The pay gap at FTSE 100 companies is in the spotlight in new research from the New Street Consulting Group, which finds that women are paid far less than their male counterparts in both executive and non-executive director roles.
A female board director is paid 73 percent less, on average, than a male director. The average pay – including both executive and non-executive roles – for a female director stands at £237,000 ($325,000) compared with £875,900 for a male director.
This large pay gap at the board level of FTSE 100 companies is mostly due to 91 percent of female directors holding non-executive roles, rather than executive positions. Non-executive roles tend to have a much lower remuneration.
The research suggests that in holding almost exclusively non-executive roles, women are losing out on the responsibility and authority that comes with being an executive director. But it also shows a pay gap at the non-executive director level, with the average male earning £170,400 in the role, compared with £108,400 for the average woman.
Even at the executive level, a male director earns an average of £2.4 mn compared with an average of £1.4 mn for a female executive director.
‘Great progress has been made in bringing more women onto boards, but this research shows there is much more to do. Focusing solely on the percentage of directors who are women is not enough when trying to approach equality,’ says Claire Carter, director at New Street Consulting Group.
‘Most businesses want to end the old boys’ club that exists at the top. The key to doing that will be ensuring that women have more executive responsibilities and are trained and prepared properly for taking on that responsibility. Allocating them the right assignments and projects is essential to that process.’
Recently, a report by the Financial Reporting Council finds that gender diversity benefits FTSE companies.
The report notes that when more than one diverse board director is added, the board itself may require a change in its culture to accommodate the new perspectives and get the maximum value from the diverse perspectives represented.
‘Ultimately the catalyst for change lies with the boards themselves. It will be a case of examining whether there are any barriers preventing females from reaching the very top at their organization and whether there’s anything they can do to help overcome these,’ adds Carter.