Laws in many countries mandate paying men and women equally when in similar jobs. Such laws, coupled with considerable organizational efforts, lead some scholars to contend that within-job pay inequality is no longer a source of the gender pay gap. We argue important differences in a widely used form of pay heretofore overlooked in existing studies—equity-based awards (i.e., pay where the value is tied to the employing organization’s stock, such as stock and stock options)—may cause underestimation of gender-based within-job pay inequality. Specifically, we theorize that because of differences in both why and how equity-based awards are distributed to employees compared to other forms of pay, a gender gap will exist in equity-based awards, with biased perceptions of retention driving the gap. Using a multimethod study with novel data from two technology organizations, archival data from publicly traded firms, and experimental data, we find consistent support for our hypotheses. Taken together, our results suggest that using equity-based awards as a means to retain employees, and the rationale and processes associated with distributing such pay, can result in gender-based within-job inequality. Thus, our study sheds light on a previously overlooked form of inequality in the workplace while offering implications for both theory and practice.

Using novel data from two organizations that have been recognized as leaders for their gender equality efforts, we show that even when organizations are taking active steps to reduce gender inequality in more traditional forms of pay (e.g., salary and bonuses), gender pay gaps continue to exist for equity-based awards.