Contribution of Women on the Board or Committee on the Compensation
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2021-07-08
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en
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Abstract
Women are still underrepresented in positions as member of the board or remuneration committee. This paper examines the effect of women on the board or remuneration committee on the executive compensation in a firm. In addition, it is also examined whether women on the board or remuneration committee have an effect on the executive compensation-to-employee salary ratio (EC-to-ES ratio). This research uses panel data from different firms in Europe in the years 2010 until 2019. The findings of the paper are that there is a negative relation between executive compensation and women on the board. Additionally, executive compensation is negatively associated with women on remuneration committee. However, there is found a negative relation between the EC-to-ES ratio and women on the board and remuneration committee. The reason for this could be that the increase in supervision and quality of the decision-making process in combination with the higher inequality averse lead to a reduction of executive compensation. However, an alternative explanation is that the employee salary is increased to counteract inequality, when there are women on the board or remuneration committee.
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Faculteit der Managementwetenschappen