Female CEOs paid less than their male counterparts - myth or reality?

It’s become an accepted fact that, despite moves towards bridging the gender gap in workplaces around the world, women are still often paid less than their male counterparts. But is this inequality limited to front line troops in the ‘firing line’ of business or does it actually reach up to the very top of organisations?

According to a new study by Phillip Geller and Luc Renneboog at one of Europe’s top business schools, EMLYON, the boardroom may actually be a fairer place than perceptions sometimes suggest. The two academics carried out a review of top tier pay at all of the UK’s listed companies and found no real evidence that female CEOs received less financial reward than male ones. The only significant differences between the two groups lay in the way they were rewarded rather in the actual amount they received. The analysis found that, while a male CEO’s bonus was heavily geared to traditional financial performance measures, a female corporate leader would often be judged more on their individual management style.

However this apparent evidence of a trend towards equality did come with something of a sting in its tail. Although those women who had made it to the top job seemed to have gained parity of their male counterparts, they only made up a fairly paltry 2% of UK CEOs. And at the next rank down, which included such key roles as CFO, COO, Deputy CEO, etc, equality was conspicuous by its absence. Female executives at this level could expect to earn around 23% less than men, which Geller and Renneboog calculated as a shortfall of more than £1.3million over five years. On average a female senior executive will receive a 15% lower salary and a 20% smaller bonus.

Research by McKinsey & Co and many other consultancies, business schools and think tanks has demonstrated that businesses with mixed gender boards outperform their single-sex counterparts in terms of both return on assets and investments. But while many organisations pay loud and public lip service to the value of diversity, it appears that there are still too few that are willing to pay to make it happen. In fact the only businesses that seemed to be making any real progress towards levelling the executive playing field, according to the EMLYON study, were those which already had female non-executive directors on their boards or – somewhat unexpectedly – were operating in what were traditionally seen as ‘male’ sectors, such as technology and IT. As professional recruiters we completely believe that leadership teams should be made up of the best talent that can be acquired and that any obstacles in the way of this, such as disparity in reward, are potentially damaging and ignore a basic commercial imperative.

Isn’t it perhaps time for all serious businesses to not just talk the talk but walk the walk when it comes to senior executive pay?

Paul Hunt is managing director of Healy Hunt Executive