What’s in a name? When it comes to how CEOs are paid, apparently, a lot. According to new research from City, University of London’s Bayes Business School, the “favorability” of a CEO’s surname helps determine their job security. It can also increase their payrate by up to 4.9%.
The study looked at data from thousands of CEOs working for S&P 1500 firms in the United States, during a 15-year-period, starting in 1999. It found a major correlation between the surnames often associated with wealth and power and—you guessed it—higher salaries.
Not only can a more favorable surname equate to additional earnings of $240,699 yearly, above the average annual CEO salary of $5,482,910, but it can also protect a person from job loss. CEOs with favorable surnames were less likely to be dismissed, even for a major issue: underperformance. By comparison, CEOs with less favorable surnames were found to face greater scrutiny and pressure to perform.
If you’re wondering what “favorability” actually means, in this study, it focused on country of origin. “Americans’ favorability toward CEOs’ surnames is measured as the weighted average of the favorability ratings from Gallup poll data for countries associated with those names,” researchers wrote. Effectively, it can come down to “white-sounding” names sounding more powerful, and having more positive bias than names that sound foreign.
It’s not all that surprising, as researchers believe the study offers further proof of unconscious bias in the corporate world. Jane Smith, one of the lead researchers, explained, “Our findings indicate that there may be an unconscious bias toward CEOs with certain surnames. This bias could be driven by societal perceptions and stereotypes associated with those names, which in turn affect compensation decisions.”
Those prejudices, such as racial bias, have long appeared in studies on workplace hiring, pay, and overall treatment. One study out of the University of Chicago and Massachusetts Institute of Technology, from two decades ago, found that résumés with white-sounding first names received 50% more callbacks for interviews than those with first names that sounded African American. Sadly, not much has changed since then. A 2021 study found that in job applicants, having distinctly Black-sounding names reduced the likelihood of hearing back from an employer by 2.1 percentage points when compared to those with white-sounding names.
This latest study now further reinforces the unfortunate reality that name biases exist in the corporate world, especially in high-level roles. They can signal power—or a lack of it.