Bridging the gap? Board gender diversity, ESG performance, and executive pay in GCC

Why this topic matters for everyday workers

Across the world, people are increasingly asking whether top executives are paid fairly compared with the employees who keep companies running. At the same time, investors and governments are pressuring firms to behave more responsibly toward the environment, their workers, and society. This study looks at how these trends come together in the Gulf Cooperation Council (GCC) countries, asking a simple question with big consequences: do companies that perform better on Environmental, Social, and Governance (ESG) measures—and that include more women on their boards—also have fairer gaps between CEO pay and worker pay?

Pay gaps at the top

The executive pay gap is the difference between what a chief executive earns and what the average employee earns. When this gap becomes very large, it can fuel frustration among workers and provoke public criticism. In the GCC region, where family-owned firms and concentrated ownership are common, executive pay has often been high and not always transparent. These countries are now trying to modernize their economies and corporate practices, making the fairness of executive pay an important social and political issue as well as a business concern.

Responsible business and company behavior

ESG performance is a way of judging how seriously a company takes its wider responsibilities. Environmental measures capture how it treats natural resources; social measures look at employees, communities, and customers; and governance measures capture how well the company is run and how accountable its leaders are. The authors argue, using stakeholder theory, that firms which care about all their stakeholders—not only shareholders—should also care about fair pay. In this view, a company that scores highly on ESG should be more likely to avoid extreme pay gaps that damage trust and morale.

Women in the boardroom

Board gender diversity—having both women and men among a company’s directors—has been slowly rising in GCC countries, helped by reforms such as Saudi Vision 2030 and similar national agendas. Earlier research suggests that women on boards tend to pay more attention to fairness, transparency, and social issues. This study tests whether that is true for pay as well: do gender-diverse boards push companies with strong ESG performance to translate those values into more balanced executive pay structures? The authors expect that when more women sit at the board table, they will reinforce the link between responsible business practices and fairer pay.

What the researchers actually did

The team analyzed data from 567 non-financial companies listed on GCC stock exchanges between 2020 and 2023, yielding 2268 firm-year observations. They used a widely followed ESG rating, detailed information on CEO and average employee compensation, and the percentage of female directors on each board. With statistical models that account for firm size, leverage, profitability, board structure, and country effects—and extra tests using lagged data to check robustness—they examined two relationships: first, whether better ESG performance is associated with a smaller CEO–worker pay gap; and second, whether having more women on the board changes the strength of that relationship.

What they found and why it matters

The results show that, on average, GCC companies with higher ESG scores have smaller gaps between CEO pay and employee pay. In other words, firms that are more serious about environmental and social responsibility and good governance also tend to distribute rewards more evenly. The study also finds that gender-diverse boards make this effect stronger: companies with more women directors see an even sharper reduction in the pay gap as their ESG performance improves. These patterns hold even after controlling for other influences and when the researchers repeat the analysis with lagged variables to reduce concerns about cause and effect.

Big picture takeaways for society

For a lay audience, the message is straightforward: in GCC countries, companies that are both more responsible and more inclusive at the top appear less likely to allow outsized pay gaps between their CEOs and workers. Stronger ESG performance goes hand in hand with fairer pay, and adding women to corporate boards helps ensure that these responsible intentions reach the compensation decisions that matter most. For policymakers, the findings support efforts to encourage both ESG reporting and female representation in boardrooms. For employees and investors, they suggest that asking about a company’s ESG record and who sits on its board can provide clues about whether executive pay is aligned with broader notions of fairness and long-term sustainability.

Citation: Mohamed Shawki Tawfik, A., Alsudays, R., Aladwey, L. et al. Bridging the gap? Board gender diversity, ESG performance, and executive pay in GCC. Humanit Soc Sci Commun 13, 510 (2026). https://doi.org/10.1057/s41599-026-06922-9

Keywords: executive pay gap, board gender diversity, ESG performance, GCC corporate governance, stakeholder theory