Does Gender Influence CEO pay?
09/12/2022
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Guerdon Associates researched the CEO pay of ASX 100 companies to determine whether gender influences executive remuneration.

The results are summarised as follows:

  • In the ASX 100 there are 13 female CEOs
  • No significant difference is observed between genders for total fixed remuneration, maximum total remuneration and maximum incentive opportunity (maximum short-term incentive (STI), maximum long-term incentive (LTI) and long-term equity (LTE))
  • A statistically significant and positive relationship is observed between market capitalisation and all three remuneration opportunities tested in the analysis.

Summary Statistics

Table 1 below summarises the median total fixed remuneration for ASX 100 CEOs split by sector. In the analysis, Block Inc was excluded as the CEO is a founder with significantly lower remuneration than peers.

Table 1: Total Fixed Remuneration of ASX 100 CEOs by Sector

Sectors

Male

Female

Count

Median

Count

Median

Financials

12

$1,869,111

4

$1,660,514

Materials

18

$1,474,050

3

$1,668,000

Consumer Discretionary

7

$1,600,000

3

$1,866,723

Energy

5

$1,888,000

1

$2,200,000

Communication Services

4

$1,575,000

1

$2,390,000

Real Estate

8

$1,546,480

1

$1,500,000

Consumer Staples

6

$1,790,658

0

Utilities

3

$1,675,000

0

Industrials

11

$1,877,187

0

Information Technology

5

$1,316,381

0

Health Care

7

$1,952,875

0

Total

86

$1,687,500

13

$1,715,000

 

On the face of it, there are substantial (i.e., greater than 10%) differences between male and female CEO fixed remuneration across almost every sector for which there are female CEOs, as indicated in Table 1. However, given the small number of female CEOs in each sector, there is insufficient data to indicate conclusive sector-specific pay differences between genders.

Table 2 below summarises the total fixed remuneration percentile splits by gender for the ASX 100.

Table 2: Summary of Total Fixed Remuneration of ASX 100 CEOs

 

Male

Female

Total

Count

86

13

99

Average

$1,763,243

$1,723,723

$1,758,053

25th Percentile

$1,479,401

$1,500,000

$1,482,721

50th Percentile

$1,687,500

$1,715,000

$1,700,000

75th Percentile

$2,063,227

$2,084,411

$2,084,357

 

Table 2 suggests there is not a significant difference in fixed remuneration between male and female CEOs at each quartile.

Regression Analysis

Using publicly available data sourced from ASX100 constituents’ most recent annual report, Guerdon Associates conducted a regression analysis to control for external factors and isolate the effect of gender on remuneration outcomes. Variables that were considered when performing the regression analysis included tenure of CEO, company financials, company size and the company’s scope of operations.

Considering these variables, analysis was performed for total fixed remuneration, maximum total remuneration and maximum incentive opportunity (Maximum STI, Maximum LTI and LTE) for CEOs.

Findings

In the regression analysis, gender, length of tenure and company scope of operations were not observed to be statistically significant. This means that a CEO’s gender was not observed to impact that CEO’s remuneration opportunity among the ASX100 cohort.

From the regressions, market capitalisation was consistently significant in comparison to other financials and company size measures.

Figure 1 displays the relationship between market capitalisation and total fixed remuneration.

Figure 1: Plot of Total Fixed Remuneration on Market Capitalisation

Note: A logarithmic adjustment was used for market capitalisation.

As expected, a positive relationship was observed between company market capitalisation and total fixed remuneration in the ASX 100. This relationship can be attributable to several factors, but that is outside the scope of this article.

Conclusion

While it can be said that being female or male does not influence Australian CEO pay, it is still size that counts.

© Guerdon Associates 2024
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