Executive Women & Wealth Building through Compensation

How Women Executive Catch Up With LTI

If women executives are not getting their fair share of stock-based comp, why not? Stock-based compensation can help an executive to build wealth to a much greater degree than annual salary and bonus, Chuck observes. Linda Steffen of M3X offers her simple hypothesis of how women end up with less. “Women are falling behind early in their careers. Women start out their careers as 40-50% of entry level work force, then only 7% reach the senior levels of the Fortune 500. Those few women who made it to the top level have made a long climb slowly and steadily, instead of job hop.”

With that said, staying the course has had an opportunity cost for women. “Because of that path, they have missed out on the huge grants often provided when moving from company to company as many of their male counterparts.”

To be clear: women who stay with the same company may miss out on higher equity comp than is negotiated by incoming executives. And, by changing companies, women executives may face a new set of variables that may prove to be impediments, such as an individualistic culture – characterized by sharp elbows - that rewards individual achievement over teamwork.

Kerry dials her sister, who is awaiting a flight to Chicago. Kerry suggests Ellie should tune into the podcast as she boards her flight to Chicago. They both listen as the consultant boldly details the data-backed compensation reality for executive women and what to do about it. Kerry is staying put, while Ellie will be meeting with a recruiter soon.

“A company’s strategy may be to promote women executives, but if culture is highly individualistic, it may play less well for the more collaborative nature of women executives,” Linda says. As for timing, “big leaps are made when you move up by promotion or changing companies,” since the pay bands for salary and bonus are often narrow and inflexible for your current role.

Linda observes that many times women change the rules to reward teamwork once they ascend to senior roles. “If you cannot win under their rules, always talk to recruiters,” she advises.

That is what I am talking about, Ellie notes from her seat on the tarmac. To be honest, she doesn’t feel her cooperative management style has been rewarded. She agrees when Linda says to bring a specific goal to the table when she meets the recruiter. Big compensation leaps are made through promotions and job changes, and Ellie will negotiate a big jump in long-term incentives to change companies. As Linda advises, she will not disclose her own compensation but will access comparative data and quantify the equity compensation she leaves on the table when she leaves. She is familiar with her company’s pay ranges and will reach out to Linda to determine how to access competitive compensation data to aid in her recruiting conversations.

Kerry heard Linda say that the most common route for women at the top involved a long and steady route through promotion. By the time her manager retires, she will be armed with data to defend a sizable ramp-up in LTI. Kerry can see why Ellie chooses to change jobs; though an executive job change is not without risk. As for Kerry, she will gather compensation data for her next promotion.

*The name, likeness, and circumstances in this example are a fictional composite of facts from executives similar to actual SFG Clients.

Executive Compensation, Non-Qualified Deferred Compensation, Restricted Stock Units, Stock Options, Women Executive Wealth

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