they believe the difference is due to the unfortunate, but apparently greater, likelihood that leadership success is ascribed to male leaders. “A lot of research shows [men receive] a lot of internal attributions—people think that he must be responsible for increasing or decreasing” performance, says one of the study authors, Clara Kulich. “With a female manager, [boards are] more prone to use external situations, economic situations,” she says, noting almost an “indifference” to the women leader’s impact.
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