EY: Boardroom Gender Pay Gap Grew Between 2019 and 2023, Despite Initiatives to Achieve the Opposite

The gender pay gap across European financial services boardrooms increased between 2019 and 2023, from 31 per cent to 36 per cent, despite a wide range of efforts and initiatives aiming to bring women’s pay in boardrooms closer to that of their male counterparts. 

The data is according to the latest EY European Financial Services Boardroom Monitor, which incorporates new analysis on the most recently reported non-executive director remuneration. EY found that the difference in the overall remuneration of men and women across Europe’s financial boardrooms within this period increased despite a rise in the absolute level of pay awarded to female non-exec directors.

The Monitor also highlighted a disparity in the gender pay gap across different regions. North American non-exec directors were found to have received significantly higher overall remuneration, despite European non-exec directors receiving higher average fixed fee compensation. This is due to North American directors receiving equity and stock options in addition to their fixed-fee compensation, which UK and EU boards do not offer for independence and objectivity reasons.

Omar Ali, EY global financial services leader, said: “Competition for boardroom talent is high and increasingly global, and remuneration is becoming a more prominent focus. 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.

“Firms across North America lag European counterparts in appointing women to their boardrooms but, when they do, remuneration is on a much more level playing field. Addressing both imbalances will be increasingly key for firms across the global sector.”

Regional remuneration differences 

Between 2019 and 2023, average remuneration for female non-exec board directors across European financial services firms increased by 12 per cent, from $164,584 in 2019 to $184,477 in 2023. During this time, remuneration for male non-exec board directors increased at a higher rate of 21 per cent, rising from $238,706 in 2019 to $287,994 in 2023.

By comparison, over the same period, the gender pay gap across the boardrooms of the largest North American financial services firms narrowed, from seven per cent to five per cent.

The pay awarded to female non-exec board directors across North American financial services firms increased by 13 per cent, from $287,465 in 2019 to $324,250 in 2023. Pay awarded to male non-exec board directors increased at a slower rate of 10 per cent, from $309,392 in 2019 to $340,481 in 2023.

However, in 2023, female directors tracked across European financial boardrooms earned $64 for every $100 earned by male peers, compared with $69 dollars for every $100 earned by male directors in 2019, representing a five per cent increase in the gender pay gap.

Comparing this to female non-executive board directors at North American financial services firms, women earned an average of $95 for every $100 earned by their male peers, compared with $93 for every $100 earned by male directors in 2019.

Gender splits in the boardroom

At the end of 2024, the gender split across directors of European financial services firms stands at 43 per cent female and 57 per cent male. In North America, female representation was seven per cent lower: 36 per cent female and 64 per cent male.

The EY Monitor finds that the gender split of sub-committees was majority male at the end of 2023. In Europe, committees were split 45 per cent women to 55 per cent men, and in North America, the split was 37 per cent women to 63 per cent men.

Female non-exec board directors at North American financial firms earn 13 per cent more than male non-exec board directors at European financial services firms. In 2023, remuneration for female non-exec board directors at North American firms averaged $324,250, versus $287,994 for male non-exec directors at European firms.

Non-cash remuneration, including equity and options awards, was found to be a major component of overall remuneration awarded to North American financial services non-executive board directors. EY says that this practice is virtually non-existent across European boards, as the region’s corporate governance codes discourage non-exec directors from receiving any variable pay in order to maintain independence and objectivity.

In 2019, 54 per cent of remuneration awarded to non-exec board directors across North American financial firms was structured in non-cash terms through equity or stock option awards, rising to 56 per cent by 2023. While European non-exec board directors receive less remuneration overall, average fixed-fee compensation is much higher than that awarded to their North American counterparts.

International competition ‘is changing the context’

For every $1billion of revenue earned in 2023, North American financial services firms paid their non-exec board of directors an average of $407,794. By comparison, European financial services firms paid their non-exec board of directors 33 per cent less – an average of $275,242 for every $1billion of revenue earned.

In Europe, the non-exec directors of wealth and asset management firms are the highest paid, receiving an average $455,220 per $1billion of revenue in 2023. By comparison, non-exec directors across the banking sector were paid an average $289,008, and insurance non-exec directors $136,319, per $1billion of revenue.

Across North American firms, banking boardrooms are the highest earning across the financial sector. For each $1billion of revenues earned by banks, boards were paid $490,095; followed by the wealth and asset management sector ($395,723); and insurance ($223,439).

Omar Ali concludes: “Compensation for non-executive directors across Europe’s financial boardrooms lags behind peers governing North American firms, creating a transatlantic pay gap. Analysis shows that this hinges on the practice of structuring equity and/or options as a major component of total compensation, which is prominent in North America, but not in Europe, where corporate governance codes and regulatory frameworks prioritise independence over shareholder alignment.

“In conversations with chairs across Europe, dependence on income derived through a board role is often described as a ‘red flag’ in the appointment process – yet the challenge of international competition is changing the context. 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.”