The Gender Pay Gap: Still Alive at the Top, Too

Posted by: Jena McGregor on November 6, 2008

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.

Reader Comments

Evelyn

November 6, 2008 4:25 PM

My thoughts exactly.

Karl

November 6, 2008 4:33 PM

Women CEO's should NEVER make what their male counter-parts make because men are much more CORRUPT, DECEPTIVE, MANIPULATIVE, & GREEDY, right? How many WOMEN have led MILLIONS into battle and SLAUGHTERED their enemy? None that I can think of!!! How many WOMEN go to Strip Clubs, and how many cheat on their husbands with PROSTUTUTES that cost up to $5,000 an hour, like the one Eliot Spitzer had?? You see, MEN deserve more money because they've earned the "right" to it!!! I'm Karl, and I approve this comment! P.S. No woman could've ever come up with a scheme to DEFRAUD tens of MILLIONS of Americans out of their RETIREMENTS, right? And no woman could've ever come up with that same scheme that DEFRAUDED countries out of their INVESTMENTS, correct? It was MEN who did it, right? See, I'm simply PROVING my point!!!! P.S. I'm referring to the "A.R.M." sheme. "Adjustable Rate Mortgage" scheme that was concocted by MEN!!!!!!!!

Bill

November 6, 2008 4:45 PM

Perhaps women are just not as greedy as men in these positions.

Squeezebox

November 6, 2008 4:48 PM

Maybe the answer to excessive executive pay is to hire a woman instead of a man? Same results, less cost.

KG

November 7, 2008 10:55 AM

The first step would be to lower male CEO's pay in alignment with female CEO's pay.

Michael korte

November 7, 2008 4:16 PM

Only like the Chrysler Bailout of the 70's. Gov owns stock as long as "LOAN" is unpaid. Suppliers and Employees (UAW) assume wage PACKAGES equal to RETAIL LEVALS.

Toyota and Honda, Nission build cars in America at a profit. LEARN FROM THEM.

Government Stock may be sold at 50x purchase price. The taxpayers deserve a PROFIT

Nicola Rowe

November 9, 2008 2:55 AM

Partly it's also that women haven't been socialised to ask for as much. Women need to learn to dream big, and then they need to go after what they want. If that means being more assertive than usual, so be it.

I've blogged about this at Strategynut

Sally in Chicago

November 9, 2008 6:13 AM

One of the reasons women make less than men is because of child birth time off; another is that they don't ask during the interview "what is the male making" and demand to make equal or more.
And what about women who cannot or will not go into labor type jobs like construction?
Come on ladies -- step up to the plate.

mjw149

November 10, 2008 10:23 AM

I don't understand this irrational post. You admit the reasons why women make less money (more time off primarily) then refer to it as an unfortunate 'fact'? How about this: women are more likely to be at home than men, this is an unfortunate fact if you're male. How are we going to close the 'time off' gap? Make medication so that men can respond to children better?

Tina

November 13, 2008 10:33 AM

How about the time women need off to actually give birth? I guess the answer is just for women to stop having babies - yeah, the end of the human race is the answer!

Manda

November 22, 2008 1:23 PM

MJW, I'm sure many women would love to close the "time off" gap. The time off to care for children and/or elderly family members is not vacation. It is harder than being at work.

MJA

January 9, 2009 1:30 PM

Let's redirect for a moment. Any professional that has chosen to climb the ranks of a corporation ...would have to be exceptionally ambitious and driven to begin with.

The matters of being a parent (at that level who wouldn't be able to afford a nanny?) or construction worker jobs (we are talking about CEOs here) are irrelevant. Further, who asks how many men are fathers that serve as CEOs. What difference does it make?

Equal pay for equal work, period. The systemic issue remains in errors of attribution. If a female leader delivers results it is viewed as environmental. Also as the WalMart compensation suit highlighte -- the salary of women is viewed as not supporting a family and "gravy."

Where further study might want to shed light on is reception of women negotiating. The pereception of shrewd women being shrews. The reaction of stakeholders to a women asking for more. If it is documented that women historically have not negotiated as hard or asked for enough ...think about the audience. When a women does negotiate it would be deemed out of her expected role. Sociologically we are conditioned to reject behavior that is out of expectations. (i.e. a man wearing a dress) The response would be "who does she think she is?" and the woman would be perceived as incredibly arrogant.

In response to the individual that said "ask in the interview what a man is paid" -- you would come off like a complete unprofessional nut with an axe to grind.

muhammad akmeir

November 17, 2009 10:41 AM

women just need to stay home and make delicious sandwiches and stop working. They should just raise kids ands stay out of the work force. their brains are to small

muhammad akmeir

November 17, 2009 10:41 AM

women just need to stay home and make delicious sandwiches and stop working. They should just raise kids ands stay out of the work force. their brains are to small

muhammad akmeir

November 17, 2009 10:41 AM

women just need to stay home and make delicious sandwiches and stop working. They should just raise kids ands stay out of the work force. their brains are to small

Frank

November 22, 2009 10:26 PM

What if a Celebrity would do that?

Ray

January 11, 2010 11:05 AM

@ all of those who believe that women get paid less than men simply because they don't ask to get paid more, why is it that women HAVE to ask to get paid more?... like MJA said, " Equal pay for equal work, period". People need to view both sexes equally, stop looking at their genitals and start paying attention to their work ethic.

Ray

January 11, 2010 11:05 AM

@ all of those who believe that women get paid less than men simply because they don't ask to get paid more, why is it that women HAVE to ask to get paid more?... like MJA said, " Equal pay for equal work, period". People need to view both sexes equally, stop looking at their genitals and start paying attention to their work ethic.

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