Why Barra's pay isn't a gender equity issue
Women who are CEO of General Motors make just 94 cents for every dollar that a male GM CEO earns, according to the Internet.
After GM released some details of Mary Barra's compensation in her first year as CEO, a few stories began popping up citing the numbers as proof that the automaker is not really that progressive after all.
Here are the numbers:
Barra's base salary for 2014 is $1.6 million. Not bad. I estimate that's more than half the amount her father earned in his entire 39-year career at GM.
But wait! It's $100,000 less than Dan Akerson's $1.7 million salary as CEO in 2012 and 2013, which he will continue receiving this year as a consultant now that he's retired.
Barra also can earn $2.8 million under GM's short-term incentive plans. But Akerson can get $2.975 million in incentives.
If each earns the maximum, that's $4.4 million for the woman and $4.675 million for the man, who isn't even the actual CEO anymore.
Case closed, right? Clearly, GM hates women so much that it chose one as its new leader, then decided to pay her less than she's worth and disclose that during her first week on the job in order to distract people who won't stop complaining about the bailout it took five years ago.
Plenty of data show that women, on average, earn less than men in the United States, and that's a legitimate concern that people have good reason to be upset about. I'm sure it happens across the auto industry and that there are women inside GM who feel they aren't financially valued as much as male co-workers.
But there's no reason to believe this one instance has anything to do with gender inequity. Here's why:
Barra is new on the job. Akerson was CEO for more than three years, having proved himself during a critical period and having led the company through its initial public offering. If Akerson's successor was male, a 6 percent lower salary would seem perfectly logical for that reason alone.
Barra is CEO but not chairman. Because GM now also has to pay its new nonexecutive chairman, Tim Solso, it will be devoting more money to salaries for its CEO and chairman than it was when Akerson had both jobs.
Most importantly, the figures released last week are only one part of Barra's compensation. GM even said so in its press release, which apparently none of the faux experts on executive compensation bothered to read.
"These partial totals for Barra and [incoming President Dan] Ammann do not include compensation that could be awarded under the company's long-term incentive plan, which is subject to approval by GM stockholders at the company's Annual Meeting in June," GM said in the statement.
"Details of the long-term plan and the remaining portion of Barra's and Ammann's compensation under it will be listed in GM's 2014 proxy filing to be released in April." Those other items beyond salary and cash bonuses often make up a majority of an executive's pay.
Barra will almost certainly make at least $10 million this year, including stock and options. Her earning potential is even greater than Akerson's because the government pay restrictions on GM ended when the Treasury Department sold its remaining shares in the company at the end of last year.
In 2012, the last year for which GM has disclosed full executive compensation data, Barra earned $4.9 million as head of global product development -- while the pay restrictions were in effect. I have a hard time believing that GM would promote her to CEO while also cutting her pay. If so, the issue isn't that she's a woman, but that she's a terrible negotiator.
And what about poor Akerson? His compensation totaled about $11 million last year, whereas Rick Wagoner was pulling down roughly $15 million as recently as 2008. Anyone could use those numbers to argue that GM values bald men less.
Sure, GM could have just given Barra an extra $100,000 in base salary to match Akerson. It's unlikely shareholders would have criticized such a decision, and it would have prevented anyone with only half the facts from immediately jumping to conclusions. But there are also plenty of reasons it didn't need to.
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