Should First-Ever Woman CEO of GM Earn Half?

Mary Barra was named the first-ever female CEO at General Motors, the second largest automaker worldwide, a month ago and has just been named the most powerful woman in business by Fortune magazine, ahead of Ginny Rometti, chairman (sic!) and CEO of IBM, and Indra Nooyi, CEO of Pepsi. Ms. Barra's appointment was celebrated as a milestone in equality. But it turns out that (unless GM hits performance targets) Ms. Barra earns just half of what her predecessor made as GM's CEO in guaranteed compensation. Is that fair? Unfair? Or unimportant?

Ms. Barra says she never once asked for a promotion or a raise in her 33 years at GM.  Her mantra is, "Do every job you're like you were going to do it for the rest of your life and demonstrate that ownership in it." She believes that if you produce great results, you will get noticed.

That mindset has surely worked well for her. At the age of 18, she went to the General Motors Institute and started as an engineering intern.

Having worked with the automotive industry since 1997 and being used to seeing one lone woman surrounded by 12 men on executive boards and management teams, it is heartening for me to see a woman at the helm of the second-largest automaker in the world.

But before we celebrate too quickly, we need to look at some new facts. Apparently executive equality only goes so far.

For example, Ms. Barra this year receives half of what her predecessor Dan Akerson received in compensation: $4.4 million, which includes her base salary of $1.6 million.

In 2012 Akerson earned $9.1 million: $1.9 million in salary and $7.3 million in stock options.

You might say, Ms. Barra will surely make enough. We need not have pity on her.

But where is the justice? Is Ms. Barra expected to add half the value Mr. Akerson added? Or is she half as competent?

To add injury to insult: Mr. Akerson is reported to earn more than Ms. Barra as an external advisor to GM. He is slated to receive $4.68 million in 2014, more than the CEO.

GM dismissed the issue of pay inequality. "This represents two of her three compensation components," the company said in a statement, adding that it would disclose specific numbers in its April 2014 proxy filing.

It added that "discussion of pay inequality is premature and flawed."

Is it? According to a report by Bloomberg last year, only 8 percent of the highest-paid executives at S&P 500 companies in 2012 were women. And the highest-paid women earned 18 percent less than the men.

Yesterday GM reversed its earlier communication. It announced that Ms. Barra stands to cash in up to $13 million, based on meeting specified performance levels. Ideally she stands to earn up to 68% more than Mr. Akerson.

The reason: the stringent compensation rules imposed by the U.S. government during the bailout of GM ended last year. Ms. Barra's tenure began mid-January, so she no longer falls under the same restrictions as her predecessor, who could earn a maximum of $8 million. 

What do you say? Do you think Mary Barra should earn as much as her predecessor? Or is she compensated adequately? Or does it not matter at all? I look forward to reading you on my blog: http://thomaszweifel.blogspot.com/.

Dr. Thomas D. Zweifel is a Partner & Managing Director at Manres AG in Zurich, Switzerland, and the author of seven strategy and leadership books such as The Rabbi and the CEO (SelectBooks, 2008, with co-author Aaron L. Raskin; also available in German, Polish, Russian; finalist for the National Jewish Book Award and the Foreword Award of the Year).