Research has shown that divorce, among other major negative shocks to CEOs’ private lives, negatively influences firm performance. However, it is unclear 1) how and why divorce impacts firm performance, 2) whether the influence depends on the CEO’s gender, and 3) what are the consequences for employees in terms of wages and mobility. We hypothesize that the negative link between CEO divorce and firm performance is moderated by gender. Focusing on female CEOs, we proffer competing hypotheses with respect to the effects of the divorce of a female CEO. Finally, we hypothesize that a CEO divorce is negatively associated with employee wages and is positively associated with employees exiting the firm. Analyzing Danish register data, we replicate the finding that a CEO divorce event has negative effects on firm performance, but also find that the relation is stronger when the CEO is female. Additionally, we find that while the divorce of a CEO has no effects on employee wages. However, divorce does influence the gender pay gap. Following a female CEO divorce the gap decreases, and conversely for male CEOs. Moreover, relatively more men leave in the wake of a female CEO divorce.