It turns out that General Motors Company (NYSE:GM)’s new CEO Mary Barra is earning less than half the salary paid to her predecessor Dan Akerson. When this story broke a few days ago, media pundits on both sides of the spectrum were crying foul, and asking why Barra was only being paid $4.4 million a year when the prior CEO Akerson had been receiving an annual salary of $9 million. As is often the case, it now appears the media jumped the gun with this story, as Ms. Barra is only taking on around half the responsibilities that Akerson had.
Only serving as General Motors’ CEO
Unlike her predecessor Akerson who served as both CEO and chairman of the board, Barra is only serving as CEO. Furthermore, General Motors Company (NYSE:GM) decided to resurrect the position of president, and gave CFO Tim Ammann the nod. This means Barra will have also have an experienced partner to assist with the executive duties, and is arguably another reason for the smaller salary.
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Statement from GM
General Motors Company (NYSE:GM) released a statement on the controversy on Tuesday of this week. “General Motors CEO Mary Barra will receive $1.6 million in salary and $2.8 million under the company’s short-term incentive plan, which totals $4.4 million. This represents two of her three compensation components. Specific long-term incentive compensation numbers will be included in the company’s April 2014 proxy filing, which likely will dispel any notion of pay inequity. Stockholders at GM’s Annual Meeting must approve the long-term portion of her pay.
Dan Akerson, who had prior CEO experience and was chairman of the board of directors, was paid $1.7 million in salary and $7.3 million in Salary Stock awards for a total of about $9 million in 2012, the last publicly available record of his compensation. Akerson’s compensation did not include a long-term incentive because, as is now clear, he was not going to be at GM for the long term.
it should be pointed out that Dan Akerson felt he was underpaid at $9 million a year (he once referred to his job as “national service”) and had been lobbying the Treasury to remove executive pay restrictions for years. Whether this means Barra is underpaid to just serve as CEO at half his “national service” pay remains an open question.
The issue of experience also seems murky here, as Barra has 30 years at GM serving in a variety of positions and Akerson comes from a finance and private equity background with no prior experience in the auto industry. Bloomberg’s Edward Niedermeyer suggests the salary disparity might have to do with the generally high regard General Motors Company (NYSE:GM)’s board has for finance types over “car guys (gals)” who have come up through ranks.