Women and minorities make less than their director counterparts.
By Eve Tahmincioglu
It's #EqualPayDay on social media and it's a good time to look into equity in the board room.
The findings, while not as bad as the pay gap for female employees, point to a 3% to 9% gap, according to a study by researchers at University of Missouri and University of Delaware.
“On average across all firms, minorities and females actually are paid more than the average board member,” said Matthew Souther, assistant professor of finance in the University of Missouri's Robert J. Trulaske, Sr. College of Business, in a statement put out earlier this year about the research. “However, when those boards and leadership opportunities are scrutinized more closely, this higher pay is driven by minorities and females being more likely to serve on boards of higher-paying, more visible firms. Within these boards, they actually earn less on average than their peers.”
The research found:
- Minorities and females on boards of directors are more qualified when comparing education, experience and expertise.
- They also found that it’s uncommon for minorities and females to chair or serve on important committees such as audit or compensation committees. Committee chairs or directors who serve on important committees typically are paid additional money for their service.
- Only 7 percent of directors are minority and 12 percent are female and therefore underrepresented relative to the population; because many minorities and females are not chosen to chair committees or serve on “power” committees, and as a result they often receive less total pay compared to their peers.
“The pay gap is not huge, so we think this might be some type of subconscious effect,” said co-author Adam Yore, assistant professor of finance at the University of Delaware. “Yet, it is something that could impact a board because they could be missing a significant perspective by not having a minority or female on the board serving in a leadership role. We also found that the pay gap was larger for those who had served longer, which also is concerning as boards always want to attract and retain the best people.”