The sur­pris­ing role where women of­ten earn more than men.

One job re­verses the gen­der gap, but very few women have it

The Washington Post Sunday - - BUSINESS - BY JENA MCGRE­GOR jena.mcgre­gor@wash­post.com

The gen­der pay gap has shown up in seem­ingly ev­ery job there is: Tech work­ers. Sci­en­tists. Even male nurses make more than their fe­male peers.

But in one oc­cu­pa­tion — one at the very tip­top of cor­po­rate Amer­ica — the me­dian woman has con­sis­tently earned more than the me­dian man. It’s the cor­ner of­fice of the coun­try’s largest pub­lic com­pa­nies: chief ex­ec­u­tives of Stan­dard & Poor’s 500 cor­po­ra­tions.

A new anal­y­sis of the largest pub­lic U.S. com­pa­nies by the As­so­ci­ated Press and Equilar, the ex­ec­u­tive pay and cor­po­rate gov­er­nance re­search firm, finds that the me­dian fe­male CEO made $13.1 mil­lion in 2016, com­pared with $11.4 mil­lion for the me­dian male CEO.

“I don’t think there’s any one de­fin­i­tive rea­son we can say this is hap­pen­ing,” said Dan Marcec, Equilar’s di­rec­tor of con­tent. “It could just be a mat­ter that these in­di­vid­u­als hap­pen to be run­ning some of the more well-per­form­ing com­pa­nies and that’s re­flected in their com­pen­sa­tion.”

What­ever the rea­son, it’s been hap­pen­ing re­peat­edly — and for a while. Eric Hoff­mann, vice pres­i­dent of in­for­ma­tion ser­vices for Fari­ent Ad­vi­sors, an ex­ec­u­tive com­pen­sa­tion con­sult­ing firm, ran the data him­self us­ing a slightly dif­fer­ent sam­ple — S&P 500 com­pa­nies where the CEO was in the job for the full fis­cal year. He found that in nine of the past 10 years, the me­dian fe­male CEO earned a big­ger pack­age than her male peer. “We’re get­ting some real con­sis­tency here,” he said.

Among the 25 high­est paid CEOs in 2016, ac­cord­ing to the AP/Equilar study, five of them were women, an over­rep­re­sen­ta­tion when women make up less than 6 per­cent of all CEOs in the S&P 500, ac­cord­ing to the non­profit Cat­a­lyst. (The AP/Equilar study looked at the 346 CEOs in the S&P 500 that have been in the job for at least two fis­cal years and filed their 2017 proxy state­ments by May 1. Twenty-one of them are women, and 325 are men.)

The high­est-paid fe­male CEO, IBM’s Vir­ginia Rometty, was paid $32.3 mil­lion last year, thanks in part to a stock-op­tion award IBM val­ued at $12.1 mil­lion that was ques­tioned by an in­flu­en­tial proxy ad­viser and nar­rowly won share­holder ap­proval. Ya­hoo’s Marissa Mayer came in sec­ond, with a pack­age val­ued at $27.4 mil­lion last year, fol­lowed by Pep­siCo’s In­dra Nooyi, at $25.2 mil­lion. Two CEOs who have since left their jobs — Reynolds Amer­i­can’s Su­san Cameron and Xerox’s Ur­sula Burns — fell at the me­dian value for 2016, $13.1 mil­lion.

So why, at least at the me­dian, have fe­male CEOs con­sis­tently made more than men?

There are plenty of the­o­ries, but not a clear ex­pla­na­tion. One pos­si­bil­ity might be sam­ple size, since there are so many fewer women than men in the job. But since these analy­ses look at me­dian pay, rather than av­er­ages, an out­lier shouldn’t sway the fig­ures sub­stan­tially, Hoff­mann says. The small num­bers, how­ever, could lead to more volatil­ity from one year to the next in what fe­male CEOs make.

Rather, he thinks the most likely ex­pla­na­tion is com­pany size, as there is a dis­tinct cor­re­la­tion be­tween an­nual rev­enue and ex­ec­u­tive pay, and many of these women run larger com­pa­nies.

“If I were to have to hang my hat on why women CEOs make more than their male coun­ter­parts, I’m go­ing to hang 90 per­cent of that on the size of the com­pa­nies the women are run­ning,” he said. Thir­teen of the 21 women in the study are among the 250 largest com­pa­nies by rev­enue, and just four were ranked be­tween 401 and 500.

Some aca­demics have stud­ied the is­sue. Lisa Les­lie, a pro­fes­sor at New York Uni­ver­sity, looked at the high­est-paid ex­ec­u­tives in S&P 1500 com­pa­nies and found what might be called a “diver­sity pre­mium,” in which women at the top earn more than men in these top-paid po­si­tions at big com­pa­nies. The rea­son, Les­lie told the Har­vard Busi­ness Re­view, is that com­pa­nies that have adopted or­ga­ni­za­tional diver­sity goals — some­thing com­mon at the largest com­pa­nies — are more likely to pay ex­tra for high-po­ten­tial women.

Other re­searchers at Ge­orge Wash­ing­ton Uni­ver­sity have tried to an­swer the ques­tion, again with­out a clear an­swer. Also writ­ing in the Har­vard Busi­ness Re­view, James Bai­ley and Mar­garet Or­mis­ton sug­gested it could be a sup­ply-and-de­mand is­sue, or per­haps a move by com­pa­nies to hire women to help them im­prove their im­age, of­fer­ing them more in­cen­tive pay along with it. “They’re sug­gest­ing, ‘We’ve done bad things in the past, and there­fore, by hiring a woman, we should be for­given and it helps make up for what we’ve done,’ ” Bai­ley said in an in­ter­view.

An­other pos­si­bil­ity, fi­nally, has less to do with who’s run­ning which com­pany but the na­ture of ex­ec­u­tive com­pen­sa­tion and how it’s dis­closed. Since 2006, the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion has re­quired com­pa­nies to de­tail a lot of in­for­ma­tion about how CEOs are paid, mean­ing women and men — and the boards of di­rec­tors who hire them — have plenty of in­for­ma­tion to go on when it comes to ne­go­ti­at­ing their pay.

That could bol­ster the ar­gu­ment that more in­for­ma­tion and trans­parency would help close the gen­der pay gap for women well be­low the CEO rank, too. “You talk about work­ers in the gen­eral pop­u­la­tion, and if I’m a woman and I sus­pect I’m mak­ing a lot less than a cor­re­spond­ing male do­ing the same job, I can re­ally only sus­pect that,” Hoff­mann said. “But with ex­ec­u­tive pay, there’s so much trans­parency.”

AS­SO­CI­ATED PRESS

The 10 high­est-paid fe­male chief ex­ec­u­tives in 2016, ac­cord­ing to a study by the As­so­ci­ated Press and Equilar, top, from left: Vir­ginia Rometty, IBM; Marissa Mayer, Ya­hoo; In­dra Nooyi, Pep­siCo; Mary Barra, Gen­eral Mo­tors; Phebe No­vakovic, Gen­eral Dy­nam­ics. Bot­tom row, from left: Mar­il­lyn Hew­son, Lock­heed Martin; Irene Rosen­feld, Mon­delez In­ter­na­tional; Lynn Good, Duke En­ergy; Heather Bresch, My­lan; and Su­san Cameron, who has since left Reynolds Amer­i­can.

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