By Emma Hinchliffe
January 8, 2019

Women hold onto their stock options longer than men—which means, at least on this one metric, that women make their employers (or ex-employers) pay out more than their male counterparts do, according to a forthcoming study.

“It means women employees cost more,” says Nancy Wallace, a co-author of the research and professor at the University of California Berkeley’s Haas School of Business. Wallace, along with her fellow Haas professor Richard Stanton, and New York University associate professor Jennifer Carpenter co-authored “Employee Stock Option Exercise and Firm Cost,” in the Journal of Finance.

Women reliably exercise their stock options more slowly than men—with men losing out on 2% to 4% of their options’ potential value—the researchers found. But the reasons for this behavior are still up for debate. While the authors don’t come to any conclusion, they do cite a number of theories. Among the possibilities: women are wiser and more deliberate about their compensation, men are more confident when it comes to making investment decisions, and women are less often the solo breadwinner and less likely to be forced to cash out to buy a home or a car.

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The researchers examined data from 290,000 employees and 810,000 option grants at 88 public firms, 27 of which were in the S&P 500, controlling for factors like vesting structure and the price of the stock. Their research, in the works for almost 10 years, was funded by the Society of Actuaries, which aimed to better estimate the speed with which stock options are exercised generally. Wallace and the other researchers also found that senior executives exercise their options more slowly than junior executives—perhaps because they have more money and less need to cash out.

But the finding that women tend to hold onto their stock compensation for longer doesn’t necessarily mean that they’re actually costing companies more overall than their male counterparts. For one thing, men, on average, receive a larger number of stock options. Factor in the gender pay gap and it’s highly likely that male employees are still walking away with more money, although Wallace notes that her team hasn’t done the research to back that up yet.

Could the new study lead companies to penalize women in hiring and compensation? “It is [a] rather sobering [possibility] given the lack of access to senior managerial roles for women,” says Wallace. “I take that very, very seriously.”

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