There’s a moment of UAW legend, when Joe Hinrichs — now the CEO of rail giant CSX — was at Ford Motor Co., and he called CEO Alan Mulally late at night to tell him that they could get needed concessions from the union … if Mulally was willing to cut his pay.
And the boss said yes.
Ultimately, Mulally and Executive Chair Bill Ford both cut their salaries by 30 percent. Though as we see now even more starkly, such as our listing of CEO pay packages: For people at the top, salary is a relatively modest slice of the compensation pie.
Still, it’s interesting to me that the UAW today hasn’t requested pay cuts for CEOs and other executives. Of course, their pay is decided by the board of directors and is not a matter of union negotiations. But does that really have to stop the union from demanding it?
UAW President Shawn Fain has highlighted CEO compensation in his ample communication with UAW members.
He has noted that a UAW member would have to work for 355 years to earn what Stellantis CEO Carlos Tavares gets in one.
Fain has argued that a new hire at the Ultium Cells plant in Lordstown, Ohio, would need to work 16 years to earn what Mary Barra gets in an average week. (Though GM has since bumped up pay at the battery plant — even in advance of reaching a contractual agreement.)
Wheaton said Fain used Barra’s compensation rise over the past four years — 46 percent — as the rationale for his baseline demand of a 46 percent raise for UAW members: 20 percent now and 5 percent in each of the next four years. With compounding, it’s a good 46 percent.
“So tell us we’re crazy. If you got that, we, of course, deserve at least that much,” said Wheaton, explaining Fain’s thinking. “He has used it repeatedly.”
In Equilar’s analysis of CEO pay, her compensation fell 45 percent last year. But the numbers show she still brought home $96.3 million over two years.
That sounds like a lot of money. Really, it is a lot of money. But it’s a fraction of what some of her peers are getting.
Some might think that Peter Rawlinson, CEO of Lucid Group, didn’t have a good year last year: Production was less than half the company’s original forecasts, it was suffering from Tesla’s price cuts and burning through cash, setting up this spring’s $3 billion infusion from majority shareholder Saudi Arabia’s Public Investment Fund.
Despite the setbacks, Rawlinson made $379 million last year — 11 times more than Barra did in a year when GM earned $9.9 billion attributable to stockholders. Much of Rawlinson’s compensation came from restricted stock units tied to its public listing, however, so its value has since declined along with the company’s stock price.
The Detroit 3 CEOs have done quite well by any reasonable human standard in recent years
Ford CEO Jim Farley’s compensation jumped 84 percent to $18.3 million, according to Equilar. He would need another 84 percent bump to nearly match Barra’s 2022.
Tavares also has boosted his income, though his job has also gotten bigger and his company is doing incredibly well — the most profitable of the UAW-represented companies. Yet the Detroit 3 CEOs together didn’t earn half of what Rawlinson got.
Jensen Huang, CEO of Nvidia, saw his compensation drop by 10 percent. But don’t feel too bad for him: It topped half a billion dollars for the second year in a row. Since the stock’s value has increased almost 12-fold from a 2018 trough — rising by more than $1 trillion — I suspect Nvidia’s board feels justified that his performance is aligned with their priorities.
Topping 10 figures in two years is pretty remarkable. Except in contrast with Elon Musk’s 2021 compensation of $23.5 billion.
If Barra, Farley and Tavares applied Fain’s math to Musk’s 2021, might they want to start a CEO Local of the Wobblies?
Not likely.
But it’s that kind of logarithmic scale that makes working people believe they need to exert — or at least threaten to exert — the power they can against the might of capitalism.
“People are frustrated with CEO pay,” Wheaton said, “but also just frustrated in general.”
The rise of billionaire tech giants has spurred unionism in America, making unions more popular than they have been since 1965, according to Gallup. Unions have organized at select Amazon and Starbucks locations. And the Teamsters won a lucrative contract this year from UPS.
You or I can think what we will — that management should be rewarded for maximizing shareholder returns, that executive pay is obscene and needs to be limited, or somewhere in between.
But what really matters in the U.S. auto industry in 2023 is what UAW members think about it and how willing they are to halt everybody’s moneymaking efforts to get what they see as their fair share.