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Does being a man or woman influence how much a CEO gets paid?

PhD researcher finds a significant shift towards equal pay at the top of the corporate ladder
February 6, 2024
By Sarah Rahimi

Blurred people walking up stairs with blue background

The journey to the top of the corporate ladder is filled with challenges, especially for women. But my recent research signals a significant shift from the larger narrative of gender inequality in the workplace.

As part of my master's dissertation, supervised by Kathleen Boies, I found that a woman CEO’s pay is more reflective of her performance than her gender or industry. These findings are based on my analysis of 3,277 firm-year observations from public United States firms between 2010 and 2018.

Historically, the narrative has been clear: women, across various employment levels, have consistently earned less than men. While this has been an ongoing issue, there are signs of change at the executive level. According to my research, it seems that being a man or a woman does not influence how much a CEO gets paid.

Society’s expectations

Instead, the factors influencing CEO compensation are firm-specific like risk, size, sales and growth potential. Additional factors include annual increases due to inflation or market trends and whether the CEO serves as the chairperson.

At the core of my research is the Role Congruity Theory, which proposes that societal expectations about gender can influence leadership perceptions. Traditionally, men are seen as assertive and dominant whereas women are perceived as communal and caring – traits not traditionally associated with leadership. This can lead to a bias against women, potentially affecting their performance evaluations and, consequently, their pay.

But the data I collected reveals that the gender of CEOs, whether in industries dominated by men or women, doesn't significantly influence compensation. This finding suggests that at the CEO level, women are judged by their professional skills and performance rather than their conformity to gender stereotypes.

Transparency leads to equality

The visibility and scrutiny that comes with being CEO, especially within publicly traded companies, may also contribute to the end of pay disparities. Public firms in the United States are required to disclose executive compensation, subjecting them to scrutiny from stakeholders and the general public. This transparency could discourage gender-based compensation discrimination.

For the general public, these findings extend beyond the executive level, delivering a powerful message: gender should not hinder professional advancement or fair compensation. This is particularly relevant for young individuals and emerging professionals, who now see women achieving and receiving equitable compensation at the CEO level, reinforcing confidence in a system that rewards ability and hard work.

For business professionals, these findings are a framework for creating equitable pay structures and focusing on performance over gender biases, which can enhance a company's reputation and ethical image. This focus on equity can improve employee morale and staff retention. It will also attract top professionals who value diversity. Equitable compensation at the top could motivate employees at all levels, leading to increased productivity and job satisfaction.

These findings show women aspiring to fill leadership roles that fair pay is possible. When women become CEOs, their compensation is appropriately matched to their achievements, marking a significant milestone towards gender equality in the workplace.

However, pay equity among CEOs should not be interpreted as an indication of gender equality across all positions. The path to becoming CEO is difficult and often affected by gender biases. Despite progress at the top, the fight for gender equality in the workplace is ongoing. Although this research questions the idea of a widespread gender pay gap, it does not dismiss the presence of unequal pay in other roles. This emphasizes the need for continuous advocacy for gender equity across all professional areas.

Sarah Rahimi

Sarah Rahimi is a PhD candidate in Business Administration and Management in the John Molson School of Business. She earned her undergraduate degree with distinction in Honours Psychology, supplemented with a Minor in Human Relations, from Concordia University in 2018.

She earned an MSc in Management from Concordia, graduating in 2020 with a GPA of 4.1/4.3. Rahimi's Master’s thesis delved into equity, diversity and inclusion (EDI), particularly examining the CEO gender compensation gap. She is currently progressing with her PhD thesis (2020-present), deepening her investigation into EDI, gender, leadership and dyslexia.

Among her awards are the Most Popular Poster (three times) and the People’s Choice Award at Concordia’s 3MT Competition.

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