Study Shows Female CEO Board Directors Paid Less Than Male Counterparts
Do organizations truly value a more diverse board of directors? A new study suggests many firms may only be paying lip service to the importance of diversity and increasing board diversity in superficial ways.
A new paper forthcoming in Human Resource Management explores whether external pressures to diversify boards lead organizations to devalue the board memberships held by female CEOs relative to male CEOs and, as a result, pay female CEOs less for these roles.
Schulich Organization Studies professor, Winny Shen, and her collaborators, Shavin Malhotra from the University of Waterloo, and PengCheng Zhu from the University of San Diego, examined the relationships between CEO gender, board memberships, and pay in S&P 1500 firms from 2007 to 2019. After examining a number of potential alternative explanations, they found that female CEOs receive less compensation for being directors than their male counterparts.
Unexpectedly, this gap in compensation was most apparent in organizations that had boards with greater female representation. The study also revealed that this gender pay gap disappeared when female board directors chaired more important and powerful committees.
“Our study points to the importance of moving beyond mere presence to ensuring women have power on boards,” argues Shen. “We need to make sure that organizations are not inviting women to be on boards simply to be symbols or tokens. This creates a vicious cycle where others assume that female CEOs, who are also directors, should not be rewarded for engaging in these roles because they are not there legitimately, thereby reinforcing gender inequality in the workplace.”