It pays to best a top executive at one of Israel’s biggest companies, but it pays even better if you’re a man — a third better on average. But the male advantage is slowly diminishing.
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- Israel’s Finance Sector Is Screaming for Reform
That’s what a survey conducted for TheMarker by BDO Consulting Group found among the 350 most highly paid executives at the companies that comprise the Tel Aviv Stock Exchange’s TA-100 index on leading stocks.
The annual compensation cost for male executives last year was about 3.2 million shekels ($820,000) versus 2.4 million shekels for female executives. The figure includes salary, benefits and stock options.
“The findings are sad. No matter how you cut it, the discrimination cries to heaven by every parameter,” says Keren Kibovich, a BDO partner and head of the division on compensation consulting. “In every management position, men make more than women and in every industry and sector male executives on average make more than female executives, with the exception of banking.”
Three of Israel’s five biggest bank – Leumi, Israel Discount and First International – have women CEOs. Female banking executives enjoyed compensation averaging 3.58 million shekels last year, slightly ahead of what male bankers earned.
The discrimination is the most severe for younger and older female executives. At age 40 on average top women managers are making less than half of what their male peers are; by age 70, just one fifth, says Kibovich.
Banks aside, women are grossly underrepresented at the highest levels of management. Female executives accounted for just 12% of the 350 managers included in the survey, barely changed from 11% in each of the two previous years.
The good news is that pay and compensation gaps are diminishing. In 2012, women executives earned 44% less than men, but the gap narrowed to 38% in 2013 and 35% in 2014.
Kibovich says that one possible reason for the narrowing gap could be that compensation for all top executives has been declining, especially for CEOs and chairpeople who are more likely to be male than female.
In fact, the BDO survey found there were fewer women occupying the top two jobs at TA-100 companies than there were three years ago.
Male executives leading industrial companies are the compensation kings, earning an average of 4.622 million shekels annually. Besides being heavily male – 48 executives in the survey versus just seven women – the gap between the sexes was also the widest: Women managers’ compensation was just 1.64 million shekels on average.
Moreover, the gap grew between 2012 and 2014.
Investment and holding companies ranked No. 2 in terms of pay discrimination. Men earned 3.79 million shekels annually, compared with 1.43 million for women. The male-female ratio was even more out of balance, with 38 men to just three women.
Men and women holding equivalent titles make different amounts of money, the BDO survey found. Male CEOs, for instance, made 17% more than female CEOs on average. Male chief financial officers pulled in 63% more than female CFOs. However, in some pay grades the difference almost disappeared – for instance among CEOs for subsidiaries of TA-100 companies, the gap was just 1%.
A significant difference between men and women at the top is that women are awarded – or, says, Kibovich, prefer — a bigger component of fixed compensation (mainly salary) as against performance-based elements (such as stock options). For men the fixed portion on average was 59%, compared with 80% for women.
Kibovich speculates this is because women prefer financial seucirty over risk or perhaps because women are more likely to win performance pay based on their track record while men get theirs based on expectations for future performance.
“Women need to be more assertive in negotiating their employment terms, at least once every three years,” she says, but adds: “Only through legislation can we begin to fix this problem [of dissemination], even if only a little, of this persistent distortion.”