The United Auto Workers says it knows it needs to help Detroit's automakers cut labor costs to reduce the gap in production expenses with Asian rivals. But as talks continue on new contracts, the union also is questioning why top executives at the automakers are paid what they are.
"As much as workers do, workers can't do enough, and as much as executives get, they cannot get enough," UAW President Ron Gettelfinger said during last month's two-day strike against General Motors gm.
During talks with GM, the UAW pointed out that while the automaker has complained that hourly wages and benefits are dragging it down, it has continued awarding bonuses to its top executives.
GM CEO Rick Wagoner earned $9.3 million in salary and bonus in 2006, nearly double what he earned in 2005.
While UAW members finish voting on a new contract with General Motors that includes a cost-of-living freeze, union negotiators have moved on to Chrysler, with Ford Motor f next.
Chrysler's new CEO, Bob Nardelli, became a symbol of corporate excess when he left Home Depot early this year with a $210 million severance package. Ford's new CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.
Some top executives have taken steps to curtail their pay during automakers' recent financial difficulties. Former Ford CEO Bill Ford took only $1 in wages during his tenure and donated much of his stock-based pay to charity. Wagoner and his top lieutenants took a base pay cut, although they continued to get bonuses.
Pros and cons
The automakers didn't want to comment on the issue.
Critics say automotive executive paydays are out of line with what's happening in the industry. "It seems like something out of the gilded age," says Chris Kutalik, an editor at Labor Notes newspaper. "It's such a glaring disparity."
Others say executive salaries are determined by what companies are willing to pay for the talent. "There's pros and cons to every bit of it. Do you want the job of being a CEO of a bankrupt supplier for nothing? The question becomes what's the right amount of pay for the job that's being rendered," says Laurie Harbour Felax, auto industry consultant at Stout Risius Ross.
Mulally defended his pay package to reporters last summer, saying, "All the skills required to run a business are market-driven."
Pay packages at U.S. automakers don't stand out compared with those at other U.S. companies. The median 2006 compensation for CEOs at 50 of the largest U.S. companies was $17.8 million, according to a USA TODAY analysis of data from Salary.com's CompAnalyst Executive database. Packages included salary, bonus, perks and stock and options awards.
But U.S. executive pay outpaces that of Asian companies, including Asian automakers.
Detroit automakers have focused on the gap between their hourly workers and those of the non-union foreign automakers in the USA. Union workers say the executive pay gap should be examined, as well.
"There is a huge difference between Asia and here when it comes to the top executive compensation," says Han Kim, a professor of business administration at the University of Michigan. "Rarely in Asia, especially Japan and Korea, do the CEOs get paid more than a million dollars."