Gender pay gap: GM defends compensation package for CEO Mary Barra

Media reports last week said that Mary Barra was set to earn about half the salary of her predecessor, but GM has provided additional information. What are the income disparities between the sexes in the US?

Incoming General Motors CEO Mary Barra will earn more than her male predecessor – just depending on how you do the math.

The questions about Ms. Barra’s salary, which came after media reports last week said she was set to earn about half the salary of her predecessor, draw attention to the income disparities that remain between the sexes.

Barra was named to the take the GM helm in December, becoming the first woman to lead a major automotive company. According to GM, she will earn a total of $14.4 million this year – consisting of an annual salary of $1.6 million, short-term incentive compensation of $2.8 million, and long-term compensation of $10 million.

By comparison her predecessor, Dan Akerson, who exited the company Jan. 15, received an annual salary of $1.7 million in 2012, with $7.3 million in short-term stock awards, totaling about $9 million. His compensation did not include long-range incentives. The company did not disclose what Mr. Akerson earned last year.

The media reports did not include Barra’s long-term compensation, GM said Monday. That component was not included in a Securities and Exchange Commission filing made last month.

“As a new CEO, Mary's total compensation is in line with her peer group and properly weighted so that most is at-risk. The company's performance will ultimately determine how much she is paid,” GM chairman Tim Solso said in a statement. The company said it was announcing Barra’s compensation this week, ahead of its proxy statement in April, “to correct misperceptions created by comparisons that used only a portion” of her overall pay package.

Still, critics say that the revised comparison is misleading because Barra’s long-term compensation is based both on personal and company performance and therefore is not guaranteed. Remove Barra’s long-term compensation, and she suddenly earns about $5 million less than what Akerson made in 2012.

“There is still room to question this,” says Lisa Maatz, vice president of government relations at the American Association of University Women (AAUW) in Washington. “This additional amount in terms of proxy money is all theoretical.”

In addition, some point out, the leaders entered their positions from vastly different backgrounds – Barra as a 33-year veteran of the company and Akerson with zero automotive industry experience when he took charge in 2010. This suggests that Barra should automatically earn more than her predecessor based on company loyalty and insider experience, critics say.

Overall in the United States, the income gap between the sexes remains stark. According to a 2012 AAUW report, women one year out of college working full time were paid, on average, 82 percent of what their male counterparts were paid. This is especially true in more-professional jobs in engineering, computer science, and business.

Similarly, according to 2012 data from the Census Bureau, women working full-time jobs earn roughly 77 cents on the dollar compared with men. This same figure was quoted by President Obama as an “embarrassment” in his recent State of the Union address. Barra attended the speech as a guest of Michelle Obama’s.

In the corporate suite, things can be even worse: The members of corporate boards are less than 20 percent of women, Ms. Maatz says – a figure she describes as “abysmal.”

“Obviously it is an issue when it comes to hiring future CEOs and creating influence over policies,” she says. “There have been studies that have come out that say if you have a diverse board and diverse management team, you’re going to be more profitable. But people often like to surround themselves with people who look most like them.”

Her organization is pressing Mr. Obama to sign an executive order that would ban federal contractors from retaliating against workers who seek information about wage practices or share salary information.

If salaries become more transparent, the income gap will narrow, says Katina Sawyer, a sociologist specializing in gender issues in the workplace at Villanova University outside Philadelphia. However, “the burden falls on the employee to bring these issues to light” – which, up to now, can often be difficult.

“In order for women to organize for fair pay, they need to do things which most people don't do in organizations – talk about their pay and ask about the pay of others,” Ms. Sawyer says.

MarySheila McDonald, associate dean of business at La Salle University in Philadelphia, agrees that income inequality between the sexes at the corporate level “is still an issue.” But often, she says, compensation packages vary because male candidates have been conditioned to be more aggressive at the negotiating table.

“Men apparently have mastered the art of negotiation ... and have historically been greater risk-takers,” Ms. McDonald says. She warns that the long-term compensation package offered to Barra could be a “smoke screen” to protect the company from a full commitment because her appointment is so unprecedented.

“They can be thinking that they are making this big leap, so are going to wait and see if she can really pull her weight and prove she deserves long-term compensation,” McDonald says. “Would they do that for a man? You wonder.”