Compensation at the top

Last week, the share price of Burberry, the luxury fashion company, scored a record high, and the company’s market capitalisation exceeded £5bn ($8.3bn), earning Angela Ahrendts, its chief executive, a maximum bonus of £1.8m.

While few could deny Ahrendts is doing a great job – albeit in the super-hot luxury sector, which is tipped this year to achieve double-digit growth – there are still murmurings about compensation.

A much-discussed article published by Bloomberg News last year claimed that US women chief executives earned 40 per cent more than their male peers, based on a comparison of the average total pay of the 16 women chief executives of Fortune 500 companies with the average total pay of the 484 male chief executives.

Graef Crystal, a pay expert who analysed the data for Bloomberg News, said that “compensation committees are saying we don’t want to have any trouble” over underpaying women, “so if we err, let’s err on the side of giving them too much”.

The suggestion that compensation of women executives is somehow less based on market forces and more on gender politics has been a red rag to feminist bulls ever since the article appeared.

It was quickly pointed out that comparing chief executive pay in any meaningful way had to take into consideration the size, complexity and performance of the companies involved. The list of women included some of the highest-paid executives in the Fortune 500 – Yahoo’s Carol Bartz and Kraft’s Irene Rosenfeld.

Arguably, the pay package of Indra Nooyi, chairman and chief executive of PepsiCo, quoted as $10.1m by Bloomberg, seems small for someone who runs a leading US brand with a market cap of $105bn, and compared with the $21m paid to Jim Skinner, chief executive of McDonald’s.

Lynn Laverty Elsenhans, chief executive of Sunoco, the US refinery, was last year reported to be paid $1.5m, while Greg Goff, chief executive of Tesoro, a rival refinery, received $18.6m.

Are women at the top paid too much, too little or – just like their male peers – a market price?

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The 'Women at the Top' blog is part of a series of online and print publications that focuses on women's achievements in business. With up-to-date news and incisive analysis, the blog will provoke discussion on the role of the world's most prominent businesswomen.

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About our bloggers

Liz Bolshaw

Liz Bolshaw is a business journalist and editor. She has been a successful book publisher, online editor, magazine editor and publisher.

She was launch editor of the Europe-wide online community Entrepreneur Country, has published magazines for PwC, 3i, dunhill and Bafta, and launched The Sharp Edge, a magazine for and about entrepreneurs, with Duncan Bannatyne. She is a regular contributor to Thomson Reuters’ Venture Capital Journal.

Her last project for the Financial Times was as editor of the paper’s Business Education magazine.

Rebecca Knight

Rebecca Knight is a freelance journalist based in Boston. She writes regularly for the FT on business education, entrepreneurship, and management.

Andrew Hill

Andrew Hill is an associate editor and the management editor of the FT. He was City editor of the FT and editor of the daily Lombard column on British business and finance from September 2006 to December 2010.

He was the FT’s financial editor from June 2005 to September 2006, with overall responsibility for coverage of companies and markets. Before becoming financial editor, he was the FT’s comment & analysis editor, in charge of the paper’s opinion and features pages.

From 1999 to 2003, he was the FT’s New York bureau chief. He joined the FT in 1988 and has also worked as foreign news editor, UK companies reporter and correspondent in Brussels and Milan.

Pino Bethencourt

Pino Bethencourt is a professor and leadership expert at IE Business School in Madrid. She is also an author and executive coach.

Lynda Gratton

Lynda Gratton is professor of management practice at London Business School.

Linda Tarr-Whelan

Linda Tarr-Whelan, former ambassador to the UN commission on the status of women, is a Demos distinguished senior fellow.