Female chiefs may be unfairly targeted but, just like the men, they're overpaid

Outlook Is the fuss over Katherine Garrett-Cox – the way in which she has been running Alliance Trust, and her pay – yet another example of sexism in the City, as she has claimed? Before you start screaming “hell, no” or “hell, yes”, depending on your preference, step back a second. It is actually possible to have a foot in both camps and still be right.

Let me explain: The New York Times’ DealBook has pointed out that there are just 23 female chief executives running companies on America’s S&P 500 index (which is a much better proxy for the FTSE 100 than the more commonly quoted Dow Jones). At least a quarter have found themselves under assault from (male) activist investors, as with Alliance Trust. That’s a telling statistic, particularly as there is sound academic research to suggest that investors can see women as more likely to roll over – subconsciously, at least – and less competent. In one study, for example, more than 200 MBA students were given a share-issue prospectus. The only difference was that some of the prospectuses showed a male chief executive, and some a female. Care to guess who the students viewed as the more competent?

This is despite evidence that female executives can actually be better for the long-term health of the companies they run. That is a controversial assertion, because it depends how you slice and dice the numbers. Less controversial are figures demonstrating that greater gender diversity at the top does seem to result in improved performance. In other words, Ms Garrett-Cox has raised a valid point. Whether it is applicable to her, though, is rather more questionable. Alliance Trust’s long-term performance has been shaky under her stewardship. There has been a big discount between the value of the company and the value of its holdings, and its costs have been rising quite sharply, as I discussed in a previous column.

Ms Garrett-Cox has also intimated that there has been a certain gender bias in discussions about her £1.4m pay package. Not here – this column is an equal-opportunities offender on that front. Nearly all of Britain’s top executives – regardless of gender, race, religion or sexuality – are overpaid through a combination of cronyism, flawed governance and a dereliction of duty on the part of institutional investors who could do something about it on our behalf but choose not to. That’s as true for Ms Garrett-Cox as it is for anyone. By trying to suggest otherwise, she displays the depressing sense of entitlement that is so common among this country’s corporate elite.