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

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.