Pay Inequity Continues for Female CEOs

Crossposted to

This isn’t a surprising revelation, but it’s an important one: According to a corporate research firm, female CEOs earned only 58% of what male CEOs earned in 2008– and their pay was slashed 3 times the amount of male CEO pay cuts . Additionally, men CEOs earned 3.5 times more in bonuses than women CEOs. On paper, this pay discrepancy may not have been obvious, because the median base salary was higher for women than for men. But as Reuters explains :

Top female chief executives’ median base salary was $40,000 higher than that for male CEOs, but men’s’ discretionary bonuses were more than 3.5 times larger than those given to females, and men’s perquisite payments were nearly twice the amount received by women.

A lot of the dialogue about the gender gap in earned salaries gets stuck on the issue of women not advancing to the top of companies, which is an important fact in its own right. But this issue can be twisted by those who deny the pay inequity problem, as they attempt to explain that if women did rise to the top of companies, the gender gap would disappear. Studies like this show the gap exists at all levels. There are few female CEOs in general, and their income still is strikingly less than their male counterparts’ income. As a related point, check out this graphical depiction from Sociological Images of income differences in the United States. The chart comes from Business Management, and shows the number of years a minimum wage worker, an average worker, and the President would all have to work in order to earn as much as CEOs earn in one year.

I’ve included the most extreme case (CEO of Hewlett-Packard).

This illustrates that a person being paid minimum wage would have to work 2,256 years to earn what the CEO of Hewlett-Packard is paid in a year. An "average worker" (earning $40,690 annually) would have to work 836 years, and yes, President Obama would have to spend 85 working years to earn the grand total of $34,031,021. (This is just counting the president’s salary, of course, not all additional benefits earned during and after holding the office). Clearly, it’s not so bad to be a CEO. And the discrepancy between male and female CEOs is less than the one that exists between CEOs as a whole, and average American workers. But at every level of advancement, women’s work is undervalued and underpaid. I find it interesting that the median salary for women CEOs was higher than for men, but the total financial benefit received was far less. To me, this shows that blatant discrimination is unacceptable in our current cultural milieu– and that ‘equality’ is supposed to be valued and provided– but only on the surface . In reality, however, equality still doesn’t really exist. For instance:

Perquisite compensation — everything from company cars to club memberships — for male CEOs was nearly twice that received by women CEOs, on average.

Hmm…company cars…club memberships…what does that sound like? The old boys network still going strong.

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  1. Charybdis
    Posted October 28, 2009 at 2:12 pm | Permalink

    I’m willing to bet that, at all upper levels of pay and management, women earn *far less* than the 70 cents on the dollar they earn on average throughout the economy. And no, sadly, I don’t find this surprising.

  2. cattrack2
    Posted October 28, 2009 at 2:33 pm | Permalink

    I certainly believe that there’s a pay gap between men & women. But this doesn’t seem like a reliable study. Bonuses are typically based on performance. Since the base salary for female CEOs is significantly higher, its hard to draw any conclusions without looking at the type of companies these women are leading, since I’d expect smaller companies to pay out smaller bonuses. Also, the fact that men outnumber women in highly lucrative fields like financial services would also twist the results. The bottom line, is that this is probably more of a statement about the type and size of companies women lead than about a pay gap.

  3. TD
    Posted October 28, 2009 at 2:35 pm | Permalink

    AS I recall a large portion of female CEOs work for nonprofit organizations and this substantially skews the data.
    How well does the data hold out when you adjust for company size and revenue?

  4. feckless
    Posted October 28, 2009 at 3:37 pm | Permalink

    Women at the top of business outearn men – Saturday, December 13, 2008
    By Torsten Ove, Pittsburgh Post-Gazette
    A Carnegie Mellon University study has concluded that women executives out-earn their male counterparts.
    The study, which examined 16,000 executives over 14 years, found that women at the top of the business world bring in a bit more than men and are promoted at the same rate, countering the popular notion that women earn less than men for the same work.
    “That common perception is not borne out by this study,” said Robert A. Miller, professor of economics and strategy and one of the authors. “If you’re looking for evidence of gender discrimination in executive promotion and compensation, it’s not happening there.”
    The study, “Are There Glass Ceilings for Female Executives?,” was released last month by Carnegie Mellon’s Tepper School of Business but hasn’t been published yet.
    The largest empirical analysis of the top echelons of publicly traded companies determined that women earned about $100,000 more per year than men of the same age, educational background and experience.
    “Once you control for the position that they’re in, that is, their rank, and you control for experience and control for their education, background and turnover, once you do that you find that they earn a little more,” said Dr. Miller.
    Female executives on the whole still earn less than male executives, but that’s because more women quit before they reach the top, the study says.
    “At any given level of the career hierarchy, women are paid slightly more than men with the same background, have slightly less income uncertainty and are promoted as quickly,” it concludes. “We concluded that the gender pay gap and differences in job rank in this most lucrative occupation is explained by females leaving the market at higher rates than males.”
    Why they quit is harder to explain. Younger women opt out of the work force to have babies, but the average age for executives in the study was 53, beyond the child-bearing years.
    Yet female executives still retire earlier than men and are more likely to switch careers. The CMU paper offers some possible reasons, including “more unpleasantries, indignities and tougher, unrewarding assignments” at work. The authors also suggest that women over time acquire “more nonmarket human capital” than men — meaning connections outside the workplace — that make retirement more attractive.
    Some studies had indicated female executives were paid the same as men, but those didn’t address the rate of promotion as this one does, he said.
    More recent studies reached similar conclusions. A report released last month by The Corporate Library, a research firm in Maine, said women corporate directors earn 15 percent more than male counterparts, although they are still outnumbered 8-1 by men on boards.
    The CMU study compiled data representing 60 different job titles at more than 1,800 companies between 1992 and 2006. In addition to examining promotion rates, the researchers also analyzed total compensation, including benefits, bonuses, retirement packages and stock options in addition to salary. Overall, the study concluded that job turnover and tenure are better indicators of compensation than gender. ->

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