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16-01-2022 | Original Paper

Minding the ($500,000) Gap: Accounting for the Gender-Driven Gap in Executive Severance Agreements

Authors: Kelsey E. Medeiros, Jennifer A. Griffith, Stephan D. Shipe, Matthew P. Crayne, Rachel Campagna, Tristan McIntosh

Published in: Journal of Business and Psychology | Issue 5/2022

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Abstract

As the number of women in leadership positions continues to rise, it is important to closely examine the gender pay gap at the executive level. Prior studies examining the gender pay gap in executive positions have typically focused on annual salary. The nature of an executive compensation package, however, offers the opportunity for a gender pay gap to emerge through multiple avenues, including the executive severance package. To examine potential gender differences in severance payouts, a series of OLS regressions with follow-up robustness analyses were conducted. After accounting for plausible alternative explanations, a gender-based gap in severance packages exceeding $500,000 in favor of male executives was identified. Furthermore, additional analyses suggest that these packages are more sensitive to firm performance for men than for women.

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Our sample includes a time series of firms and the current executives of that firm for any given year within the sample period. By analyzing compensation at the executive-firm-year level, we were able to estimate the effects of the combination of these three levels on compensation. Not doing so could lead to potentially misleading results. We would not expect that the GPG would be consistent across time for a single firm just as we would not expect the compensation of an executive to be the same across firms or even through time at the same firm.

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Title: Minding the ($500,000) Gap: Accounting for the Gender-Driven Gap in Executive Severance Agreements
Authors: Kelsey E. Medeiros
Jennifer A. Griffith
Stephan D. Shipe
Matthew P. Crayne
Rachel Campagna
Tristan McIntosh
Publication date: 16-01-2022
Publisher: Springer US
Published in: Journal of Business and Psychology / Issue 5/2022
Print ISSN: 0889-3268
Electronic ISSN: 1573-353X
DOI: https://doi.org/10.1007/s10869-021-09785-w

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