UAW justifies pay demands by pointing to CEO pay raises. So how tall were they?

NEW YORK (AP) — It was a central argument for the United Auto Workers union: If Detroit’s three automakers increased CEO pay by 40% over the past four years, workers should get similar raises.

UAW President Shawn Fain has repeatedly cited the figure, comparing it to the 6% wage increases autoworkers have received since their last contract in 2019. He opened negotiations by demanding a similar wage increase of 40% over four years, along with pension reimbursement and housing costs increasing. The UAW has since lowered its demand to a 36% wage increase, but the two sides remain far apart in collective bargaining negotiations. trigger a strike.

Fain’s focus on CEO pay is part of a growing trend of emboldened unions that are citing the wealth gap between workers and top bosses to fuel demand for better pay and working conditions. In June, Netflix shareholders rejected executive pay packages in a non-binding vote, just days after the Writers Guild of America wrote letters urging investors to vote against the pay proposals, saying they would be inappropriate given the ongoing writers’ strike in Hollywood is inappropriate. The WGA wrote similar letters addressing executive compensation at Comcast and NBCUniversal.

Fain has pushed back against arguments that a big union wage increase would drive up vehicle costs and put the Big Three automakers — General Motors, Ford and Stellantis (formerly Chrysler) — at a disadvantage compared to foreign competitors with lower-cost workers in the race to transition to electric vehicles.

“Over the last four years, vehicle prices have increased by 30%. Our wages went up 6%, the CEOs got 40%. There were billions of dollars in shareholder dividends. So our wages are not the problem,” Fain said in a recent interview with The Associated Press.

Political cartoons

CEO pay has been soaring for decades while rank-and-file workers’ wages have lagged. But did the CEOs of the Big Three really get a 40% raise? Not exactly.

“I don’t know where the 40% comes from,” General Motors CEO Mary Barra said at a recent conference when asked if the UAW’s numbers were accurate.

Calculating executive pay is notoriously complicated because much of it comes in the form of stock awards or stock options. A detailed look at the compensation packages of all three companies shows that the UAW’s claim both overstates and underestimates the reality, depending on your perspective.


Barra, the only one of the three to have held the position since 2019, is the highest-paid with a compensation package worth $28.98 million in 2022. The value depends on stock performance and other metrics.

Her salary has increased 34% since 2019, according to public filing data Equilar analyzed for AP.

Ford CEO James Farley received total compensation of nearly $21 million in 2022, a 25% increase from the $16.76 million received by then-CEO William Clay Ford in 2019. Farley’s package last year included $15.14 million in stock awards, which also vest over three years with a final value based on performance.

The comparison becomes more complicated with Stellantis, which was created in 2021 from the merger of the Italian-American conglomerate Fiat Chrysler Automobiles and the French PSA Group. Because it is a European company, the way Stellantis discloses executive salaries differs significantly from GM and Ford.

In its annual compensation report, Stellantis reported that CEO Carlos Tavares’ salary was €23.46 million in 2022. That’s an increase of almost 77% compared to Fiat Chrysler boss Mike Manley’s 2019 salary of €13.28 million.

These are the numbers used by the UAW when it calculated that three automakers have collectively increased CEO pay by 40.1% since 2019, according to methodology the union provided to The AP.

But there’s a catch: Stellantis’ numbers reflect “realized compensation,” which includes the value of previously granted equity that vested during the reporting year. In contrast, US companies use the grant date value of blocks of shares awarded to executives during the reporting year.

In its analysis, Equilar used the “grant date” method to make an equal comparison between all three CEOs. According to this metric, Tavares’ compensation in 2022 amounted to 21.95 million euros, including 10.9 million in stock awards with a three-year vesting period.

According to Equilar, this is actually a 24% decrease from Manley’s compensation package in 2019, which was €29.04 million.

The volatility of CEO compensation

So does Tavares really make less than Manley did four years ago? Not really.

Because in some years, talk of a CEO’s “realized salary” can obscure the exorbitant pay packages approved by company boards.

Enter Tavares’ 2021 compensation package, which included a special incentive bonus of €25 million in cash and shares worth €19.56 million – all contingent on long-term performance goals – which Tavares included in recognition of “his essential role.” the management of the company was granted through the merger.

This one-time award alone, added to millions in other regular compensation, increased Tavares’ 2021 compensation package well beyond what Manley received in 2019.

Stellantis shareholders voted 52.1% to reject the salary proposal at their annual meeting, although the vote was only advisory and the board still approved his package.

GM and Ford CEO compensation packages also peaked in 2021 before declining slightly in 2022.

How does all this compare to regular wages?

No matter how you break down the numbers, the gap between CEO pay and rank-and-file pay is gigantic across all three companies.

At GM, the average employee wage in 2022 was $80,034. It would take this worker 362 years to earn Barra’s annual compensation.

At Ford, where the media pays $74,691, it would take 281 years.

At Stellantis, with an average salary of 64,328 euros, it would take 365 years, although the company noted in its annual report that the disparity includes expenses related to Tavares’ one-time grant. Apart from that, the salary ratio is 298:1.

How extreme is this difference? It depends on the comparison.

It’s well above the typical pay gap at S&P 500 companies, which was 186-1, according to the AP annual CEO salary surveywhich uses data analyzed by Equilar.

And by historical standards it is astronomical. According to a study of the 350 largest publicly traded U.S. companies by the left-leaning Economic Policy Institute, the CEO-to-worker pay ratio was just 15:1 in 1965.

Car manufacturers, in turn, emphasize that their foreign competitors pay their workers significantly less. According to Harry Katz, a labor professor at Cornell University, workers at the Detroit 3 automakers are paid about $60 an hour, including benefits. For foreign-based automakers with U.S. factories, compensation is about $40 to $45.

CEO Elon Musk’s 2022 compensation was listed as zero in the company’s proxy statement, rendering the official pay rate meaningless. That’s, of course, because Tesla hasn’t given Musk any new packages since a 2018 long-term compensation plan that could potentially be worth more than $50 billion and is under legal challenge by shareholders.

But the stand-in offers a glimpse into the startling wealth gap between his workers and one of the world’s richest men.

The filing stated that Musk’s total “realized compensation” in 2021 was more than $737 million. A typical Tesla worker earned $40,723 this year.

According to the commissioner, it would take more than 18,000 years for that worker to receive Musk’s “realized compensation” this year.

AP Auto Writer Tom Krishner in Detroit contributed to this story.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Brian Ashcraft is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button