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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.

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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.

The Stubborn Gap at the Top of the Ladder

  • Female C-suite pay as a percentage of pay earned by their male counterparts reached a record low for the nine-year period since 2012. On average in 2020, women with C-suite positions earned only $0.75 for every $1.00 earned by men at the top of the corporate ladder, down from $0.88 for every dollar in 2018. Median female pay for NEOs was 81% that of pay for male NEOs in 2020.
  • Overall, S&P 500 C-suite pay rose by 24% from 2012 to 2020. However, this increase breaks down to a 27% increase for men in the C-suite, compared with 10% for women.
  • While women made incremental inroads into corporate America's C-suites, they'll have to wait until at least 2060 to reach parity at the present rate of progress. The number of women holding NEO positions at S&P 500 companies increased by only 6 percentage points over the most recent nine years for which data is available (to 14% in 2020, up from 8% in 2012).
  • Just over half of S&P 500 C-suites (56%) had at least one female NEO in 2020, up from one third (34%) in 2012. However, C-suites have been slow to advance a second female executive, as only 16% of C-suites had two or more female NEOs in 2020, up from 7% in 2012. And at the very top, progress is even slower: The number of woman-headed S&P 500 companies inched up to 5.5% from 4.3%.

The Reliance on Share-Based Pay Works Better for Men Than Women in the C-Suite

  • While C-suite salaries have been nearly identical over the nine-year study period, the share-based component of pay has seen growth of 45%, on average. In 2020, awards of options, restricted stock, and performance shares accounted for 63% of total NEO take-home pay, up from 54% in 2012.
  • However, this trend favors men, whose share-based pay increased, on average, nearly 30 percentage points more than that of women over the survey period. Whereas women in the C-suite saw a 20% rise in share-based pay, men in the C-suite enjoyed a whopping 49% increase in this component--with the gap opening considerably in 2019 and 2020.
  • The number of senior executives earning more than $50 million in 2020 doubled from the previous high of nine in any one year. Of 18 executives earning more than $50 million in 2020, only one was a woman. Five of the largest 10 pay packages across the entire nine years were earned in 2020, all by men. None of the largest 10 packages were earned by a woman.

The Persistent C-Suite Pay Gap Reflects Institutional Barriers

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.

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About the Author

Jackie Cook

Director, Stewardship, Product Strategy & Development
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Jackie Cook is Director, Stewardship, Product Strategy & Development in Sustainalytics’ Stewardship services team. Up to October 2021, she was director of stewardship research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. In her present role, she leads the ESG Voting Policy Overlay offering, which offers clients a specialist ESG voting lens.

Cook joined Morningstar in October 2018 with Morningstar’s acquisition of Fund Votes Research Ltd., a company that she founded in 2007. Fund Votes had been a provider of mutual fund and exchange-traded fund proxy-voting data on corporate resolutions and shareholder proposals across ESG topics. Previously, Cook had been a senior research associate at The Corporate Library (which merged with GMI in 2010 and was acquired by MSCI in 2014) and a junior research fellow at the Centre for Business Research at the University of Cambridge. Over the past 22 years, she has also worked as a consultant on governance research projects for UNCTAD and several nongovernment organizations and has published academic articles on mutual corporate form, investor advocacy, and energy governance.

Cook holds a bachelor’s degree with honors in clinical psychology from Nelson Mandela Metropolitan University, South Africa, and a master’s degree in research psychology from Rhodes University, South Africa. She also holds a bachelor’s degree with honors in economics and management from Saïd Business School of the University of Oxford, where she studied as a Rhodes Scholar.

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