- Released April 29, 1995
Executive Excess 1995: Workers Lose, CEOs Win (II)
The second annual report on CEO pay: The widening wage gap between U.S. executives and their U.S. and Mexican workers.
Sixteen months into NAFTA, as the U.S. and Mexican economies become increasingly intertwined, this report takes a look at how the U.S. companies with the most employees in Mexico are treating their executives and their workers. The study analyzes the 1994 compensation packages of the top three executives at the 26 U.S. companies with at least 1,500 employees in Mexico, and examines the wages and working conditions for both the Mexican and U.S. workers of these firms.
- The 78 executives at the 26 U.S. firms included in the study earned, on average, total compensation packages of $2,651,825 in 1994. If they had instead taken home only $411,200 — the average pay of the top 38 Japanese executives — they could have used the rest of their earnings to give each of their Mexican workers a raise of more than $1,000 per year. Since most of their Mexican employees earn between $1,000 and $3,000 per year, this would amount to a raise of 33-100 percent.
- These executives enjoyed average pay raises of more than 29 percent. Executives at Ford and General Motors got pay hikes of more than 130 percent. At the same time, many of these same companies are refusing to grant raises to their Mexican workers that would make up for the 40-50 percent plummet in purchasing power caused by the current Mexican economic crisis.
- In most cases, the executives at these firms are making several thousand times the pay of their Mexican employees. For example, Ford CEO Alexander Trotman made 2,003 times the annual pay of an average Ford employee in Mexico. Trotman’s 1994 compensation package was $8.1 million, while the average Ford employee in Mexico made $4,044.
- In at least one case, the CEO’s compensation was worth far more than the company’s total annual Mexican payroll. A news report stated that wages in AlliedSignal’s Monterry plant had dropped from $1.30 to 82 cents an hour in January due to the peso crisis. At that wage rate, Allied’s 3,810 Mexican workers would make a combined total of only $7.8 million a year — less than two-thirds the value of Allied CEO Lawrence Bossidy’s $12.4 million take last year.
- The U.S. employees of these companies haven’t fared well either. U.S. wages continue to stagnate and the 26 companies studied have carried out 18 NAFTA-related layoffs affecting 3,396 U.S. workers since NAFTA took effect on January 1, 1994.