Ford Motor Co. awarded Chief Executive Officer Alan Mulally $56.5 million in stock, and Executive Chairman Bill Ford received $42.4 million in shares as a reward for the automaker’s turnaround.
Ford paid the unrestricted stock to its top two executives as part of an incentive plan for 2009 and 2010, according to filings with the U.S. Securities and Exchange Commission. Ford earned $9.28 billion in the last two years after $30.1 billion in losses from 2006 through 2008. The shares, which traded as low as $1.01 on Nov. 20, 2008, rose 46 cents to $14.47 at 4:15 p.m. in New York Stock Exchange composite trading.
The executives will receive other compensation for 2010, including salary and benefits, which will be revealed in a proxy report in the coming weeks, said John Stoll, a company spokesman. Dearborn, Michigan-based Ford withheld some of the stock awards to cover their income taxes. After taxes, Mulally received $33.4 million and Bill Ford got $25.1 million.
“This is an indication of the performance that the company has experienced under Alan Mulally and Bill Ford’s leadership,” Stoll said today in an interview. “Ford is committed to aligning executive compensation to the company’s performance and long-term shareholder value.”
Mulally, 65, also received 884,433 stock options with a strike price of $14.76, which he can exercise until 2021, and he was awarded 543,734 restricted stock units that can be converted into shares in 2013.
Bill Ford, 53, received 412,735 stock options with a strike price of $14.76, which he can exercise until 2021, and he was awarded 253,742 restricted stock units that can be converted into shares in 2013, according to the filings.
“There’s no question they’re doing a very good job and Mulally is responsible for keeping the company afloat and out of bankruptcy,” said Gary Bradshaw, a fund manager at Dallas-based Hodges Capital Management, which owns about 175,000 Ford common shares and about 50,000 preferred shares. “But that kind of money sounds awful excessive. On the surface, it sounds too expensive.”
The size of the stock awards could make it difficult for Ford to negotiate a new contract this year with the United Auto Workers union, Bradshaw said. Ford’s contract with the UAW, which represents 40,600 of its U.S. workers, expires in September.
“When they’re negotiating with the union, this is going to get thrown right back at them,” said Bradshaw, who continues to buy Ford shares.
Ford said Jan. 28 that it is paying bonus checks averaging $5,000 to its U.S. hourly workers, the largest payout since 2000. Michele Martin, a spokeswoman for the UAW, did not immediately respond to a request for comment.