February 9, 2022
Examine Equity Grant Processes to Enhance Pay Equity
I’ve previously blogged about benchmarking pay practices being detrimental to female executives. But we’re also still tackling gender pay gaps in the workplace, including with respect to equity compensation – and the inequity may potentially be coming from pay negotiation skills and managerial discretion. Barbara Baksa refers to a WSJ analysis in her NASPP blog, which found that in 2018, the average value of company stock held by men was almost 4x that of women, at $104,902 and $26,361, respectively. In addition, the inequity seems to start up front, as women receive 15-30% fewer equity grants (based on a study examining a tech startup and a large pubco).
As companies get more and more calls for pay equity audits in proxy seasons, it’s a good time for compensation committees to get familiar with how exactly companies are managing the equity grant process to root out unfair biases. And as Barbara notes, “employees who are paid less [in cash] can’t contribute as much to the company ESPP or retirement plans as their higher paid colleagues” – and they may also not be able to exercise as many stock options either – so that may affect both your workforce makeup during the hiring stage and pay inequity during the employee lifecycle.
– Emily Sacks-Wilner