1. Equity-based compensation and the gender pay gap in top corporate jobs B. Burcin Yurtoglu Christine Zulehner 1

2. Abstract We investigate the gender pay gap in top corporate jobs for 2001-2007 and report that female managers receive 19 percent less in total compensation than their male colleagues. Controlling for various characteristics reduces this di ff erence to seven per-cent. While the gender pay gap is slightly below 5 percent for the fixed component, it is almost 10 percent for the equity-based compensation. 2

3. 1 Introduction  We investigate the gender pay gap in top corporate jobs for 2001-2007. We extend research by Bertrand and Hallock (2001) and Bell (2005).  Bertrand and Hallock (2001) investigated the period 1992-1997 and report a raw gender pay gap of 44 percent. Bell (2005) analyzes the same data set from 1992 to 2003 and shows that the gap is around 25 percent.  A substantial fraction of this pay gap is explained by firm size and vertical segregation.  Women work more likely in smaller firms and are less likely to be CEOs. 3

4.  After controlling for these and other characteristics, the gender pay gap goes down to an insignificant 4 percent in the Bertrand and Hallock sample and to significant of 7.8 percent in the Bell sample.  Our data extends from 2001 to 2007 and thus enables us to take important changes in the structure of compensation packages into account.  There is also evidence that both the changes in the overall market were unevenly distributed across the size distribution of firms (Bebchuk and Fried 2005) 4

5. 5

6. 2. Data, variables and summary statistics 6

7.  We measure firm size by sales (SIZE) and control for performance by using (3-digit)industry adjusted market- to-book ratios (MTB). Both variables are one year lagged.  We extract the main title and construct 12 broad occupational categories. Since some of these explanatory variables may change over time, we control for the possibility that changes in these variables are correlated with gender.  Women may move less both across firms and in the hierarchical layer in firms, which can also be a source of the gender wage gap. 7

8.  To control for the first issue we generate a dummy, change of firm, which takes the value one, if the individual worked in a different firm in the previous period.  We define a second dummy, change of title, that takes the value one, if the individual had a different title in the previous period.  Finally, we define dummies that reflect the university degrees: Bachelor, Masters, MBA,  and PhD. If no degree is reported, we assume these individuals hold at least a bachelor degree, but define them as a separate group. 8

9. 3. Estimation results  We analyze the gender pay gap by estimating two specifications of a Mincer-type wage equation with the logarithm of TC, SAL and EBC as dependent variables. The first specification includes only a dummy for gender (FEMALE) to estimate the raw gender pay gap.  The second specification contains the full set of control variables. These are SIZE,MTB and 3-digit industry dummies,as well as individual specific variables like age, age squared, tenure,tenure squared, educational and occupational dummy variables. 9

10.  We also include the change of the firm and the change of the title variables mentioned above. In addition to these variables all of our regressions contain annual time dummies. 10

11. 11

12. 4.Summary and concluding remarks  Female managers in our sample which covers listed US companies over the 2001-2007 period have received 18.9 percent less in TC than their male colleagues.  When we control for personal, occupational, firm and industry characteristics, the pay gap becomes smaller. It,however, remains significant at 7.0 percent. 12

13.  This estimate of the pay gap is much larger than the one reported by Bertrand and Hallock (2001) 。  Our estimates are substantially different for SAL and EBC. While the gender pay gap is slightly below 5 percent for SAL it is almost 10 percent for EBC.  This finding highlights an important channel through which traditional sources of the gender pay gap, such as vertical segregation, operate. 13