Ford Motor Co.’s compensation committee has granted CEO Alan Mulally the option to buy five million shares. Of Ford. “It’s part of our long-term incentive plan to tie compensation to the performance of the company and the performance of the shares for investors,” Ford spokesman Mark Truby told Reuters. Or wrote in a press release. Or something. Big Al’s “strike price”: $1.96. The Blue Oval’s current share price at close of play Friday (as seen on TTAC stock tracker): $2.19. “Mulally may exercise one-third of the options a year from now, two-thirds after two years and all of them by March 2012. The options expire in March 2019.” And become worthless the moment Ford files for bankruptcy. So don’t expect Alan to see C11 as a viable option—even if GM and Chrysler go through that door first. Meanwhile, Big Al scored 136,005 shares of restricted stock and took a 30 percent haircut for 2008 and 2009. Reuters forgot to mention the bottom line on that: $1.4M p.a.. But don’t worry. In ’07, Mulally’s total take home—and we’re just talking about salary for one year—was a cool $21,670,674.
It’s not just Big Al that wants to keep Ford out of Chapter 11. I believe all of their shareholders have the same motive.
I guess the question would be – how much money would it take to lure one of the B&B to helm Ford. And keep in mind the CEO is supposed to act in the best interest of the company and its shareholders… not to TTAC; not to me (since I own zero shares); and not to some taxpayer in Alabama who has the potential to get his pocket picked, but may buy a Ford truck anyway.
http://www.ford.com/about-ford/company-information/corporate-governance/corporate-governance-policies/governance-policy-803p
holydonut
Any shareholder with an ounce of common sense (i.e. everyone but the little old lady holding onto her Blue Oval blue chip stock) has already bailed on Ford. Hence the stock price.
I reckon this generous attempt to web Mulally’s interests to Ford’s is… not so effective. Big Al has banked well above $30m on this deal already– no matter what. How hungry can you be with that much in the bank? Oh, and the rest,
Well, it’s very likely many of your B&B have F stocks in their 401K or other funds. Ford shares still have over 50% ownership with institutions. Yes, many institutions have sold shares, but Reuters shows 1,265,277,567 shares held by institutions (summation of multiple exchanges).
http://www.reuters.com/finance/stocks/institutionalHolders?symbol=F.N
But it’s probably more fun to imagine a situation where Ford shares are being held by old ladies.
It would be interesting to know exactly how much he does purchase as it will call him on does he believe they are gonna make it or is he just working for the dough.
Or Could this be Ford’s way of clawing back some of that 21 mil?
You pay what someone is worth, and I don’t see how you can argue against the worth of someone like Mulally, especially when we look at the state of Ford relative to their cohorts – and Mulally’s performance relative to his cohorts. He has done a great job guiding the company from the weakest of the Big 3 to by far the strongest and most likely to survive the carnage.
Meanwhile, back at Boeing, Al’s old gig, amid severly cut profits, stock price, and employees, the executives lathered themselves up with a 14% pay raise.
Isn’t this where we came in???
RobertSD
If you had to point to ONE THING that killed the domestics, it’s the attitude that they only had to compare themselves to each other.
With a small percentage of the world’s population isn’t there an equally or more capable person outside the USA who can be brought in on an H-1B visa to work for a couple hundred thousand bucks yearly?
How about an illegal alien with the qualifications who would do the work for 50K per year?
The mere commoners are expected to compete with the visa holders and illegals, what’s so special about the “upper crust”?
Well, I think RobertSD’s claim of “cohorts” could easily extend towards any firm in the USA that is struggling mightily at this moment.
I believe Thain and Blankfein stole more of the public’s wealth than any of these Detroit CEOs, and they got paid way more to do it. Getting The Al for $20M seems like a steal. Keegan over at Goodyear lead a firm that had to sell a bunch of assets, close stores, and lay off about 10,000 people in 2008… but $12M of the guy’s $21M compensation was cold hard cash.
Sounds like he and your Detroit pals would have a lot in common to talk about over Sunday brunch with most any CEO out there.
http://www.nytimes.com/interactive/2008/04/05/business/20080405_EXECCOMP_GRAPHIC.html
As they say – don’t hate the player hate the game.
holydonut As they say – don’t hate the player hate the game.
Well I guess that the whole problem. (Note, I’m very far left and my grandfather started local #1 of the garment workers union, may parents taught)
The game needs to be changed. In the old days CEO’s made good money at “X” times what a line worker might make But now there aren’t any limits and it’s screwed everyone else from the worker to the customer.
Though I’m from a labor union family I have (maybe unfairly) looked at teamsters and the UAW with a colored eye. I’m not sure they were acting in their rank and file’s best interest. They got good deals for their people but failed to understand the bigger dynamic that those deals who end up helping to run them out of business.
As for Alan, you are a millionare what more do you need?
I’m a union guy and I have no problem with massive reward for success. I just don’t like massive reward for failure ala GM.
We need to reward success but not failure. Failure must have its consequences. No bonuses unless a company is profitable should be a common sense rule for most company’s BOD when setting executive compensation.