Why European boardrooms are losing the gender pay game
Despite progress in female representation on boards, European financial services firms are still falling behind when it comes to gender pay parity. According to the EY European Financial Services Boardroom Monitor, the gender pay gap for non-executive directors (non-execs) has widened from 31% to 36% between 2019 and 2023, leaving women in European boardrooms earning just $64 for every $100 paid to their male peers.
This stands in stark contrast to North America, where the gap narrowed from 7% to 5% over the same period. While female representation in Europe is higher at 43% compared to 36% in North America, the pay disparity remains a glaring issue.
“Gender representation across Europe’s financial boardrooms is moving slowly in the right direction, but it still remains far from equal. Data shows that whilst more men sit on committees and occupy more chair roles than women, the imbalance in pay between male and female peers is stark and concerning,” notes Omar Ali, EY’s Global Financial Services Leader.
One of the key factors behind the growing gender pay gap is Europe’s resistance to equity-based remuneration. North American non-execs earn 38% more than their European peers, thanks in large part to equity and stock options. In 2023, 56% of North American boardroom pay came from non-cash components, compared to virtually none in Europe due to governance codes discouraging variable pay to maintain independence.
Despite European non-execs commanding higher fixed fees ($242,715 in 2023 compared to $156,811 in North America), the absence of equity-based remuneration leaves overall pay significantly lower. In 2023, male non-execs in Europe earned $287,994 on average, compared to $184,477 for female directors—a gap of over $100,000. By contrast, the gender pay gap in North America narrowed slightly, with women earning $324,250, just $16,000 less than men.
“Competition for boardroom talent is high and increasingly global, and remuneration is becoming a more prominent focus. Addressing both imbalances will be increasingly key for firms across the global sector,” explains Ali.
Gender representation also varies regionally. European boards have a higher percentage of female non-execs (43%) compared to North America (36%), yet pay disparity remains wider. Sub-committee roles also show gendered trends, with men holding more positions and earning significantly more than women in Europe, even in equivalent roles.
The EY report highlights that specific skill sets, such as C-suite or sustainability expertise, can significantly boost remuneration in Europe. In 2023, non-execs with C-suite experience earned $260,487 on average, while those with sustainability expertise earned $301,098. However, even within these premium categories, men continue to out-earn women.
Between 2019 and 2023, male non-execs with C-suite experience earned $284,065 annually, compared to $164,696 for their female counterparts. Men with sustainability expertise earned an average of $429,868 per year, dwarfing the $167,587 paid to women with similar credentials.
Regional disparities further illustrate the uneven landscape. Swiss firms offer the highest boardroom pay, with median male remuneration at $380,020 in 2023, compared to $254,732 for women. By contrast, Norwegian firms provide the lowest pay, with female non-execs earning just $60,141 on median.
Sectorally, non-execs in wealth and asset management are the highest paid, earning $455,220 per $1 billion of revenue in 2023, compared to $289,008 in banking and $136,319 in insurance. Meanwhile, North American banking boardrooms outpace their peers across all sectors, earning $490,095 per $1 billion of revenue.
The widening gender pay gap highlights structural issues in European boardroom remuneration, particularly compared to North America’s equity-driven models. While governance codes in Europe prioritize independence by avoiding variable pay, this approach may need to evolve to remain competitive on a global scale.
“Chairs acknowledge that balancing and aligning independence and equity-related incentivisation with shareholders is not clear cut, and that it is an evolving challenge that will warrant increasing consideration in the appointment and retention process,” says Ali.
For European firms, the question is whether they will embrace equity-based pay to attract top talent and close the gender pay gap or remain steadfast in their fixed-fee approach. As global competition heats up, addressing these disparities is not just an ethical imperative—it’s a business one.