Rise of CEO Pay Issue Is Underscored By Unionists’ Concerns In GM Strike

Mary Barra, CEO of GM Credit: GM.com
Mary Barra, CEO of GM
Credit: GM.com

The strike by United Auto Workers members against General Motors seemed to be winding to a close this week, but not until after providing one of the most powerful testaments yet to an issue whose profile keeps rising: CEO pay.

Among the several issues emphasized by UAW leaders and the rank-and-file as their strike stretched into its 12th day on Thursday was pay. Not just their compensation, which of course they believe needs to increase more than GM has offered so far, but that of GM CEO Mary Barra.

At a time when GM leadership is telling union negotiators across the bargaining table that the company needs to shepherd its financial resources because of the flattening global auto market and to afford massive R&D efforts behind electric and autonomous vehicles, the UAW leaders have their own message: “scoreboard.” As in, the roughly 240-times difference between Barra’s total compensation package of $21.87 million for 2018 and the $90,000 average pay of GM’s hourly employees.

The base salary for Barra is about flat from 2010 when adjusted for inflation, the Detroit News pointed out. But meanwhile, base wages for top-earning production employees at GM have fallen about 10 percent since 2010, one year after the company emerged from bankruptcy. Barra “gets that money off the sweat of my back,” one striking GM employee, Matt Moorhead, told the newspaper this week. “If I don’t sweat, she doesn’t make money.”

To be sure, the union began the strike also over other issues that range from concerns about GM’s use of more lower-paid temporary labor to the implicit need for the union to be seen as doing something bold for its members in the wake of a federal investigation of UAW leadership all the way up to the new president, Gary Jones.

But at a time when GM is citing the need to be financially prudent to remain competitive, and union workers are losing their wages while marching the picket line, Barra’s pay and the CEO-to-worker ratio resonate as a genuine sticking point. Reasonable GM workers will grant that her leadership has been good over her five years at the helm, but they’ll also disagree with some choices she has made, such as mothballing five U.S. production facilities. They’ll question whether Barr made decisions last year that were worth $22 million.

And however in hindsight this issue has played out in the strike and presumed settlement, CEO pay is likely to assume an ever-higher profile in the months ahead. Companies have been issuing information about their ratios of executive-to-worker pay per a new Securities & Exchange Commission requirement, and that is sure to fuel ever more water-cooler conversation if nothing else.

Even more ominous, the person emerging as one of the clear favorites for the Democratic Party presidential nomination, Elizabeth Warren, has made rhetorically beating up on corporations and CEOs one of her main talking points and policy prescriptions. She’d like to see all sorts of new restrictions on how companies operate in America, including examination of CEO pay.

It could be a long year ahead for U.S. corporate leaders who believe the pay-ratio issue is misguided, unfair or uncomfortable.

Read more: Auto-Industry Leadership Goes On Hot Seat As GM Workers Strike Nationally