United Auto Workers Makes Wage Claims Amid CEO Compensation Increases: An In-depth Analysis

A central tenet of the United Auto Workers (UAW) union’s recent negotiations has been the substantial increase in CEO pay among Detroit’s Big Three automakers over the past four years. UAW President Shawn Fain has continually emphasized that CEO pay increased by 40% in that period, thereby arguing that autoworkers should receive comparable raises. Fain initially demanded a 40% wage hike over four years for workers, along with pension restoration and cost-of-living adjustments. Although the UAW has since moderated its stance to a 36% wage hike, there remains a considerable chasm between the union and the automakers, prompting labor strikes.

Fain’s argument is consistent with a broader labor movement trend that invokes the wage disparity between executives and average employees to advocate for improved pay and conditions. Recent instances of shareholder activism, such as Netflix investors rejecting executive pay packages, underscore this sentiment. These shareholder moves followed open letters from the Writers Guild of America, which denounced inflated executive pay during ongoing industry strikes.

The UAW’s demands have also met criticism suggesting that increased labor costs would render American automotive companies—General Motors, Ford, and Stellantis (formerly Chrysler)—less competitive on the global stage, particularly in the electric vehicle market. However, Fain retorts that this is a non-issue, citing that “over the last four years, vehicle prices increased by 30%, our wages rose by 6%, CEO pay surged by 40%, and shareholders received billions in dividends.”

Scrutinizing CEO Pay Increases

While the 40% figure cited by the UAW has become a focal point of discussions, its accuracy is under question. General Motors CEO Mary Barra questioned the provenance of the number, highlighting the complexities involved in calculating executive pay, which often includes stock options and grants.

CEO Compensation: A Closer Look

In terms of raw numbers, Mary Barra’s compensation stood at $28.98 million in 2022, with stock grants making up $14.62 million of this amount. Her compensation has seen a 34% increase since 2019, according to data provided by Equilar.

Ford CEO James Farley had a total compensation of nearly $21 million in 2022, marking a 25% increase from William Clay Ford’s $16.76 million in 2019. The Stellantis situation is more complex due to its European origins and recent merger. CEO Carlos Tavares’ 2022 pay of 23.46 million euros shows a roughly 77% increase over Fiat Chrysler CEO Mike Manley’s 2019 pay. However, the comparison is skewed by differing methods of reporting “realized pay.”

The Complicated Reality of CEO Pay

While the UAW calculated an average CEO pay increase of 40.1% since 2019 across the three companies, this figure has caveats. Notably, the way Stellantis reports executive compensation skews the numbers. Equilar’s analysis suggests that Tavares’ compensation actually declined by 24% compared to his predecessor when using a “grant date” method.

The Stark Pay Disparity

Regardless of the method employed to calculate executive pay, the gulf between CEOs and average workers is immense. A median worker at GM, Ford, or Stellantis would have to work hundreds of years to match their respective CEOs’ annual pay.

International and Historical Context

The Detroit 3 automakers highlight that their foreign competitors pay significantly less to their workforce, at about $40 to $45 per hour including benefits, compared to the Detroit 3’s $60 per hour. Tesla offers another interesting case. Despite CEO Elon Musk’s official 2022 compensation being reported as zero, his “realized compensation” in 2021 was over $737 million. This illustrates another extreme in executive-worker pay disparity.

Conclusion

The UAW’s current negotiation stance highlights the contentious issue of income inequality within the automotive sector and beyond. While arguments about the specifics of CEO pay increases continue, the broader issue of a widening wage gap remains at the forefront. Whether this catalyzes meaningful change in labor compensation remains to be seen.

Contributions by AP Auto Writer Tom Krishner in Detroit.

Frequently Asked Questions (FAQs) about United Auto Workers Wage Demands

More about United Auto Workers Wage Demands

• United Auto Workers Official Site
• Equilar Executive Compensation Analysis
• Economic Policy Institute CEO-to-Worker Pay Ratio Study
• General Motors 2022 Annual Report
• Ford 2022 Annual Report
• Stellantis 2022 Annual Report
• Writers Guild of America Official Statement on Executive Pay
• Netflix Shareholder Meeting Minutes
• Tesla 2022 Proxy Statement