Gender Diversity on the Board of Directors and CEO Compensation in Norway

Abstract

In 2003, Norway passed a gender balance law requiring public limited companies to have at least 40% of each gender represented on the board by 2008. This paper contributes to the understanding of the effects of increased gender diversity among the board of directors on CEO compensation in Norwegian public limited companies. Our results show that there is no significant relationship between gender diversity on boards and CEO compensation from 2000 to 2015. However, there was a temporary increase in CEO compensation in the time period from 2008 to 2009, right after the gender balance law was implemented. Furthermore, we found that the implications were stronger for companies that had to face larger board restructuring. These findings indicate that it was not gender diversity itself that caused the short-term increase in CEO compensation but rather the large change in the board composition caused by the gender balance law.