Female CEOs have flipped the script on the gender pay gap

Female CEOs at large US public companies have surpassed their male counterparts in median pay for 2024, but they still occupy a fraction of CEO roles in corporate America, according to a new analysis by The Conference Board, ESGAUGE, and FW Cook.

Based on proxy statements by S&P 500 and Russell 3000 firms between January 1 and June 30, 2024, the report reveals that female CEOs in the S&P 500 earned a median compensation of $16.4 million, compared to $15.6 million for male CEOs. Still, women held just 7.9 percent of CEO positions, a very slight increase from 6.4 percent in 2020.

The story plays out beyond the S&P 500, as female CEOs in the broader Russell 3000 index also outearned men, with median pay of $6.7 million versus $6.1 million for their male counterparts. Still, women account for only 6.9% of CEOs at Russell 3000 member firms.

The report also highlighted a rebound in total CEO compensation after a challenging period for corporate earnings. Median CEO pay in the S&P 500 rose to $15.5 million in 2024, up from $14.4 million in 2023, while in the Russell 3000, it increased to $6.1 million from $5.8 million the previous year.

In a statement, Dana Etra, coauthor of the report and managing director at FW Cook, said the rise in CEO pay is driven largely by performance-based stock awards, reflecting "the economy's resilience and positive shareholder returns in 2023 and early 2024."

The Conference Board report found performance-related stock awards have been a key driver of growth in CEO compensation packages. In the S&P 500, stock awards linked to performance goals increased by 7.5 percent over 2023 levels, while in the Russell 3000, they rose by 9.1 percent.

Matteo Tonello, head of benchmarking and analytics at The Conference Board, highlighted the importance of striking the appropriate balance between stock awards and other forms of executive compensation at public firms.

"Increases in stock awards significantly outpace those of non-equity incentive plans, potentially overemphasizing long-term equity growth at the expense of short-term corporate goals," Tonello said.

Meanwhile, stock options have seen a significant decline in adoption within CEO pay packages. In the S&P 500, 40 percent of CEOs are said to have stock options, accounting for 9.8 percent of their total compensation, down from 18.3 percent of total CEO pay in 2011. For those in the Russell 3000, fewer than 25 percent of CEOs receive stock options, and stock options' share in the total compensation pie dropped from 16 percent in 2011 to 10.4 percent in 2024.

Paul Hodgson, senior advisor to ESGAUGE, emphasized the importance of carefully structuring stock options to align with long-term goals: "If deployed correctly, stock options can contribute to aligning pay with long-term strategic goals and remain an effective tool in compensation design."