Even before the United Auto Workers union went on strike on September 15th, UAW President Shawn Fain put the pay and raises of the Big Three CEOs in the limelight. He has alleged (rightly so) that wage gains for the CEOs’ rank-and-file employees have not kept pace.
General Motors CEO Mary Barra, Ford CEO Jim Farley and Stellantis CEO Carlos Tavares all reportedly made between $21 and $29 million last year. That works out to about 300 times as much as their employees. That may sound like a lot – and it is – even when compared to the pay of other large company CEOs. According to The Wall Street Journal, the media CEO pay package for S&P 500 companies was about $14.5 million in 2022.
The outlet says that Tavaras makes 365 times the average employee, Barra makes 362 times and Farley has to make do with just 281 times more than his media employee. Making around 300 times the average employee puts each of them in the top third of about 500 large companies in terms of pay. CEO pay apparently varies pretty widely by industry, and a whole lot of it is tied to stock. Because of that, tech and media heads usually are the highest paid.
The Journal says that when compared with other employers with big union workforces like railroads and airlines, the three automaker CEOs’ pay ratios were still higher. UPS and heavy machinery maker Caterpillar reportedly had pay gaps that were comparable to the Big Three.
From The Wall Street Journal:
In part, the ratios reflect the size of the three automakers, which each reported revenue of around $150 billion in their most recent fiscal years, said Robin Ferracone, CEO of Farient Advisors, an executive compensation and governance consulting firm.
“Size matters,” she said. “The size of the company is indicative of the scope of the job, so if you have a very large company, those CEOs tend to get paid more.” By revenue, the automakers are more than twice as big as the biggest airlines, she noted.
The outlet says that pay ratios – mandated for disclosure by the SEC in 2018 – are the function of two numbers: CEO pay divided by the pay of the median employee. It takes into account salary, bonuses and equity awards among other factors.
In industries that primarily employ highly skilled and well-compensated workers, such as utilities or pharmaceuticals, pay ratios tend to be relatively low. In industries with many low-wage workers, such as retail and fast food, ratios often are correspondingly high.
Last year, Farley reportedly made 21 percent more than his predecessor did in 2019 at Ford. Meanwhile, Barra made about 34 percent more than she did just four years ago at GM.
Under the current UAW contract – negotiated in 2019 – WSJ says full-time unionized factory workers start off at about $18 per hour and can earn up to $32 per hour. Since 2019, base wages have risen six percent. In that time, vehicle prices are up about 23 percent and overall consumer prices rose 19 percent, the outlet says. Accounting for inflation, auto workers’ wages have fallen about 5.4 percent between 2019 and July of this year.
Ford’s Farley last year earned around $21 million, or 281 times the company’s median employee earnings, compared with the multiple of 157 that his predecessor Jim Hackett earned in 2019 when the auto workers signed their last contract. Last year, employee median pay was $74,691.
At General Motors, Barra made $29 million last year. That was 362 times the median employee earnings of $80,034, and up from a comparable multiple of 203 times in 2019.
At Stellantis, the global parent of Chrysler, Dodge and other brands, Tavares last year made around $25 million, or 365 times the average employee pay of $68,712 at current exchange rates.
In 2019, the CEO earned 232 times the pay of the average employee.
You can read the whole story in The Wall Street Journal here.