In April, the sudden death of Lee Delaney, the CEO of BJ’s Warehouse Club, set into motion a chain of executive moves in which former Controller Laura Felice replaced CFO Bob Eddy, who took over as CEO. With all due respect to the difficulties and grief involved, I couldn’t help noticing the salaries being offered to the newly named executives. The new CEO received the same $1.2 million that Delaney had earned, but Felice’s salary was set at $600,000, nearly $200,000 less than what Eddy had been making.
I’m usually the last person to argue for higher pay for top executives. For nearly two decades now, I’ve mined corporate filings to find examples of crazy pay and perks. But it’s hard for me to ignore a situation where a woman is being paid so much less to do the same job.
This is not a one-off. I first noticed the phenomenon back in 2012, when I wrote about Ginny Rometty, who had just been tapped to serve as IBM’s CEO, but was being paid $300,000 less than Sam Palmisano, the man she had replaced. Over the years, I’ve documented dozens of other examples. It’s hard to know exactly how big the problem is, because companies don’t exactly advertise the information. One must often look at several filings to piece it together.
There are exceptions. When Lululemon named Meghan Frank as its new CFO last November, her base salary was set at $550,000, exactly what Patrick Guido had been making as CFO before he stepped down in May 2020. But even other companies that cater to women, and should hence be extra sensitive about pay parity, don’t always practice it. The clothing and accessories retailer J. Jill Inc., for example, recently set the base salary of new CEO Claire Spofford at $900,000, or $300,000 less than Jim Scully, the man who had been serving as interim CEO. J. Jill did not respond to a request for comment.
What’s particularly galling is when a company at the pinnacle of American business — a company in the Dow 30, for example — botches an opportunity to set a positive example. Consider Merck & Co., which recently named Caroline Litchfield as its new CFO with a salary of $900,000, compared with $1.1 million for the man she was replacing. When I tweeted about this, I got the typical pushback about an inexperienced CFO needing to grow into the role. But when Merck hired the current CEO, Robert M. Davis, as its CFO in 2014, it set his base salary at $950,000 — $50,000 more than Litchfield’s in 2021.
Merck and BJ’s defended their compensation decisions. A spokesman for Merck noted that Davis already had five years’ experience as CFO of Baxter International when he joined the company in 2014, that the company has “invested” in Litchfield’s “accelerated career development” and expects her compensation to grow, and that women comprise a third of its board of directors and 36% of its senior executives. A spokeswoman for BJs said that Eddy had broader responsibilities during his time as CFO than Felice does, and that the company “is committed to compensating all team members fairly regardless of gender.”
Women have made progress in the upper ends of management. They account for nearly 14% of all named executive officers at Russell 3000 companies, up 60% over the past decade, according to Equilar Inc. But that’s still a small number. If a lack of experience is what’s holding women back from higher salaries, it raises another question: Where were they supposed to get the experience and responsibilities they need to be compensated as much as men? Inequities of opportunity matter, too.
Companies can keep paying women less in part because the public doesn’t see what they’re doing. As long as the information remains buried where few bother to look, the problem won’t go away. The Securities and Exchange Commission should require more transparency about pay ratios by gender and race, all the way from the rank and file to the executive suite. Disparities need to be more embarrassing.
Bloomberg
