Blame the Wage Gap On Performance Pay

A new study from the Federal Reserve Bank of New York found that men are the ones who benefit most when a company is performing well, but when a company is doing poorly, women’s compensation suffers more.

The suspected culprit is performance pay, especially stock options and bonuses tied to the company’s success. Men tend to hold more stock options than women, so they get paid more for a company’s good performance. But when a company is underperforming, male executives have more influence over the networks of people (e.g., board members) who decide their bonus pay. So, men are in better positions to game an inefficient system to pay them more when the company’s bottom line is less than stellar.

(In case anyone is wondering, these gender differences in pay emerged when the researchers controlled for executives’ ages, titles, and companies, meaning that the gap can’t be explained by female executives being younger or less senior than their male counterparts.)

So what can women do? Study author Stefania Albanesi thinks supporting pay transparency is the key. Armed with reliable information about what male colleagues are making, women can say, “Hey, how about you let us in on some of those stock options?”—and multiply their current compensation several times over.

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TAKE THE LEAD prepares, develops, inspires and propels women to take their fair and equal share of leadership positions across all sectors by 2025. It’s today’s women’s movement — a unique catalyst for women to embrace power and reach leadership parity.