Women CEOs Don't Get Paid Less Than Men in Big Business, They Make More
May 31 2017 - 5:59AM
Dow Jones News
By Joann S. Lublin
Women in command of America's biggest businesses are reaping
rich rewards.
In an unusual reversal of the gender pay gap, female chief
executives at some of the largest U.S. companies repeatedly outearn
their male counterparts. Last year, 21 female CEOs received a
median compensation package of $13.8 million, compared with the
$11.6 million median for 382 male chiefs, according to a Wall
Street Journal analysis of S&P 500 leaders who held the job a
full year.
Women in the corner office at the biggest American firms made
more money than men in six of the past seven years, though the gap
has narrowed since 2014. The trend reflects strong performances by
S&P 500 businesses run by women -- and the fact that superstar
women tend to land such top jobs, according to executive-pay and
leadership experts.
"Boards don't want to shortchange their female CEO in today's
environment, when pay equality is such an issue," said Robin
Ferracone, head of Farient Advisors LLC, which advises board
compensation committees. So, they "err on the side of being
generous."
The total number of women running S&P 500 companies held
steady from the previous year's analysis at 28, including seven
women who retired or held the job less than a year, and remains at
roughly 5% of the total. But for the first time in The Journal
study's 28-year history, three of the 10 highest paid executives in
the overall sample are women.
They are Meg Whitman at Hewlett Packard Enterprise Co., Virginia
"Ginni" Rometty at International Business Machines Corp. and Indra
Nooyi at PepsiCo Inc.
Most of the 21 female leaders advanced into their roles within a
company rather than getting recruited. "These women must be
exceptional" because so few reach the corner office, said Heidi
Hartman, president of the Institute for Women's Policy
Research.
S&P 500 businesses now run by women generated a median total
shareholder return of 18.4% in 2016, compared with 15.7% for those
commanded by men. Returns at female-led firms outperformed male-run
companies in three of the previous five years. Total shareholder
return measures changes in a company's stock price and dividend
payments.
"The board of a company with excellent shareholder returns and
operational results likely will reward the CEO more, regardless of
gender," said Irv Becker, an executive-pay specialist for Hay
Group, a unit of recruiters Korn/Ferry International.
At HP Enterprise, which posted a total return of about 55%, Ms.
Whitman earned $35.6 million during the year ended Oct. 31. The
technology giant emerged from Hewlett-Packard Co.'s 2015 split into
two businesses. The CEO made double the $17.1 million she earned a
year earlier while running the combined company.
Ms. Whitman's latest package included a special equity grant
tied to the debut of HP Enterprise. Aside from such one-time items,
"Meg's target compensation has remained unchanged over the past
three years," a company spokeswoman said, describing part of her
package.
Mylan NV had the lowest one-year return among women-led
concerns, posting -29%. The drugmaker faced a furor over hefty
price increases for its lifesaving EpiPen. Longtime CEO Heather
Bresch received $13.8 million last year, down from $18.9 million
the previous year.
"We place a clear emphasis on variable, performance-based
compensation, " with about two-thirds of Ms. Bresch's 2016 annual
target compensation tied to performance, Mylan's proxy statement
said. Directors also cited its share price's appreciation during
the past five, 10 and 15 years. Mylan declined to comment
further.
Certain female chiefs earned hefty pay packages because they're
trying to transform their employers. "Turnaround CEOs always get a
premium because a turnaround is hard," said Jan Koors, a senior
managing director for Pearl Meyer, a compensation consultancy.
As their pay packages reach the highest tier, some female CEOs
are coming under additional shareholder scrutiny. Consider Ms.
Rometty. IBM's leader is trying to offset waning older businesses
with younger ones such as cloud computing, but revenue fell for the
20th consecutive quarter during this year's first three months.
IBM paid Ms. Rometty $32.7 million last year, up from $19.8
million a year earlier. Her 2016 package included 1.5 million stock
options, which she can't fully exercise unless IBM's stock price
increases as much as 25%, according to its proxy.
But Ms. Rometty can keep those options for 10 years. "There's
very little downside risk," said Aeisha Mastagni, a portfolio
manager for California State Teachers' Retirement System, which
owns 2.2 million IBM shares. "It's not like she has been underpaid
under her tenure as CEO."
Many IBM shareholders consider Ms. Rometty overpaid. About 46%
of votes cast at this spring's annual meeting opposed the company's
executive pay practices. That represents a record level of IBM
investor opposition for a "say-on-pay" vote. The nonbinding
referendum began in 2011.
Directors will review results of the 2017 shareholder votes "as
they do every year," an IBM spokesman said.
(END) Dow Jones Newswires
May 31, 2017 05:44 ET (09:44 GMT)
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