GM paying new woman CEO less than half of previous CEO

[civvver]

This has kind of become a big deal since Obama's state of the union address where he mentioned equality in the workplace and used General Motor's new CEO Mary Barra as an example. I believe she's the first woman CEO of any major automotive company, I could be wrong, she certainly is the first at GM. Anyway it came out later that her compensation package is only about half of what the previous male CEO earned. It's also considerably less than top CEO's at other automotive companies like Allan Mulally at Ford who has made over 20 million total the past few years. Part of why Akerson the previous GM CEO made far less than 20 (around 10 the past couple years) is because the government owned a huge chunk of GM and they were limited in how much they could pay him. Akerson is also staying on as an adviser at GM and will reportedly earn more than Barra will this year as the CEO.

What do you make of all this? Did GM do a really bad job here? Is it really indicative of the pay inequality between men and women or is it simply a stupid PR move by GM? I have also read a report than Barra's compensation will actually be much higher than the reported ~4.5 million due to stock options and it shouldn't be evaluated yet.

Another thing during all this discussion, ~4 million is a ton of money for any executive in my view. While I am very much against government interference in private companies and setting wage limits and requirements, I do think CEO salaries have gotten way out of hand. Board members don't look out for shareholders or customers, only the top executives who in turn look out for board members in a vicious cycle. Maybe the real question is, shouldn't ~4 million be plenty for Barra and are the other CEO's are all grossly overpaid at the expense of shareholders?

Here's links to the articles.

http://www.businessweek.com/articles/2014-02-05/dont-worry-gm-hasnt-short-changed-mary-barra
http://www.foxbusiness.com/economy-policy/2014/02/03/white-house-missteps-on-gm-pay-gap/

 

[Kyriakos]

More of the same crap- but it has to be noted that (i hope) even the lamestream media anchors will find it difficult to keep a straight face while arguing the average person should care this (female) Ceo is getting some millions of dollars but not nearly as much as the male Ceo before her.
Obama doesn't care either, he spent 1 million of tax payers' dollars for birthday gifts involving 'airforce1'

 

[BenitoChavez]

GM is stuck between a rock and a hard place. Either they pay the new CEO a similarly to what they have in the past and they get accused of corporate corruption (especially after the 2008 economic mess). Or they pay significantly less and they get accused of sexism and gender inequality.

Whats a company to do?

 

[Synobun]

Could be a coincidence, could not be. We'll have to wait until the next CEO to tell.

 

[LamaGT]

What if they're paying her less because she's new and unproven?

 

[Cheezy the Wiz]

I wonder how many times more she makes than her average employee.

 

[luiz]

Shouldn't people concerned with the CEO's pay be happy that compensation is now smaller? I mean, GM just got out of a hole and it needed taxpayer money to be brought back. A more modest compensation to the CEO makes sense.

And what you said on the second paragraph is also very important. A CEO's compensation is often mostly composed of bonuses and stock options; until those are fully understood we can't really tell how much they're making. Often a CEO will have a relatively modest base pay (like say 100 grand or even less) and receive millions in stock options. Does't mean they're underpaid.

 

[Hygro]

I'm with luiz on this one. It looks facepalm worthy, but that doesn't mean it is.

I believe she's the first woman CEO of any major automotive company,

I think this is true more or less, but General Dynamics is run by a woman. GD bought both of Chrysler's and GM's defense divisions and they produce tanks and stuff.

 

[Antilogic]

That's one way to cut executive compensation packages. Wink wink, nudge nudge, say no more.

 

[BvBPL]

Oh, she's only getting paid four and a half million dollars.

Boo hoo. Cry me a river.

 

[luiz]

And there's reason to believe the $4.5 million aren't the full amount she'll make. From one of the OP links:

Barra actually made more money as GM’s senior vice president of global product development than she will as its CEO, according to GM’s SEC filings. In her prior role, Barra got $4.94 million -- a base salary of $750,000, stock awards of $3.91 million, and $279,200 in other compensation and perks in 2012.

I find it a bit implausible (though of course it's not impossible) that she'll get a pay cut after being named CEO. It's more likely that the full details of her stock options simply haven't been disclosed yet.

 

[Disgustipated]

I would have no problem with it if the guy who follows her will make the same amount. Perhaps GM is realizing the CEO salaries were getting overinflated and corrected it. Kind of like how the stock market needs corrections to reflect it's actual value. Perhaps this is the actual value of a CEO (not what the previous guy made).

 

[civ_king]

I would have no problem with it if the guy who follows her will make the same amount. Perhaps GM is realizing the CEO salaries were getting overinflated and corrected it. Kind of like how the stock market needs corrections to reflect it's actual value. Perhaps this is the actual value of a CEO (not what the previous guy made).

Watch as she fixes the company then the next guy gets more because he is running a profitable company.



Isn't she still making like 100x as much as their median employee?

Overall I think CEO pay should be more like 50x the median worker instead of 400x so I'm okay with this as long as this is a sign GM is paying their CEOs less from now on.

 

[metatron]

I would have no problem with it if the guy who follows her will make the same amount.

I don't think CEO pay is comparable without information that we don't have.
Maybe she has controversial ideas. Maybe she or her surrogates offered lower pay as a tie-breaker over guy XYZ in some proverbial backroom.
Also: She's made it from the middle quintile to the top 0.1%. Maybe she has, you know, the ethos.
Which would lead us directly to what CK said.

 

[luiz]

Overall I think CEO pay should be more like 50x the median worker instead of 400x so I'm okay with this as long as this is a sign GM is paying their CEOs less from now on.

That's an often repeated line, that the CEO pay should be at most X times that of the median employee. But is it really logic?

Say you have a small consulting firm where everybody has a PhD and the median salary is 150,000 USD. In this case, I'd say paying the CEO 50x the median salary (7.5 million USD) would be quite excessive. In such firms the CEO is probably making 5-10 times the median, if that much (assuming he's not also the owner).

But OTOH, what about a massive mining company in a poor country, with tens of thousands of employees, where the median salary is 10,000 USD? In such case 50x the median (500,000 USD) will definitely be below the market rate for such position.

 

[Antilogic]

Median worker does not necessarily imply median worker at that company.

 

[Cheezy the Wiz]

If everyone were paid according to the wealth they themselves created, that would simplify things greatly, and this argument would not need to happen.

 

[Borachio]

Hmm. What about people who don't create any wealth. Like health workers, prison warders, and politicians?

 

[Cheezy the Wiz]

What is a health worker? Do you mean a doctor or GP? Their industries should be nationalized, and they they would then become public servants, and paid out of the collective fund. I guess some sort of calculated median should be referenced in that situation (same with postal workers, et al).

 

[Borachio]

Yes. Doctors, nurses, midwives, auxiliary staff etc.

Do you think a normative incomes policy is either possible or desirable?