Ford Pays Mulally $26.5 Million for 2010 After Turning Around Automaker
Ford Motor Co. (F) raised Chief Executive Officer Alan Mulally’s compensation 48 percent to $26.5 million for 2010 as the automaker posted its largest annual profit in more than a decade.
Mulally received $1.4 million in salary, $9.45 million in bonus and $15.7 million in stock, option awards and other pay, Dearborn, Michigan-based Ford said today in a filing. Executive Chairman Bill Ford, who hadn’t accepted compensation since the first quarter of 2005, got $4.8 million in salary, $2.7 million in bonus and about $19 million in stock, option awards and other pay. His total reflects compensation he has forgone since 2008.
Ford last month gave Mulally $56.5 million in stock and Bill Ford $42.4 million as a reward for the automaker’s turnaround. Ford’s shares rose 68 percent in 2010 as new models such as the Fiesta small car helped the automaker gain U.S. market share for the second year in a row. Mulally, who joined Ford in 2006 from Boeing Co. (BA), halted three years of losses and led Ford to $9.28 billion in net income in the last two years.
“It is deserved, but it is going to be a talking point because the average guy on the street will think that’s a whole lot of money,” said Bernie McGinn, president of McGinn Investment Management in Alexandria, Virginia, which owns 330,000 Ford common shares. “I’m a little concerned the union will come back and legitimately say, ‘We gave it up when you needed it and now we want ours.’”
United Auto Workers President Bob King will negotiate new contracts this year with Ford, General Motors Co. (GM) and Chrysler Group LLC. While the agreements don’t expire until September, King has said workers must be rewarded for the $7,000 to $30,000 in concessions they each gave up since 2005 to help the automakers survive.
“Alan Mulally is a great CEO, but I don’t think any human being in the world deserves that much money,” King said March 22 of Mulally’s $56.5 million stock award. “It’s outrageous.”
Ford said in the filing that it achieved 44 percent to 200 percent of its 2010 performance and bonus targets for pretax profit, cash flow, cost cuts, market share and vehicle quality. Ford’s $6.56 billion profit in 2010 was its largest since 1999.
“Alan Mulally’s leadership during 2010 has been widely recognized as extraordinary,” said John Stoll, a Ford spokesman. “His compensation reflects Ford’s goal of retaining a world-class CEO.”
Ford told its 20,000 U.S. salaried workers on Jan. 13 they won’t receive raises this year because their compensation is commensurate with other large U.S. companies. The automaker, which restored salary raises last year, said it will continue to pay bonuses this year.
Ford borrowed $23.4 billion in late 2006 after Mulally, 65, took over as CEO, putting up assets including its blue oval logo as collateral. That helped the automaker stay out of bankruptcy in 2009 as the predecessors of GM and Chrysler sought court protection and reorganized with U.S. aid.
GM Chief Executive Officer Dan Akerson was given a $9 million compensation package when he took the job, the company said in a Sept. 10 regulatory filing. Akerson, whose pay is subject to federal review, receives $1.7 million in annual salary, $5.3 million in stock that pays out over three years, and $2 million in restricted stock, the company said.
Sergio Marchionne, Chrysler’s CEO, last year received so- called deferred phantom shares valued at $2.87 million as of Dec. 31 for his three-year term on the board, the automaker said Feb. 25. He didn’t receive a salary from Chrysler, which is operated by Fiat SpA. Marchionne’s total compensation at Fiat, where he’s also CEO, was $4.77 million last year.
Volkswagen AG (VOW), the world’s most profitable automaker, paid CEO Martin Winterkorn $12.9 million in compensation for 2010, the company said March 10.
Mulally’s 2009 compensation totaled $17.9 million, including $1.4 million in salary and $16.5 million in stock, option awards and other compensation. Bill Ford’s delayed compensation for 2009 was $16.8 million. He began receiving compensation in 2010 because the company’s auto operations returned to profitability on an annual basis, Ford has said.
To win concessions from the UAW in 2009, Mulally and Bill Ford agreed to 30 percent cuts in their 2009 and 2010 salaries and to forgo bonuses for 2008 and 2009. Mulally and Bill Ford will each receive a salary of $2 million this year, the company said in the filing.
Ford rose 25 cents, or 1.7 percent, to $15.16 at 4 p.m. in New York Stock Exchange composite trading. The shares have lost 9.7 percent this year.
Chief Financial Officer Lewis Booth received $8.2 million in total compensation for 2010, more than double the $3.83 million he received a year earlier, the company said. Booth’s 2010 compensation included a $1.24 million salary, $3 million in bonus and $3.96 million in stock options and other share-based awards.
Mark Fields, the company’s president of the Americas, got total compensation of $8.82 million, more than double the $3.98 million he received a year earlier, Ford said.
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