Study: Pay gap for women, racial minorities on company boards

(Updated 11:40 a.m.)
COLUMBIA, Mo. – Women and racial minorities serving on company board of directors are typically compensated less than their peers, according to a new study by the University of Missouri and the University of Delaware.

The study reviewed more than 1,800 companies and 70,000 board members’ compensation, according to a press release. At a glance, the research shows racial minorities and females on average are paid more than the average board member, but the devil is in the details.

“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,” said Matthew Souther, assistant professor of finance in the Robert J. Trulaske Sr. College of Business. “Within these boards, they actually earn less on average than their peers.”

The research shows racial minorities and females are typically more qualified in categories of education, experience and expertise. And larger companies often have a better focus on diversity, resulting in more racial minorities serving on boards of bigger companies. But overall, only 7 percent of directors are racial minorities and 12 percent are females, according to the research. The pay gap on average is between 3 percent to 9 percent.

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“The pay gap is not huge, so we think this might be some type of subconscious effect,” said Adam Yore, an author of the study and an assistant professor of finance at the University of Missouri. “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.”

Correction: An earlier version of this story misstated Adam Yore’s title. He is an assistant professor of finance at the University of Missouri.

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