CHROs are the lowest-paid executive officers, contributing to the C-suite’s gender pay gap

Even as women make representation gains in the highest echelons of corporate America, the wage gap in the C-suite is not so different from the US overall, according to a recent analysis published by financial services firm Morningstar.

In 2022, women holding the “senior-most executive roles,” including titles such as CEO, CFO, and CHRO, earned 85 cents for every dollar earned by their male counterparts. As of 2022, full-time female workers overall were paid 84 cents on the dollar relative to men.

This gap is driven by “gendered division of labor,” as women remain underrepresented in the senior-most executive roles, Jackie Cook, Morningstar’s director of stewardship, product strategy, and development, told HR Brew.

Female representation lags in highest-paying roles. Cook has been researching gender pay disparities among “named executive officers” (NEO)—that is, the five highest-paid officers in a company—since 2019. Her research draws on Morningstar data, and looks specifically at S&P 500 companies.

The most recent data shows more women hold NEO positions today than they did a decade ago. As of 2022, women made up 16.5% of NEOs, up from 8.4% in 2013, Cook’s analysis found.

But not all NEO positions are created equal, and low female representation in the highest-paid executive categories has contributed to a gender pay gap that has vacillated between 75% and 88% over the past 10 years.

In the highest-paid C-suite titles—chief executive officer (CEO), chief technology officer (CTO), and chief operating officer (COO)—women are the least represented, Cook found. So, even though female CEOs actually outearned their male counterparts by $2 million on average in 2022, this wasn’t enough to close the wage gap, as they only represented 8% of total CEOs in the S&P 500.

And while women made up a majority (64%) of chief human resources officers (CHROs) in 2022, this role was the lowest-paid NEO position. CHROs in the S&P 500 earned $4.2 million on average, about one-quarter of what the average CEO took home. Chief legal officers, for which women held about 40% of the roles, were the second lowest-paid executive officers, earning $4.6 million on average.

How can companies close the gap? Gendered pay disparities start well before women reach the highest levels of their organization, Cook noted.

“There’s a channel through which women ascend to the senior-most ranks within organizations…that may determine the kind of pay disparity even before they reach the C-suite,” she said.

The consulting firm McKinsey has written about a “broken rung” that holds back women from senior leadership positions, and contributes to an outsize number of men holding positions at the manager level. Claudia Goldin, a Nobel Prize-winning economist, has pointed to the prevalence of “greedy work” as a key driver of the gender pay gap. Jobs that demand long hours and offer little flexibility tend to pay more, and women have a harder time taking on these roles, on top of other responsibilities like caregiving.

The fact that share-based pay—that is, pay that is tied to metrics such as shareholder returns—has been growing at the senior-most levels of organizations where men are heavily concentrated doesn’t help, Cook added. “The portion of pay made up by the share-based components is far, far higher for CEOs and for other named executive officers,” she noted.

Solving these issues isn’t a simple task for companies, Cook acknowledged, as it comes down to a “representation gap” that starts “very much earlier on down the corporate ladder.” Providing parental support, she said, is one way employers can address the matter. Increased pressure from shareholders too, may spur more companies to act. Both Nike and Oracle faced shareholder resolutions calling on the firms to report gender and racial pay gaps in 2023.

“I think this is probably indicative…of shareholder sentiments in general towards the gender and racial pay gap, and representation gap,” Cook said.