The dilemma: should the MSM and autoblogosphere highlight the fact that FoMoCo CEO Alan Mulally earned $13.6 million in 2008, a year where the automaker’s sales cratered and their profits evaporated, or should they focus on the fact that the number represents a 37 percent cut from his previous take-home? The Detroit News headline splits the difference: “Mulally’s pay cut; still gets $13.6M.” Maybe someone should point out that Big Al’s compensation was front-loaded; he banked $28.2M in the first four months of his employ. OK, now, Mulally’s 2008 pay and financial future isn’t quite as . . . bounteous these days.
Most of that — $8.7 million — represents stock options that are worthless at the current share price. The automaker said Mulally has yet to receive any stock options that he could cash. Ford said it will reduce Mulally’s salary by another 30 percent for 2009 and 2010, and eliminate merit pay increases and bonuses for U.S. salaried workers because of the challenges facing the company and the auto industry.
So the only real question here: how did the DetN find a UAW member who thinks Mulally’s salary hit puts him in the same boat as a line worker? “He’s sharing the burden with us — and I think it’s about time,” said James Vanderbeke, a worker at Ford’s Dearborn Engine Plant. “It’s a good feeling to know that they’re doing their share.”
Oh, I forgot: Big Al and Bill Ford are still flying around on corporate jets. Chartered. Reuters reports the savings.
The automaker valued Mulally’s compensation for personal use of company and private aircraft in 2008 at $344,109, less than half the $752,203 the prior year.
The automaker also said Mulally’s family will be allowed to accompany him on trips when he flies on private aircraft and the company will pay the cost of coach-class commercial flights for his family when the travel is at his request.
They’re doing their share, huh? The company is one bad step away from being in the same predicament that GM and Chrysler are in and the CEO still gets a lottery jackpot salary. Then again, GM and Chrysler’s execs also got paid ludicrous sums to fail at their positions, too. How exactly is that their share? I understand that the man in charge should be compensated, but a lot of his earnings should be tied to company profits, and since Ford doesn’t have any of those there should be nobody making that much jack. Maybe if these guys’ salaries were based on stock prices, they’d take a little more interest in the products that are in the showrooms of their dealers.
Great picture caption.
$13.6M makes for a bold headline, but the real number is $4.9M as the text of the article illustrates. Still a ton of money? Absolutely! But don’t forget that Big Al had a pretty sweet gig with Boeing including stock options which were forfeited when he left the company. He walked into a mess at Ford (with eyes wide open, I might add) and has played a bad hand with some degree of success. This story has a long way to play out, but I’m guessing Ford is relatively pleased with their CEO. Again, I am not sobbing for Mulally’s “plight”, but I don’t hold him in the same regard as Dick and Bob.
Tex
The class envy stuff has got to stop at some point..or does it? Just like a quarterback, President, etc the CEO position gets too much credit and too much blame. These industries are much bigger than one man. Are the energy company CEO’s geniuses just because there is alot of demand for their product? Dont think so, just in the right place at the right time. There are many levels of managment under the CEO that dont get the credit or blame but are doing the real work (damage).
Dawson’s Creek to Varsity Blues to various small parts to a Ford line worker. My how Mox has fallen.
Did Ford get billions in bailout bucks?
No?
Then I don’t care what the guy makes or how he travels.
The second Ford takes bailout bucks though… different story.
Just because a company loses money doesn’t mean you don’t pay the workers, and the CEOs shouldn’t be destitute. Believing they should makes you guilty of class envy.
Al has already taken cuts, and will continue to do so.
Corporate jet travel is arguably cheaper, and/or a better use of an executive’s time than messing around with commercial travel.
First of all, the “Corporate Jet” thing is getting old. If you are a CEO – TIME IS MONEY – and you cannot be bothered with scheduling flights on America’s increasingly crappy aviation sector.
Secondlyl, Ford is in better shape than the rest of the Big 3 and has better products ready for launch than alot of the competition.
If this guy made that much money, he earned it.
So what? I say give the guy a break. He willingly took on the near-impossible job of bringing back a major global manufacturing company from the brink of certain death. How many automotive scribes and blog readers, TTAC or otherwise, seriously think they could possibly go in there and have any chance in hell of doing the same or better a job as Mullaly as done, given what is has to work with. Is he perfect? No, but it doesn’t matter. He’s the guy who stepped into the breach and deserves full credit for any success – and full blame for failure.
As for this whole corporate jet nonsense, it’s a total crock of socialist-populist pseudo-class envy bullshit. What mode and frequency of use of transport execs in any company take is nobody’s damned business but a company’s senior execs and their boards, acting as fiduciaries for shareholders. If using a corporate jet is a more efficient use of time than flying commercially then so be it. If the ability to use them as a perk for some personal use is also part of the deal, again, who the NSFW cares?
I don’t see congress or the media catterwaling about Nancy Pelosi’s frequent personal use of U.S. Air Force 757s — at full taxpayer expense. Where’s the outrage over that?
The private aviation industry provides, by some estimates, over 1.2 million jobs, many of them very highly technical, well-paying jobs, contributing some $150 billion annually to the economy. This stupid assault on corporate aviation is self-defeating and does nothing more than hurt the economy and the many hard working people in this industry who depend largely on corporate aviation for their livelihoods.
