How to Close the Stock Options Gender Pay Gap
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Here's your money briefing for Thursday, September 30th. I'm J.R. Whalen for The Wall Street Journal. We often hear about the gender pay gap in the workplace with regard to salary, but at many companies that gap extends beyond the paycheck to the awarding of stock options.
A Wall Street Journal analysis found that 24% of male employees hold company stock or stock options, but only 17% of female employees hold the same.
So what's driving this divide and what can be done to close it? WSJ personal finance reporter Julia Carpenter spoke to management and career experts studying this issue. And we'll ask her about it after the break.
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The phrase glass ceiling often refers to inequities women face in the workplace regarding promotions and salary. But women also face an uneven playing field when it comes to stock options, which can be a lucrative component of a compensation package.
What is the stock options gender gap and why does it matter?
WSJ reporter Julia Carpenter and the personal finance team looked into that divide and what's being done to even things out. Julia, thank you so much for being with us.
Thanks for having me.
So Julia, first of all, what exactly are stock options and how do they fit into someone's pay package?
In short, companies can offer stock options as part of an employee's compensation package. This is something that they give to an employee and allows the employee to exercise the number of shares they're awarded in the company's stock. That could be for a startup who has yet to go public, or it could be for a company that's already gone public. But there's a specific amount of time in which you can exercise these shares. And then once you take the option, To exercise those shares, you're then able to keep those shares within a given company. So it could be really powerful as a form of compensation, especially for people who are negotiating for a particular salary. The stock option can be kind of like the cherry on top or the extra thing that they can bring to the table.
So sometimes when you are given a stock option in a company, you are not yet able to purchase that stock. You're given the opportunity to buy the stock. So when I say exercise, I mean exercise the right to buy that stock.
All right. So what kind of a gap are we talking about here? How wide is the difference in terms of stock options between men and women?
So a Wall Street Journal analysis from the Rutgers Institute of the Study of Employee Ownership and Profit Sharing found that 24% of male employees hold company stock or stock options, but only 17% of female employees hold the same. So that gap with male employees holding that much and female employees holding that little shows how this gap is yet another example of the compensation gap we've seen in terms of salary and benefits.
So why is there such a significant divide?
We've written numerous times about this issue and specifically interviewed experts and researchers who've studied the gap. It's difficult to determine exactly where the gap starts and what we can do to correct it.
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