01 Nov The Gender Gap and What Pirates, Stock Options and Equity Awards Have to do With it
McKinsey & Company recently released their 2018 Women in the Workplace report. Save-you-a-click, (though it’s worth a read) it doesn’t look good. Despite earning more bachelor’s degrees then men, staying in the workplace as long, and negotiating as hard, the progress of women’s advancement has stalled.
The language around gender equity includes “goals for a future” of equality and “moving forward”. This language implies that we’re moving away from a long past steeped in gender bias. While that’s largely true recently, it hasn’t been the case throughout history.
My 4 year old is very into pirates right now, particularly around Halloween. We have this hand-me-down book that is for much older kids, but we love reading the highlights (and I try to skip the goriest details). One thing jumped out in our last reading. Because times were desperate for many people in the 1700s, both men and women joined the pirate ranks. The book details that all rank and file members of the crew were granted one share of any looted “booty”. One share each – that’s it, not impacted by gender, age, or any other measure. Those who did the work received the pay, and those who slacked lost shares (or received other punishments I’m not suggesting!).
So, if even some of the most infamous characters in history could get this right, why can’t we? Enter one exciting tool – equity compensation. The very name contains the word “equity”; it’s got to be fair, right!? Unfortunately, recent studies indicate that there is a significant gender gap in stock option/equity compensation, perhaps even greater than the salary gap. But getting equity compensation equality correct from the beginning will impact the company for years to come, as well as women in the workforce.
Why stock options and equity compensation should be great tools for closing the gender gap:
- Granting stock options, restricted awards, and other equity compensation turns employees into owners. This not only provides incentive to drive overall corporate performance but creates a sense of inclusion and ownership that data show women are often missing.
- Vesting means years of equal payouts. Most equity awards have a payout range of 3-5 years. The payout value each year is based on the company share price at the time of exercise (Options and SARs) or release (Restricted Awards and Units). Unlike salaries, which may require review by multiple individuals each year, creating opportunity for bias, an equity award grant guarantees equal compensation to all recipients for years to come.
- Equity compensation drives a longer-term perspective: When someone receives a 3 or 5 year award, they can’t help but think about the future with a company. A perfect opportunity for managers and leaders to frame a discussion with female employees about where they see themselves in the future and what they need to reach those goals.
Since pirate law is unlikely to be adopted again anytime soon, it’s time to build tools to close the gender equality chasm in compensation. Equity Compensation is a comparatively inexpensive form of compensation that is easy to implement and will continue to pay equality dividends into the future.