Female startups’ CEOs took a pay cut in the pandemic – Males got a raise
Female startups’ CEOs took a pay cut during the pandemic, contrary to their male counterparts who enjoyed salary increases, an analysis by accounting firm Kruze Consulting found – confirming that the pandemic made the gender pay gap worse.
An analysis of 250 seed- and venture-funded startups by the accounting firm found that female executives took a harder hit on their finances. Women running startups took a 30% pay cut during the peak of the pandemic (earned $101,000 in 2020 compared to $138,000 in 2019) in the U.S., while their male counterparts received a 2% pay increase (earned $146,000 compared to $143,000 in 2019).
Average startup CEO salary dipped in 2020
On average, the startup CEO salary dipped 2% to $139,00 in 2020, but bounced back to $146,000 at the beginning of 2021. The 2021 number is 5% higher than the typical CEO pay at an early-stage company in 2020, and so macro-trend of CEO compensation rising over time continues, the report notes.
As the urgency of the COVID situation decreased, and many early-stage companies saw their financial situation stabilize, a number of the startups that reduced their executive pay reversed the situation.
The study found that 41% of the CEOs who had their salaries reduced later increased them by the end of the year, while 47% kept their salaries flat – and 13% decreased their compensation further.
“Many CEOs scrambled during COVID to try to stretch their company’s runway by slashing costs, including their own pay,” said Scott Orn, COO of FP&A at Kruze Consulting. “However, as the year ended and many technology companies recovered – and as venture funding continued at unprecedented levels – boards and executives felt comfortable increasing executive compensation to pre-crisis levels.”
The recovery is not even
However, women still haven’t recovered those reductions in pay. This year, they’re earning $132,000 on average, up from last year, but still $6,000 less than what they earned in 2019. The salaries of male startup CEOs, meanwhile, have continued to climb ($148,000 this year from $146,000 in 2020 and $143,000 in 2019).
Looking by year, for every dollar in salary men earned, female CEOs earned:
2019: $0.96
2020: $0.69
2021: $0.89
“The female executives we work with were aggressive at taking steps to preserve their companies’ cash during COVID, including drastically cutting their own compensation,” said Vanessa Kruze, CEO of Kruze Consulting.
“And, while we did see many of startups with male leaders also reduce their pay, we aren’t quite sure why females were more likely to take a pay cut during the pandemic,” she added.
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