Wasting time arguing over these stupid side-bar pseudo-issues that have absolutely zero to do with getting our economy moving again, are self-defeating and have got to stop, or we’ll never get back on track to a growing economy.
“Maybe if these guys’ salaries were based on stock prices, they’d take a little more interest in the products that are in the showrooms of their dealers.”
I disagree, for this causes managers to make decision based on short-term profits. Jack Welch, who was one of the originators of maximizing stock prices, recently said in an interview that focusing on stock prices is “dumb.:
yeah, enough with the class envy bullshit. It works when you’re talking about Red Ink Rick or Nardelli, cause they deserve it. Mulally, on the other hand, has made very smart moves since he’s been there. Unloading other brands (and leaving Tata holding the bag as they devalue), mortgaging whatever they needed to raise the cash to make it through the burn, bringing over highly acclaimed Euro models, investing into cars and hybrid technology (see: new Fusion), not forgetting about trucks (see: new F150), securing cheap credit from the govt without taking the bailout (brilliant marketing move in the least), renegotiating with the UAW to accept shares in lieu of cash, and now, the latest debt swap move that is already oversubscribed with investors.
I’m sorry, but this guy has pulled more huge moves in the past two years than anybody in the car business. He is the Ghosn of our time and everyone will realize it in 2-3 years. He should not be forced to take so many cuts; the fact that he is doing so shows good will.
superbadd75 :
March 25th, 2009 at 7:58 am
They’re doing their share, huh? The company is one bad step away from being in the same predicament that GM and Chrysler are in and the CEO still gets a lottery jackpot salary.
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Yes, they are only one step away from the fate of GM. But that’s not Alan’s fault. That’s the fault of the government. Ford may have already been very close to profit, had there not been bailout of GM.
Alan’s mission was to outrun Rick from the bear. But just as Rick was about to be caught by the bear, the bailout bandwagon came by. Rick simply hopped on, and whoever that doesn’t hop on will be caught by the bear. This not Alan vs. Rick; this is Alan vs. bailout.
ruckover :
March 25th, 2009 at 10:52 am
“Maybe if these guys’ salaries were based on stock prices, they’d take a little more interest in the products that are in the showrooms of their dealers.”
I disagree, for this causes managers to make decision based on short-term profits. Jack Welch, who was one of the originators of maximizing stock prices, recently said in an interview that focusing on stock prices is “dumb.:
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This can easily be fixed. Don’t pay them a shit load of stocks upfront. Instead, pay them over a long period of time.
Say, instead of paying Rick 1M shares this year, pay him 50k shares for the next 20 years.
All the power to Mullaly, I tink he’s the best leader of them all.
Consider whats coming up the pipeline in the next year: Taurus, Fusion, Fiesta, Mustang. All core, bread-and-butter cars that are supposedly living up to all expectations. All these cars were developed under the direction of Mullaly. He’s only been at the helm for a few years right, so he must have gotten on the ball immediately with new product development.
What do the other guys have coming next year?
Ford has the best chance of surviving, and prospering, as long as they can keep the doors open until then.
The leader making it happen deserves every dime.
Ford CEO Alan Mulally Banks $13.6m in 2008, Flies in Private Jets
That’s factually untrue. You acknowledge in the post that $8.7M of the total compensation is in the form of stock options that are currently worthless to Mulally, so there’s no way that he “banked” $13.6M.
There’s an op-ed in the NYT that’s a resignation letter from an executive at AIG’s financial products group. He already had agreed to work for $1 a year and didn’t think that was sufficient compensation for getting unfairly pilloried by grandstanding politicians. He said that rather than return a bonus that he earned contractually to his employer or the gov’t, he’ll be donating the after-tax proceeds of his bonus to charity. Of course if they pass that 90% tax on bonuses, that means that the charities will get less money.
That may be intentional. The Obama administration is floating a plan to reduce the tax deduction on charitable contributions. That would decimate philanthropy in this country. Of course, eliminating private charities is a good way to force people into the “helping hands” of government programs.
It seems like it is just the current fashion to write critical pieces about all executives. That seems to me sort of a pitchfork mob mentality.
Sure, a lot of blame can be spread around to corporate executives legitimately for the mess American manufacturing companies are in, but I don’t believe that Mulally should be lumped into that category. In no way, shape, or form is he even remotely responsible for Ford’s current financial condition. In fact, Ford’s relative health as compared to the other domestic manufacturers is because of his leadership and changes that he has helped bring about at Ford.
Ford is not out of the woods yet, but if they make it (and I believe that they will) it will be owed in large part by Mulally’s vision and leadership.
If Ford doesn’t make it, then it would will turn out to have been a lost cause before he ever came on board. Kudos to the man for trying.
Alan Mulally didn’t dig his spoon into the bailout bowl, so why should we be concerned? It’s certainly not our tax dollars that is being spent on his paycheck or corporate jet.
Is that the Blueberry` new phone in the guy`s hand? the one with the biggest gaps around buttons of any 2008 or 09 cellphone models in production? yepp.