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Women earning more as CEOs than men in America

Australia’s high paid CEOs still a boys club as female CEOs in the US earn more than male, study shows.
February 19, 2021

I had to read the line twice but it seems that women are being paid slightly more to be CEOs than men in America, according to the latest data from Morningstar.

In a report titled, The Gender Gap in the C-Suite, released this week Morningstar reveals that based on 2019 research, chief executive (CEO) women earned 103 cents for every dollar earned by men as CEOs at the median.

By comparison, of the top 20 highest paid Australian chief executives of ASX 200 listed companies, there was not one woman, according to an ACSI 2020 report. So it’s safe to assume that female CEOs in the top listed space at least do not out earn males on average.

The reasons given for the disparity in the US research included that it may be due to a net increase in female CEOs over the study period from 89 to 132—a 48% increase—combined with the common practice of awarding substantial CEO signing bonuses, also called “golden hellos.”

“In other words, the proportion of female CEOs receiving a signing bonus in any one year of the study is likely higher than the proportion of male CEOs receiving this bonus, thereby driving female CEO median pay higher than it would be if the proportion of newly hired female CEOs was more similar to that of male CEOs,” explains Morningstar.

Despite the finding, given there are significantly more male CEOs than female, overall there would have been many more men than women receiving these so-called “golden hellos” during the study period.

Whilst there is some good news in this Morningstar report, it also highlights how corporate America could be doing a lot more compared to other countries when it comes to tackling the gender gap in executive leadership.

In Australia, the Workplace Gender Equality Act has required gender pay reporting since 2012. Median gender pay gap reporting was mandated in the United Kingdom in 2017. However, under SEC rules, U.S. corporations are not required to publicly disclose workplace diversity metrics or diversity-based pay breakdowns.

One of the key findings of the report was that better or even mandatory disclosure of workforce diversity and gender and racial pay equity would help both companies and their investors in the US. Such action would also go a significant way to changing corporate behaviour more broadly.

When the study looked at only non-CEO NEOs—which removes a much larger proportion of males from the calculation than it does females and also removes most of the largest pay packages—it reveals that median female non-CEO NEO pay slipped to be that of 91.5% that of male non-CEO NEO counterparts in 2019 and that women made up almost 14% of all non-CEO NEO roles, up from 11% in 2015.

Among the key findings of the report include:

  • In the highest ranks of corporate America, men outnumbered women by more than 7 to 1 in 2019. For CEOs, this figure rises to nearly 17.
  • More than half of companies studied did not have a single female named executive officer.
  • In 2019, the highest paid senior executive women earned 84.6 cents for every dollar earned by their male counterparts—reflecting a differential that has narrowed only slightly since 2015 when it stood at 81.5 cents.
  • The median pay of female non-CEO NEOs stands at 91.5% of that earned by male non-CEO NEOs.
  • Interestingly, the few women who reach the highest earning rank, that of CEO, have earned a slim premium over their male counterparts since 2017. In 2019, female CEOs earned 103 cents for every dollar earned by male CEOs.
  • Consistent with other research on this issue, a breakdown of gender differences and pay practices across senior executive roles suggests that at least part of the gender gap can be traced to the route by which women are promoted into the top corporate ranks.

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February 19, 2021
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