Underpaid women directors

Growth has lagged male peers

It might be more than a century before full pay parity between men and women is achieved, suggests ‘Global Gender Gap 2024’ report, released by the World Economic Forum last week. The wait could be as long as 134 years.

When it comes to women executive directors, the gap could actually be widening, reveals a Business Standard analysis of compensation data sourced from primeinfobase.com. India’s women executive directors are on average paid nearly 40 per cent less than men in the same role. While a male executive director on average makes Rs 7.6 crore at a company which is part of the Nifty 500 index, comprising some of India’s largest firms, a woman executive director earns an average Rs 4.8 crore.
 
The average figure has risen at a 9.4 per cent compound annual growth rate for men in the past decade, compared with only 1.8 per cent increase for women, leading to a wider gap today than 10 years ago (chart 1, click image for interactive link).

At companies other than the top ones, women executive directors seem to have done worse. An analysis of all-NSE listed companies across the years shows that the average female executive director salary has declined since 2012-13, while it has risen for others (chart 2).

The decline could be attributed to an increase in the number of female executive directors. Their number has gone up since the Companies Act 2013 mandated at least one woman director on each company board.
 
Promoter directors receive significantly higher pay compared to professional directors.
 
“A majority of male executive directors are also promoters who tend to reward themselves quite generously in comparison to professional directors. This is not true for women where a greater number of executive directors are professionals,” says Pranav Haldea, managing director, PRIME Database Group.
 
Fewer women are in management roles in India than in other countries. India is one of the major economies that have seen a decline in the number of women in senior and middle-management roles since 2019, according to data from the International Labour Organization (chart 3).

The country, has however, managed to narrow the pay gap between men and women. By one measure in the gender gap report, Indian women earned roughly 20.6 per cent of what men earned before the pandemic. That has increased to 28.6 per cent now.
 
This is calculated using women’s and men’s shares of the economically active population, the ratio of women’s wages to men’s (both indicators are sourced from the ILO), gross domestic product valued at constant 2017 international dollars (IMF), and women’s and men’s shares of population (World Bank).
 
Women’s earnings relative to men’s in India is less than in any of the other top five economies. These are also lower than Brazil, China and South Africa among emerging markets. Data for Russia is unavailable.