For Female CEOs, It's Stingy at the Top

They took home far less than male chiefs--not to mention other women executives

Asked to name the nation's highest-paid female executives, most compensation experts will go with the obvious choices. Hewlett-Packard Co. (HWP ) Chief Executive Carleton S. Fiorina and Avon Products Inc. (AVP ) CEO Andrea Jung come immediately to mind. But guess again. Neither woman is anywhere near the top--Jung ranks 14th and Fiorina 26th. In fact, in a list compiled by BusinessWeek, only three of the 30 highest-paid female executives of 2000 occupied the corner office.

What gives? Usually, rank goes hand in hand with rewards. That's certainly the case with BusinessWeek's overall ranking of highest-paid execs. In 2000, of the 20 highest paid men, 14 were chiefs. Executive women, however, are another story. Jung, who hauled in $7.7 million last year, was outpaced by a small battalion of lower ranked executives making two, three, even four times what she earned. And even the best-paid women trailed far behind their male counterparts.

In part, the explanation lies in a quirk of compensation: Some of the best-known women CEOs cashed in fewer stock options than lower-ranking execs. Jung realized a gain of $278,750, compared with first-ranked Heather Killen, a senior vice-president at Yahoo! Inc. ($32.5 million) and second-ranked Dawn G. Lepore, vice-chair, executive vice-president, and chief information officer at Charles Schwab Corp. (SCH ) ($20.2 million). Other execs benefited from large bonuses. Among them: Deborah C. Hopkins, Lucent's (LU ) chief financial officer, who received a $4 million signing bonus, and Leslie C. Tortora, chief information officer at Goldman Sachs Group Inc. (GS ), who took home a performance bonus of nearly $7 million.

But female CEOs also fared relatively poorly last year because many of their companies had less than stellar years. Four of the seven women-led companies in BusinessWeek's overall sample of 825 large-, medium-, and small-cap companies saw their stock prices plummet or flatten in 2000, and several female executives paid the price. Among them: Lillian Vernon Corp. (LVC ) founder Lillian Vernon, who took a voluntary 10% paycut after the direct-mail company lost 37% of its value last year. What's more, six of the seven female CEOs work for Old Economy companies, which do a better job than tech companies at promoting women but pay less. Says Mary C. Mattis, senior research fellow at Catalyst, a women's business think tank: "Generally speaking, the new industries are not level playing fields for women."

SUBTLE BARRIERS. Perhaps the most important reason few female CEOs rise to the top in pay is that there are so few around. Indeed, while women account for 171--or 3.9%--of the 4,341 highest-paid executives at the 825 companies we analyzed, female CEOs are running fewer than 1% of the companies. Experts say the barriers to women reaching the pinnacle of corporate power range from lack of experience in operational positions to exclusion from male-dominated social networks. Says Debra Meyerson, a visiting professor at Stanford University who studies gender issues: "The more senior they get, the more subtle the barriers become, and the more profoundly they operate."

Nowhere is inequity at the top more apparent than in pay. For the 20 highest-paid male executives, total compensation averaged $138.5 million, while the 20 best-paid females barely eked out $11.2 million apiece. With the best-paid women holding lower-level positions at smaller or stodgier companies, it's no wonder that pay lags.

Progress is slow. But more women are now going higher on the corporate ladder, where the rewards are significantly richer--and a shot at the top is better. According to Catalyst, 7.3% of line jobs held by corporate officers at 500 large companies were held by women in 2000, up from 5.3% in 1996. In fact, there are more female chief financial officers, chief operations officers, and chief information officers than ever before. In 2000, 15 of the top 50 highest-paid executive women held such positions--traditional steps to becoming a CEO--up from 11 in 1994. Colgate-Palmolive (CL ), Goldman Sachs, and Merck (MRK ) all have women in those top positions, and that doesn't include former Lucent executive Patricia F. Russo, who was named president and chief operating officer at Eastman Kodak Co. (EK ) on April 11. They're not exactly storming the barricades--but it's a start.

By Louis Lavelle in New York

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