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For today’s blog entry, I present highlights from recent publications that focus on equity compensation and gender.
A recent study by Carta (“The Gap Table: Analyzing the Gender Gap in Equity”) looks at distribution of equity between men and women at over 6,000 of their client companies (which “skew towards early-stage venture backed startups”). Here are some of their findings:
Carta also found that women represent just 29% of employees at companies with up to 10 employees. It isn’t until companies approach 400 employees that female representation exceeds 40%. This is important because, as Carta observes and we all know from experience, employees who join startups in earlier stages generally receive lower-priced option grants. As the company grows, these employees’ equity awards are often worth significantly more than the equity awards held by more recently hired employees.
Carta found even more of a disparity among founders:
Earlier this year, Fidelity analyzed exercise behavior of employees at their client companies to assess differences between women and men. Emily Cervino highlights some of their findings in an article on LinkedIn (“Who's the Better Exerciser: Men or Women?”). During the period they studied, nearly 7 out of 10 exercises were directed by men, which Emily notes is largely reflective of grant practices (men receive more stock options, so they also exercise more).
Interestingly, Fidelity found that women tend to realize more gain on their exercises. The mean average of gain for women is 6% higher than the mean average of gain for men.
Fidelity corporate clients can elect to have Fidelity automatically execute exercises of unexercised stock options at their expiration date. Among their clients that utilize this feature, Fidelity found that a greater percentage of women allowed their stock options to be automatically exercised as compared to the percentage of men that allowed this. I have to wonder if the higher gains women realized might be partly attributable to that—sometimes the best thing you can do for your investments is leave them alone.
These studies seem like just the tip of the iceberg when it comes to looking at equity compensation and gender bias. I expect we’ll be hearing more on this topic in the next few years.
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