Even at the Top, Israeli Women Trail Male Peers in Salary

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Bank Leumi CEO Rakefet Russak-Aminoach, left, and her former boss, Galia Maor. Banking is the only sector in which top female executives earn more than men.
Bank Leumi CEO Rakefet Russak-Aminoach, left, and her former boss, Galia Maor. Banking is the only sector in which top female executives earn more than men.Credit: Aviv Hofi

For a woman to land the top job at one of Israel’s biggest companies means she’s got it made. But in all likelihood she isn’t making as much as the man occupying the corner suite at a similar-sized business, according to the latest survey of CEO compensation taken by BDO Consulting Group for TheMarker.

Indeed, the gap in salaries between male and female CEOs among the companies that make up the Tel Aviv Stock Exchange’s TA-100 index has widened and reached 43% in 2013. By comparison when the first survey was conducted in 2011, the gap was wide but only 35%. Experts said that concrete figures showing double-digit differences would lead to greater awareness and a closing of the gap. It never happened.

Comparing previous surveys to the one of 2013 also shows there was almost no change in salary differentials not only for CEOs, but also for the top five salary earners at the publicly traded firms, which are required by law to report them. In 2012 women made up 11% of this elite group, a big increase from 3% in 2011, but then the figure dropped slightly in 2013 from 42 to 41, compared with 334 men.

The salary gaps did fall by 1% in 2013 compared to 2012 on average, but the glass ceiling on Ahad Ha’am Street was not even cracked.

The average cost of salary — a figure that includes not only basic pay but fringe benefits and social payments -- among companies’ top five male earners rose by 16%, from 3.1 million shekels ($890,000) in 2012 to 3.6 million shekels in 2013. While the figure for women rose a slightly faster 17% that still puts them further behind because the average cost of compensation was so much lower, rising from 2.1 million shekels to 2.5 million shekels.

“The banking industry is still the best paying for senior [female] executives,” said Keren Kibovich, an attorney who heads the corporate governance department at BDO.

“The proportion of senior women in banking is 19%, and it’s the only sector where women earn more than men, about 7% on average. In every other industry women earn less. In two areas, investments and industry, the wage gaps are significantly higher than average, 128% and 134%.”

Biomed is another industry with a relatively high percentage of well-paid women, who make up 18% of the total. But at 43% the salary gap between men and women is well above average. Still, the gap actually narrowed in 2013 from 2012.

Women are also doing better in the real estate sector, while senior female executives are actually losing ground in the services and sales businesses. The year 2013 also marked the first time women appeared in the highest level of the insurance industry - but there were only two such high paid female executives.

It is not just that male CEOs earn more, there were only five women CEOs, compared with 75 men among the companies surveyed. Women occupy fewer senior positions, such as vice presidents. There were only three female chairwomen and only two deputy CEOs, said Kibovich. While the salary differential was 28% between men and women for CEOs, for chief financial officer and other vice presidents, the gaps were 21% and 23%, respectively, she said.

The way the pay packages are structured is also different for male and female executives. The regular salary component for women was 63%, much higher than the 54% for men. In other words, women’s compensation depended less on performance and the share price of the company she is leading.

The biggest differences came in stock compensation. These figures are both down significantly from 2012 when regular salary accounted for 62% of male executives’ total compensation while for women it was 74%. In 2011 the figures were 56% and 67%, respectively.

“This can be explained by the fact that women tend to take fewer risks than men and so prefer compensation that is not at risk of changing and dependent on performance,” said Kibovich. “Their compensation packages tend to be relatively more stable, conservative and secure.”

“It’s possible that women are paid more for historical performance and proving ability, while men are compensated more based on the potential for future performance,” she said.

Most of the executives, both men and women, were in their 50s. The biggest jump in salary came between age 40 and 50 for both men and women. Salaries continue to rise between age 50 and 60, when it reaches its peak. After 60 the compensation for both sexes begins to decline.

What is interesting is how the wage gap changes with age. If up to age 40 the gap is only 11%, at age 70 it is 250%, she said.

What can women do about it?

“First of all, women must be aware of the accepted salary levels for their positions. Second, they must actively initiate a salary discussion at least once every three years (contracts for senior executives tend to be for the long term). In addition, female managers must not be afraid of switching industries - men do so much more easily, and when they do they improve their conditions.”

“The most important thing, in my opinion, is that women need to initiate more, to be active in social networks and create strong networking for themselves,” said Kubovich. “ Men have army reserve duty, soccer, cycling. Women have the WhatsApp group of the preschool. It doesn’t help them earn more money.”

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