Women Leaders Help Close Gender Pay Gap

July 14, 2005 (PLANSPONSOR.com) - A study by Harverford College Economics Professor Linda Bell shows that a pay gap still exists between women executives and their male peers, but having women leaders seems to decrease the gap size.

According to a news release, the study shows that overall, top women executives are paid between 8%-25% less than male executives. However, women executives working in women-led firms earn between 15% and 20% more than women working in other firms. Further, the study revealed that women executives have relatively better compensation and representation among top management in firms with more female Board members, and women executives do better – in relative compensation and numbers – in firms with a female CEO or Chair, especially if the female CEO is a member of the Board.

“It seems a logical conclusion to infer that women leaders help the women below them. If equity for high-skilled and performing women is a policy goal, then the one obvious instrument is affirmative action at the very top of the corporate hierarchy,” Bell said in the news release.

Bell’s study merged the Standard & Poor’s ExecuComp data for the years 1992-2003 with an independent data set from the Institutional Investor Research Center (IIRC) on Corporate Directors. According to the news release, the data contains information on compensation and the individual components of compensation of the top five executives of all firms in the S&P 500, S&P Midcap 400, and S&P Smallcap 600.