Filed under: Ford, Earnings/Financials Ford revealed today that its CEO Alan Mullaly was compensated with a package worth $21.7 million last year. His base pay was $2 million and he received incentive bonuses totaling $7 million. The rest of his money pile comes from stock options and the like. All told, Ford's top five highest paid execs accounted for some $60 million of the Blue Oval's total bill in 2007. Mulally actually made $28.2 million in 2006, but $11 million of that was what it cost Ford to buy out his contract with Boeing. $60 million is a lot of money to pay five people in one year, which strikes at the heart of an age old question in modern American business: how much should executives get paid? If they're doing their job and the company is profitable, no one seems to quibble over a million here and a million there, but instead credits the CEO for his or her expert leadership. When a company is losing money like Ford, however, those big bucks suddenly seem like funds that could have been used to develop new products, pay lower-tiered workers better or pad the company's cash reserves just in case. Bill Ford Jr., Ford's last CEO who has turned down a salary until Ford turns a profit, hired Mulally to do what he couldn't: make Ford profitable again. But hiring a guy like Mulally costs money, which is what we're seeing here. It is too early to determine if Mulally is earning his wage, so the impatient see his compensation package as completely unwarranted. We're willing to wait a few years, and if Ford is back in the black by then, we know the cost of doing business with Mulally was worth it for the guys and gals from Dearborn. [Source: Automotive News, sub. req'd, Photo by GEOFF ROBINS/AFP/Getty] Permalink | Email this | Comments More...
Maybe they all should work for free like Bill Ford, untill they turn a profit. 60 MILLION is a lot of money to pay, when you are asking unions for give backs and lower wages.
Difference is that Billy Jr. was running Ford straight into the ground and Mullaly is finally starting to get things turned around. What the article fails to clarify is that more than half of his '07 compensation was in options whose value is directly related to the performance of the company's stock which is dependent on earnings. In other words, the more money Ford makes, the more the options are worth. There is no guarantee that he will make anything on those options. His only guaranteed comp is the $9M in cash he received last year. The rest depends on how successful he is on the turnaround. Unions get absolutely no sympathy from me. They are largely responsible for Ford's financial condition. They got greedy and now much of their membership is discovering how much their job skills are truly worth.
And if the workers did not have a union, ford would have more profit for years, and still be in just as bad shape as they are now. Just the stockholders would have made more money. The workers should get a good wage for a good job. If the unions are at fault, how come my Ford escort, made in non union MEXACO did not cost less? Ford just made more profits.
1) So you honestly believe that any earnings Ford would have retained had they not been the victims of union extortion would have been distributed to shareholders in their entirety? Besides, if a company is in a solid enough financial condition, who cares how much is dividended out to the shareholders? Those earnings do belong to the shareholders (owners) and rightfully so since they ultimately assume all of the company's risk. In spite of what you think, a company's profits do not belong to the employees. Before you bore me with the tired "they made that money off the back of the employees" nonsense, remember that those employees were very well-compensated for their efforts. If they did not like it, they were always free to find a job elsewhere. 2) Workers should get a fair market wage just like the rest of us in the real world. 3) Any profits derived from the Escort you bought obviously went to pay for the comp and benefits to their unionized US counterparts as well as the ridiculous legacy costs for retired union workers. What is so evil about a company making money anyway? BTW, the UAW is the reason why your Escort was made in Mexico.
