Female CEOs Outearn Male Counterparts In S&P 500 Companies

Female CEOs are outearning their male counterparts, according to a study by Equilar and the Associated Press. Despite this financial win, the number of women at the helm of companies is still disproportionately small compared to men.

The study examined 2023 CEO compensation for the S&P 500, or the 500 largest publicly traded companies. It focused only on CEOs who had held positions for at least two fiscal years and whose firms filed proxy statements between January 1 and April 30, 2024. These criteria narrowed the sample from 500 to 341 CEOs, of which 25 were women.

They found that women’s median pay exceeded men’s by more than 8%. For female CEOs, the median compensation was $17.6 million, whereas for male CEOs, the median was $16.3 million. This result is surprising because women generally take home only about 82 cents for every dollar earned by a man.

For the fifth year in a row, Lisa Su, CEO of Advanced Micro Devices, was the highest-earning female CEO in the study. Her total compensation of $30.3 million was about $2.5 million more than that of Mary Barra, CEO of General Motors, who received $27.8 million. Jane Fraser, CEO of Citigroup, was the third highest-paid female CEO, with an income of $25.4 million.

However, it’s not all good news for women. Men dominated the highest ranks of CEO pay, with the top twenty highest-paid CEOs all being men. In addition, of the 341 CEOs studied, only 25 were women. Including all S&P 500 companies, only 31 are led by women—less than 7%. As recently as 2019, more men named James were at the helm of S&P 500 companies than women.

Several theories attempt to explain why so few women reach the C-suite. One outdated theory suggested that as more women entered the workforce in recent decades, they needed time to rise through the ranks. However, it’s been over fifty years since women began joining the workforce in significant numbers—ample time for them to reach the top positions.

A new study of over 29,000 management-track employees at a large retailer revealed a more logical explanation. At the company, women constituted 56% of entry-level field workers but only 48% of department managers, 35% of store managers, and 14% of district managers.

The researchers found that differences in forecasts of potential caused the gender gap in promotions. Women at the retailer were less likely to be promoted because although they received higher performance ratings than men, they were seen as having less potential than men.

To assess whether women truly had less future potential than men, the researchers looked at women’s performance ratings in future periods. They found that women tend to outperform forecasts of their potential. Yet, even though they outperformed prior ratings of their potential, managers still rated the women as having lower future potential. “This means that, at the same time that women are given performance ratings indicating that they outperformed their previous year’s potential ratings (relative to men with the same potential ratings), women are still assessed as having lower potential going forward,” the researchers write.

While it’s widely believed that reducing work hours to raise children hinders women’s advancement to top positions, this study found similar patterns among women over 50, who are less likely to have young children at home.

The results from this retailer align with other research showing that women face significantly higher standards than men and are often overlooked for leadership roles. One study found that women must actually demonstrate their leadership abilities before being considered competent leaders, a requirement not typically imposed on men. This may also explain why women who reach CEO tend to receive higher pay—they had to be even more exceptional than men to get there.