Auto Union Demands Wage Increase Amid Soaring CEO Salaries


The United Auto Workers union is leveraging the discrepancy between skyrocketing CEO salaries and workers’ wages in its call for a hefty wage increase. Over the last four years, Detroit’s ‘Big Three’ automotive manufacturers – General Motors, Ford, and Stellantis (formerly Chrysler) – have increased CEO pay by 40%, a figure repeatedly cited by UAW President Shawn Fain. Contrastingly, auto workers have seen a modest 6% increase in wages since their last contract in 2019.

Regathering at the negotiation table, Fain led with a demand for a parallel 40% wage increase. This was later downsized to 36%, but negotiations continue to be deadlocked due to differences over wages, pensions, and cost of living adjustments.

Fain, vocal about the wage disparity, regards the trend of disproportionate executive pay raises as unjustified given the wealth gap between executives and workers. Case in point – Netflix, where shareholders recently voted against executive pay packages after the Writers Guild of America encouraged investors to veto extravagant pay increases amidst a writers’ strike in Hollywood.

Vehicle price inflation as a repercussion of the proposed pay increase is a growing concern. Fain refutes these worries, arguing that it would not put Detroit’s Big Three at a disadvantage against lower-cost overseas competitors within the emerging electric vehicle market. His rationale for demanding a 40% raise is simple: the immense increase in CEO pay over the last four years justifies workers’ entitlement to an equitable share of the auto industry’s economic rewards.

However, the actual percentage increase in CEO pay within these automotive giants is more nuanced than Fain’s claim. GM’s CEO Mary Barra questions the UAW’s 40% assertion, thus highlighting the complexity of calculating executive pay given its stock-oriented structure. A closer examination of the three CEO’s compensation reflects both under and overstatements of the UAW’s claim.

The figurehead who’s held her position since 2019, Barra had the highest compensation package in 2022 at a hefty US$28.98 million. A 34% increase from that of 2019, it starkly contrasts with the slight wage increase her workers received. The largest contributor to Barra’s pay was stock grants, amounting to US$14.62 million, which are vested over three years based on company performance and other metrics.

Ford CEO James Farley’s total compensation in 2022 stood at nearly US$21 million, a notable 21% boost from the US$17.4 million garnered by then-CEO Jim Hackett in 2019.

Yet, factors complicate how we view Stellantis. The brand, borne of a merger in 2021, discloses executive pay differently due to European regulations. Their CEO, Carlos Tavares, saw his 2022 pay go up to 23.46 million euros–a significant 77% inflation from what former CEO Mike Manley made in 2019.

Based on these figures, the UAW’s calculation of a collective 40.1% increase in CEO pay amongst the Big Three appears reasonable. However, compensation calculation methodologies differed between Stellantis and the American counterparts, yielding an untrue comparison. Tavares’ 2022 pay actually saw a decline of 24% from 2019 after adjusting for stock packages and reporting differences.

This convoluted narrative of executive pay seems to clash with how workers’ wages have stagnated over the years. Despite the intricacies of these calculations, the stark discrepancy is seen when comparing the median workers’ pay with that of the CEOs. An ordinary worker from GM would need to labor for 362 years to equal a year’s worth of Barra’s compensation. Meanwhile, at Ford, it would take 281 years. At Stellantis, approximately 365 years would pass for earnings to stack up to Tavares’ salary.

While these figures are significantly higher than a typical CEO-to-worker pay gap in S&P 500 companies, they are astronomically out of alignment with historical norms. In 1965, the CEO-to-worker pay ratio was a mere 15-to-1, whereas today it ranges between 281-to-1 and 365-to-1.

Ultimately, the auto heavyweights highlight the wages of foreign competitors as an argument against UAW’s demands, with overseas automakers typically offering lower hourly compensation than their American counterparts. But within the industry’s leading brands lurks a more substantial disparity. Tesla CEO Elon Musk’s compensation was reported as zero in 2022 due to a lack of new stock grants – but a peek into the ‘realized compensation’ reveals a whopping US$737 million earned in 2021. Against this figure, we are confronted with an unbelievable 18,000-to-1 CEO-to-worker pay gap, thus highlighting the extremes of income inequality within the auto industry.


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