The United Auto Workers strike is now in its sixth day as the union and Detroit’s Big Three continue to disagree on wage increases.
UAW President Shawn Fain and other union leaders argue that Ford, General Motors, and Stellantis can afford to pay workers more, citing the significant pay raises given to CEOs in recent years. The UAW claims that these increases have created an unjustifiably large pay gap between CEOs and workers.
“We are requesting a 40% pay increase because in the last four years alone, CEO pay has increased by 40%,” said Fain on CBS News’ “Face the Nation” Sunday. “They are already millionaires.”
A Ford representative disputed the UAW’s claims, stating that CEO Jim Farley’s total compensation has actually risen by 21% since 2019, not 40%. Farley’s annual salary has also decreased by 6% over that period.
Last year, Farley earned $21 million in total compensation, which is 281 times more than the average worker at Ford, according to company filings. Stellantis CEO Carlos Tavares made $24.8 million in 2022, approximately 365 times more than the average Stellantis worker. GM CEO Mary Barra earned nearly $29 million in 2022, which is 362 times more than the typical GM worker.
Not unique to auto industry
While these ratios may seem staggering, they are not uncommon. According to Michael Dambra, an accounting and law professor at the University at Buffalo, triple-digit pay gaps between CEOs and workers are not exclusive to the auto industry. In the ’60s and ’70s, company executives earned around 20 to 30 times more than regular employees, but this gap has significantly increased since then.
In 1965, the CEO-to-worker pay ratio for the nation’s 350 largest companies was 20-to-1, according to the Economic Policy Institute. By 2021, that ratio had grown to 399-to-1. The CEO-to-worker pay ratio for S&P 500 firms was 186-to-1 in 2022, as reported by executive compensation research firm Equilar.
Compensation for CEOs “unlimited”
The growing pay ratio is due to the increasing prevalence of stock awards in CEO compensation. While companies argue that stock awards align CEOs’ financial incentives with the company’s success, the Institute for Policy Studies found that companies often increase CEO pay even when performance targets are not met.
GM CEO Mary Barra stated that 92% of her pay is tied to the company’s financial performance. She also pointed out that employees’ total pay is connected to performance through profit-sharing bonuses. However, experts note that there is a cap on employees’ profit-sharing pay, while there is no cap on Barra’s compensation, which is tied to stock performance.
“As stock performance improves and stock returns go up, the share-based compensation she receives is uncapped — it has exponential, unlimited growth,” said Dambra.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
