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U.S. Analysis: Companies Hiring More Women Pay Higher Salaries | ASHARQ AL-AWSAT English Archive 2005 -2017
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A sign that marks the Macy’s store is seen at the Herald Square location in New York. Photo, Reuters


New York-Appointing more women to corporate boards has long been viewed as a good thing for a company’s performance and for society as a whole.

However, gender diversity among directors carries another benefit, 2015 proxy filings showed a bigger paycheck for the company’s chief executive.

An analysis of C.E.O. pay at 100 large companies last year by “Equilar,” a compensation research firm in Redwood City, California, found that companies with greater gender diversity on their boards paid their chief executives about 15 percent more than the compensation dispensed by companies with less diverse boards.

In dollars, this translated to approximately $2 million more in median pay last year among these companies.

This data, which comes from a smaller set than Equilar’s broader study of pay at the top 200 companies, doesn’t necessarily prove cause and effect, of course. There could be other reasons for the disparity, too. The more diverse companies could be bigger or more profitable than average, for example.

Nevertheless, Nell Minow, a longtime expert on corporate governance, was not surprised by the findings.

“It’s very difficult for women to get on boards, and I think they are under even more pressure to go along and get along,” said Minow, a vice chairwoman at “ValueEdge Advisors;” a consulting firm that works with shareholder groups on compensation and other issues.

Today, roughly one in five directors at a wide array of public companies is female, Equilar said. That’s up to 31 percent over the last five years.

If Minow is right about board culture, anyone arguing for more women on boards should recognize that gender alone may not be enough to generate a new approach to pay.

Among the 100 largest companies Equilar studied, 57 percent have boards where women make up more than a fifth of the members, which is the average share of female directors among Standard & Poor’s 500 corporations.

The median pay among the chief executives overseeing the companies whose boards had more gender diversity was $15.7 million in 2015, Equilar found.

This compares with $13.6 million received by heads of companies whose boards had 20 percent or fewer women.

In addition to that, Chief executive compensation at companies with more diverse boards also exceeded by 8 percent the $14.5 million median pay received by C.E.O.s employed at the top 100 companies.

At the 10 large United States company boards with the greatest gender diversity, 46 of the 124 directors were women. That’s more than a third.

Macy’s, the giant retailer, ranked atop this list with six female directors out of 13. Wells Fargo came second with 40 percent of its board consisting of women.

Procter & Gamble and Hewlett-Packard each had boards made up of 38.5 percent women.

At Abbott Laboratories and Cardinal Health, women directors accounted for 36.4 percent of the boards. At the remaining companies, Accenture, AT&T, ManpowerGroup and Tenet Healthcare, one-third of the board members were women.

Who’s at the bottom of the list? Twenty-First Century Fox, with 7.7 percent of its board made up of women; Express Scripts and Qualcomm did a little better with 8.3 percent; Emerson Electric had 9.1 percent, and Humana Inc. came in at 10 percent.

Just being a director, of course, does not mean that you can have a direct impact on a company’s pay practices. That is the domain of the compensation committee, the board group that oversees the methodology used to determine top executives’ pay.

Women are not that common on these crucial committees. Even among the 10 most diverse boards, just under a third of the directors who are women, 14 of 46, belong to compensation committees.
Still less likely, the analysis showed, is that a woman will serve as chairwoman of a board’s compensation committee. Women performed that function at just two of the 10 most diverse boards last year.

The other compensation committee chairwoman was Joyce Roché, former president and chief executive of Girls Inc., a nonprofit organization that tries to build confidence in girls.

Under Ms. Roché’s stewardship at AT&T, Randall L. Stephenson, its chief executive, received $22.4 million. That’s almost $8 million more than the median pay for the 100 top companies in 2015.

Ms. Roché declined to respond to questions about the pay situation at AT&T.

She was also AT&T’s compensation committee chairwoman in 2014 when Mr. Stephenson received almost $24 million.

Company shareholders expressed displeasure with that pay package at AT&T’s annual meeting last year, where 23 percent of votes cast were against its compensation practices.

That’s far above the 5 percent of nays cast on pay at the companies in the Standard & Poor’s 500-stock index during the same year.