Ford Boosts Mulally’s Pay 11% to $23 Million Amid ProfitKeith Naughton
Ford Motor Co. boosted Chief Executive Officer Alan Mulally’s compensation by 11 percent last year to $23.2 million as the automaker posted record earnings in North American and Asia.
Mulally received $2 million in salary, $5.88 million in bonus and $15.3 million in stock, options and other compensation, Dearborn, Michigan-based Ford said yesterday in a regulatory filing. That compares with $2 million in salary, $3.95 million in bonuses and $15 million in other compensation for 2012.
Mulally, 68, a candidate for the CEO role at Microsoft Corp. last year, said in January he would stay at Ford through 2014. The former Boeing Co. executive is credited with forging a collaborative culture at Ford, which had long been characterized by backbiting, and with leading a turnaround that let the automaker avoid the bailouts and bankruptcies that befell its U.S. rivals. Ford has earned $42.3 billion in the last five years after losing $30.1 billion from 2006 through 2008.
“He’s worth every penny,” said Bernie McGinn, chief executive officer of McGinn Investment Management in Alexandria, Virginia, which holds more than 500,000 Ford shares. “People forget how difficult and revolutionary what he did was. But now they’ve had four years of good products and Ford is winning.”
Ford’s top executives achieved 112 percent of the targets set for them by the automaker’s board, according to the proxy filed yesterday. While they overperformed on pretax profit and cash flow goals, they achieved 73 percent of cost targets, 65 percent of market share goals and 88 percent of quality targets, according to the proxy.
Ford’s shares rose 1.3 percent to $15.45 at the close in New York yesterday. The stock has added 17 percent in the past 12 months.
Ford earned a record pretax profit of $8.8 billion in North America and $425 million in its Asia Pacific Africa region last year. Ford doubled its quarterly dividend to 10 cents last year and increased it to 12.5 cents in the first quarter of this year.
Ford earlier this month gave Mulally $13.8 million in stock as part of an incentive plan for 2013 performance. In addition to compensation reported in proxy statements, Ford gave Mulally $11.7 million in stock last year, $58.3 million in 2012 and $56.6 million in 2011 as a reward for the automaker’s turnaround. Those awards boost Mulally’s total payout since coming to Ford in 2006 to more than $300 million.
Ford’s stock, which traded below $2 five years ago, rose 19 percent last year, compared with the Standard & Poor’s 500 Index’s 30 percent climb.
The automaker has said pretax profit this year will decline to as much as $8 billion from $8.6 billion last year as it doubles new-model introductions worldwide. The product onslaught will mean costly factory overhauls to ready them for building fresh models such as the top-selling F-150 pickup, updated with an aluminum body and arriving in showrooms in late 2014.
“I know they’re not going to be as profitable as last year, but they’re also bringing out 23 new products and it costs money to bring out products,” McGinn said. “But think about where they’ve come from. In the past, they had the pickup truck and not much else.”
Ford shuffled its leadership team in late 2012 to prepare for the eventual departure of Mulally, who righted the automaker by globalizing operations, cutting costs and overhauling its lineup with more fuel-efficient models. Ford elevated Mark Fields, 53, to chief operating officer in December 2012, positioning him as front-runner to take over as CEO. Fields led the automaker’s North American operations from deep losses to record profits.
Fields, who joined Ford in 1989, now runs a weekly business-review meeting Mulally instituted, received total compensation of $10.17 million, up 15 percent from $8.85 million in 2012.
Executive Chairman Bill Ford received total compensation of $11.96 million, down 19 percent from $14.8 million in 2012. The 56-year-old great-grandson of founder Henry Ford received $2 million in salary, $1.68 million in bonus and $8.26 million in stock, option awards and other compensation. Ford’s compensation fell last year because the value of his pension benefits declined $173,840 after increasing $3.26 million in 2012.
Ford scheduled its annual meeting for May 8 in Wilmington, Delaware. Shareholders will vote for the 10th consecutive year on a proposal to strip the Ford family of its 40 percent voting control of the automaker and move to one vote per share. The measure is opposed by Ford’s board, which includes two Ford family members, Bill Ford and Edsel Ford II.
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