Corporate Leadership Won’t Reach Gender Parity Until 2060 at Its Current Rate
A Morningstar analysis also found the gender pay gap expanded during the pandemic after years of improvement.
The pandemic has been tough on women in general, and the latest evidence is that its negative effects have rippled through the highest levels of corporations, too.
In 2020, the most recent year for which data is available, the gender pay gap in the C-suite expanded--a reversal of the narrowing that occurred between 2015 and 2019. Indeed, female C-suite pay as a percentage of pay earned by their male counterparts fell to a record low for the nine-year period since 2012. And, while the number of women at the top of the corporate ladder has inched up, women will have to wait until 2060 to reach representation parity at the present rate of progress.
The finding came in a follow-up to our 2021 report, in which we examined pay disclosures by companies in the Russell 3000 from 2015-19. The data used in this analysis was sourced from Morningstar's Executive Insight database and is based on S&P 500 companies' named executive officer, or NEO, compensation disclosures contained in annual proxy statements. Named executive officers include CEOs, CFOs, and the next three highest-paid executive officers.
Equity-based pay has been driving up C-suite pay packages overall, but the largest packages have gone to men. Of 18 executives earning more than $50 million in 2020, only one was a woman. In 2019 and 2020, share-based pay drove a wedge between average male and female C-suite pay packages.
Skyrocketing corporate executive pay is its own intractable problem. Yet, stronger representation of women in senior leadership ranks may be part of the solution. Both companies and investors stand to benefit from narrowing the pay gap and advancing gender and racial diversity in corporate leadership.
With growing evidence that transparency reduces pay inequality, several shareholder resolutions have called on companies to disclose gender and racial pay gaps using both adjusted and unadjusted medians. In November 2021, a resolution at Microsoft (MSFT) earned 40% support; in March 2022, a similar resolution will come to vote at Apple (AAPL).
While no one in this study hurts as much as folks who lost their jobs or who are watching their real earnings erode under inflation, the persistence of the pay and representation gap at the top of corporate America is indicative of the institutional barriers to equal participation of women and minorities across the workforce and highlights the need to do more to open up senior ranks.
Jackie Cook does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.