This study investigates the evolution of CEO-employee pay disparity following Initial Public Offerings (IPOs) and the moderating role of independent female directors. Using a Difference-in-Differences approach with matched private firms in Sweden, we find that IPOs significantly widen pay disparity, primarily due to increased CEO pay while employee salaries remain unchanged. Independent female directors play a critical role in mitigating this disparity by constraining CEO pay, whereas their absence amplifies the gap. Moreover, pay disparity does not improve firm performance, while boards with independent female directors are positively associated with firm sales and size. These findings underscore the importance of board independence in promoting equitable compensation structures, providing a reassuring solution to the governance challenges of IPO transitions, and enhancing organizational outcomes.