Gender Diversity in Compensation Committees: The Factors and Implication on CEO Compensation

Abstract

Several studies have emphasized the fact that women are under-represented on corporate boards. So, the issues of corporate board gender diversity and compensation committee functioning have gained the attention of policymakers, legislators and regulators in recent times in many countries. This has led to legislative quotas, persuasion and among others to increase women representation on boards. Using 43 firms listed on Ghana stock Exchange with data spanning from 2006-2015, we found that board attributes are related with the existence of females on the compensation committee. Also, the presence of woman on compensation committee is related to the CEO compensation. The finding showed a significant negative relationship between executive compensation and presence of female on the compensation committee. In Ghana firms that have more gender-diverse are able to control excessive compensation demand by CEO.  We also observed a significant increase in women representation on corporate boards in Ghana following government persuasion and encouragement to increase women presence just about a decade ago.