Ford’s Mulally made a total $12.87M in compensation last year

March 22, 2010 | Updated: 2:10 p.m. today

Ford’s Mulally made a total $12.87M in compensation last year

BY BRENT SNAVELY
FREE PRESS BUSINESS WRITER

 

Ford disclosed today that it paid Ford President and CEO Alan Mulally $12.87 million in total compensation in 2009 compared with $7.54 million in 2008 as the company fought through the worst automotive downturn in decades and reported a profit for the first time since 2005.

Ford also said Ford Executive Chairman Bill Ford Jr. continues to voluntarily forgo any compensation.

In 2009, Mulally received a salary of $1.4 million, stock awards worth $10.97 million and $491,869 in other compensation that includes benefits such as air travel, country club memberships, security and housing, Ford said in a regulatory filing today.
 

Mulally’s base salary decreased by 30% last year compared with $2 million in 2008 but his total compensation increased because of an increase in stock awards. Ford granted Mulally a total of 8.9 million Ford shares in 2009, which were worth an estimated $10.97 million when they were granted last February. That compares with stock awards worth $4.49 million in 2008.
 

Ford’s stock price rose to a five-year high of $14.54 midday on Thursday after an analyst and a debt rating agency raised their outlooks on the company, which continues to gain market share and show quicker than expected financial improvements.
 

“We tie our executive compensation to the company’s performance…and when the company performs well and the investment community believes in Ford — that is a good thing for all of our stakeholders,” said Ford spokesman Mark Truby.
 

In addition to his $12.87 million in salary, bonus and other benefits, Mulally received stock options with an estimated future value of $5.05 million in 2009. A stock option gives the holder the right to buy shares of stock in the future at a specific time and price.
 

The Free Press does not include stock options as part of total compensation, because of the uncertainty of their value and inconsistent comparisons with past reports. However, when the value of the options is included, Mulally’s pay was $17.92 million in 2009.
 

Ford also said today that Bill Ford, great-grandson of company founder Henry Ford, did not receive any actual compensation in 2009. However, he continued to accrue stock awards and stock options that were worth a total of $16.8 million in 2009.
 

While Ford has not accepted any actual compensation since 2005, the board of directors began setting aside stock awards and options for Ford in 2008 that Ford will accept once the company’s automotive operations are profitable on an annual basis.
 

Ford reported a profit of $2.7 billion for 2009 — its first annual profit since 2005 — but much of that profit was due to onetime accounting gains.

High pay has critics

Mulally’s compensation continues to draw fire from some UAW members, even though Ford’s turnaround plan, launched in 2006, is gaining traction with market share gains in both the U.S. and Europe.
 

“I’ll admit that it appears everything he touches turns to gold,” Nick Kottalis, president and chairman of UAW Local 600’s Dearborn Truck unit, said Sunday. “But it is the workers’ dedication and commitment to this company that has brought Ford back on this major rebound.”
 

Mulally was paid $14.15 million in 2007 even as the company lost $2.7 billion.
 

During congressional testimony in November 2008, Mulally was asked whether he would work for $1 by members of Congress.
 

Mulally’s response — “I think I’m OK where I am” — became a rallying cry last year for Ford’s hourly workers when they were asked for a second time in less than 12 months to vote in favor of contract modifications. In November, the UAW announced that more than 70% of Ford’s workers rejected that deal.
 

Ford further angered UAW members in December when it reinstated merit pay, tuition reimbursement and 401(k) contributions for white-collar workers. Kottalis said that anger persists even though Ford paid hourly workers profit-sharing checks in March.
 

“I don’t want to sound ungrateful, but the average worker got $450 gross,” Kottalis said. “How do you justify that with Alan making millions of dollars.”
 

Despite the complaints, Mulally’s pay seems generally in line with other top automotive executives.
 

“The compensation committee has done a very good job from a governance perspective of giving him performance-based grants,” said Daniel Moynihan, a principal of Compensation Resources Inc. “Their stock price is doing well, and his fixed compensation went down.”
 

Also, neither Mulally nor any Ford salaried employees received a cash bonus in either 2008 or 2009.
 

In February, General Motors’ board of directors approved Chairman and CEO Ed Whitacre’s $9-million pay package after the U.S. government’s pay czar approved it.
 

Whitacre will get a base salary of $1.7 million, according to records filed with the U.S. Securities and Exchange Commission. He also will receive $5.3 million in GM stock that will be payable over three years beginning in 2012. He also will get restricted stock valued at $2 million.

Other top paid officials

In its proxy filed today, Ford also disclosed that its other top-paid executives in 2009 included CFO and Executive Vice President Lewis Booth, Executive Vice President and President of the Americas Mark Fields and Ford of Europe Chairman John Fleming.
 

In 2009, Ford paid total compensation of $3.07 million to Booth, $3.22 million to Fields and $3.1 million to Fleming — not counting stock options.
 

The U.S. Securities and Exchange Commission requires publicly traded companies to disclose the total compensation for its CEO, CFO and next three highest-paid executives each year.

What happened to the planes?

Ford also disclosed today that it closed an airplane hangar at Detroit Metropolitan Airport and turned over the management of three airplanes to a leasing company in 2008.
 

Under the arrangement, Mulally and Ford can use the planes for business and personal travel, but the management company can also charter the planes to others for private use. Ford said the change has allowed it to reduce its total air travel costs.
 

Truby said Ford tried to sell the planes but found no bidders willing to pay market value for the aircraft and is still trying to sell two other planes.
 

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