Gender pay gap extends to stock options.

Men outpacing women on stock options: study

Data from the U.S. Census Bureau have consistently shown that men outearn women when it comes to salaries. But new research suggests that the gender pay gap extends beyond traditional forms of compensation to include a practice common among startups, particularly in the tech industry: the offer of stock options or equity.

For every US$1 in company equity held by men, women hold just US$0.47, according to a study released by Carta, a Silicon Valley firm that helps startups manage their equity shares. The study finds that women tend to be disadvantaged in the amount of equity they hold at almost every stage of a new startup’s life.

Equity can be the deciding factor in a worker’s financial fortunes. Many startups lack the cash to lure new employees with premium salaries, so they offer ownership shares in the company instead. If the company is successful, those shares rise in value and employees can cash out to the tune of millions in some cases.

But the imbalance Carta found in an analysis of roughly 180,000 workers and entrepreneurs across 6,000 companies suggests women are being left behind as men reap the rewards of equity.

Despite accounting for 35 per cent of the equity holding population in Carta’s study, women held 20 per cent of the total value of equity across the various firms.

Meanwhile, the stock compensation picture is even bleaker for female startup founders. On average, the study found that male founders each hold nearly US$2.2 million worth of company equity, compared to roughly US$858,000 for each woman.

Male founders significantly outnumbered female founders in Carta’s study by a ratio of more than six to one.

Overall, women tend to join startup companies at much later stages of a firm’s life compared to men. Those trends set women even further back, according to the report, because equity packages are typically more favourable to earlier hires.

The result not only skews the amount of money women can hope to earn in equity, but can also have an effect on the direction of the tech ecosystem, according to #Angels, a group of female investors who have worked at companies such as Google, Twitter, Yahoo and Netflix.

“The major shareholders of successful start-ups get the privilege of building institutions that define the next generation of the industry,” #Angels wrote in a blog post in March. “And as technology has an increasingly global footprint, this influence shapes the entire world.”