Company boards with women in charge of executives’ salaries perform better
First Women Exclusives · September 1, 2016
Female chairs of remuneration committees are likely to make board executives work harder for their pay than male chairs, a report from compensation consulting firm Pearl Meyer has suggested.
The study reviewed the performance of 149 of the UK’s biggest listed companies, citing that 52 (35 per cent) of them have a female to oversee their remuneration board. Compared with the 26 per cent represented on FTSE100 boards, it hints that women have a knack for this particular job.
Findings indicated that companies with a woman in this position fared better in terms of returns. It highlighted that the women were able to earn £822 for shareholders for every £1 paid to the chief executive, while their male counterparts earned £561 for every £1, suggesting females are perhaps better at getting get the best value out of chief executives.
In addition to demanding more from chief executives, female heads were found to pay them an average of £400,000 more in wages.
Pearl Meyer managing director and author of the study Simon Patterson said: “In broad terms, companies where there’s a woman in charge of setting pay are more productive. It’s difficult to draw specific conclusions – but you could surmise that women are less inclined to go along with the group and more inclined to think about what could go wrong.
“The ‘new normal’ is a powerful female chair of the remuneration committee tackling difficult issues of executive pay, highly motivated to understand what is going on, focused on solutions and typically bringing with them a holistic view on the question: ‘What are we paying for?’”.
The report stated that often, a remuneration chair will play the role of a facilitator or ‘inentiviser’, where their primary focus is to support management in the achievement of agreed business strategy and compensation is a means to that end.
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