The answer expressed by the five members of the Council is that Atherton is a business. In the remarks leading up to the 5-0 vote on the compensation/benefit resolution there were repeated reference made to the private sector and the need to seek parity in medical care participation, pension contributions and furloughs etc. Only mentioned was the need to do the same as Palo Alto had done with their employees in some areas. However the overwhelming argument was the need to be in line with commercial activity but unanswered was how to measure this.
The nature of the individuals on the Council are all from business backgrounds or are experienced in that field, and they espouse outsourcing and are adept at micromanaging. So there you have the answer, and it helps explain why Atherton government has been functioning so poorly from misreading the voters on the library site to autocratic compensation programs rushed out of a smoke filled room.
A true picture of how Atherton fits into the public sector compensation of city/town rankings is found on this State Contoller site. It reports 2010 levels but does provide a accurate comparison.