Power and Pay in the C-Suite

Abstract

The debate over executive pay has gripped corporate law scholars, regulators, and the national public for decades. A C-Suite position provides uniquely lucrative financial benefits to executives, especially to Chief Executive Officers (CEOs). Over the past few decades, CEO pay has risen spectacularly, as has debate regarding why this has occurred and whether policy should or can correct it. The reasons why CEO pay has increased exponentially are complex, and the solutions for reigning in executive compensation have been incomplete at best.

Yet one glaring fact about the C-Suite eludes much of the corporate governance literature and executive compensation policy reforms and proposals: the C-Suite, particularly the CEO role, has long been and continues to be dominated by men. Few women lead companies in corporate America. Furthermore, women often find themselves in “pink collar” C-Suite roles, such as head of human resources. Not only do such positions rarely lead to the top, but they rarely constitute the highest compensated positions within corporations.

This Essay begins to explore the correlation between executive compensation and men’s domination over senior executive roles, focusing on the CEO position. We delve into various theories that could help explain why men dominate the most lucrative role in corporate America. We argue that law and corporate governance need to account for these theories in designing solutions that address gender disparity in the CEO role.

Keywords: women, diversity, executive compensation, C-suite, chief executive officer, CEO

JEL Classification: K22