Filed under: Ford, Earnings/Financials
Mullaly and other Ford execs made many millions in 2007
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]
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Reader Comments (Page 1 of 2)
Seoultrain 5:52PM (4/04/2008)
No one at the Big 3 should be getting any kind of "incentive bonuses" in their current state. Once these companies make money, give them 100 million for all I care.
But I don't think Mulally should be getting all the flak (and article pic) for this. At least he's proven he can do something by turning Boeing around. The rest? not so much.
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erth 5:57PM (4/04/2008)
i wonder how much he paid for that tie?
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almost Dr. G.. 5:57PM (4/04/2008)
further proof of how the rich get richer..
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Todd 6:20PM (4/04/2008)
Mullaly is in the Mosley sex video, he's wearing a French burlesque dancer girl outfit and a mask, so you can't tell its him. In fact all the over paid Ford execs were in the Mad Max nazi sex video ( Please cache this comment on Google's servers immediately so it comes up in a search for Ford executives lasts names ).
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MarcT 6:23PM (4/04/2008)
$60,000,000.... for FIVE men. I hope everyone remembers this the next time someone complains about health care costs for assembly workers.
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Big Rocket 8:04PM (4/04/2008)
Are you kidding? UAW apologists love to remind everyone about the excesses of management compensation, just so to hide their own excesses. Just like how two wrongs make a right. So, yeah, everyone will remember.
Disgruntled Goat 11:43PM (4/04/2008)
Yea, Big Rocket is right. Those execs deserve $10,000 per hour (do the math) for green lighting cars like the Focus. F those greedy blue collar commen folk that make the cars for $26 per hour. After all, it's the union workers fault the Focus is a dung heap nobody wants to buy. You're a socialist if you think these execs don't deserve their $10,000 per hour. How could you ever find someone to fill their place for less?
mike 8:58PM (4/05/2008)
The Aristocrat Syndrome.
This one guy thinks he's worth 210 engineers making $100,000. Not only does greed make you stupid, it makes you INSANE.
Ford needs new product, that means New Engineers, not some high priced Front Man.
Big Rocket 12:35PM (4/07/2008)
Disgruntled Goat, if only you had bothered to read my other comments here before you posted your own, you would have found out:
(a) I am opposed to excessive pay for Mulally, an unproven newbie in the automotive industry.
(b) The UAW is just as guilty of excessive pay. You wrote they earn only $26 an hour in take-home pay. I wrote even earlier they cost $60 to 67 an hour for the Big 3 to hire them.
tom 6:46PM (4/04/2008)
Maybe if pay was truely tied to performance things would happen a lot faster. When your making that kind of money you spend to much time thinking what to do with it instead how do I need to earn it.
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Disgruntled Goat 11:46PM (4/04/2008)
Exactly. Make the company billions, earn $20 million. Drive the company in the $hitter, earn $20 million. Now that's an incentive.
Jim 7:07PM (4/04/2008)
What a horrible waste of money, first say you are broke, then pay the exec's millions. Let's see the average Joe try to broker a ddeal like that !! The poor schmucks doing the work are getting screwed.
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Big Rocket 8:12PM (4/04/2008)
The poor schmucks doing the work are getting screwed? A lot of us would like to get "screwed" to the tune of being compensated $60 to 67 an hour in a recession. The only ones really getting screwed are the domestic car buyers.
NY Times, 2006: "On average, U.A.W. members at G.M and Delphi cost the equivalent of $67 an hour, including pay of about $27 an hour plus pensions and health care expenses."
Bloomberg, 2008: "Ford's... $60 expense for a current UAW member's wages and benefits."
CNN Money, 2007: "...the gap between Japanese and American carmakers' profits average out to about $2900 per vehicle... A big reason is the cost of labor..."
Bloomberg, 2008: "UAW President Ron Gettelfinger... estimated that new contracts at [Big 3] will save the automakers 'somewhere in the neighborhood' of $1,000 per vehicle."
Links:
http://www.nytimes.com/2006/03/23/business/23auto.html?ex=1300770000&en=57ea081b0a798618&ei=5088&partner=rssnyt&emc=rss
http://money.cnn.com/2007/01/26/news/companies/pluggedin_taylor_ford.fortune/index.htm?postversion=2007012611
http://www.bloomberg.com/apps/news?pid=20601209&sid=aRxTHKjUeS7w&refer=transportation
Mike 7:08PM (4/04/2008)
I always laugh at stories such as these. One must remember that these professionals at this level of their chosen fields must be compensated commensurate with their years of experience, expertise, etc. Furthermore, in order to entice individuals such as Mullaly back into an active position after retiring successfully from Boeing, the corporation has to make it worth his while. All the outrage about the compensation packages of these professionals only suffices to show how petty, jealous, and pathetic the majority of the uneducated American lazy public prove to be over and over again.
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Daniel 7:28PM (4/04/2008)
Mike.
You are a Jackass.
Eat dirt!
Gregg 8:17PM (4/04/2008)
Mike, your comments rest on the premise that Mulally is worth what he is being paid. The jury is out on that one.
The bring back the Taurus idea wasn't exactly rocket science, and it didn't work. Sales of the Fusion haven't been anywhere remarkable. Bringing back the 6.2 liter program was only correcting another one of the many, many stumbles Bill Ford made. Like how he gutted Lincoln. (Of course the 6.2 would have helped the F150/Navigator etc. sales a lot more before gas is shooting toward $4.)
But the board is in on this, whether or not they are just dim rubber stamps. Firing Jac Nasser sure fixed things, hey? And paying a non-car guy more than 20 million a year when the company continues to lose market share month by month doesn't look any better than the oil executives pleading that their record profits are needed for further exploration and development.
Yes, it is good work if you can get it...and are character disordered enough to believe anyone deserves that level of pay for going to work for someone else. A real yuk.
Big Rocket 8:30PM (4/04/2008)
Mike: You are assuming Mullaly and the other highly paid executives are worth their weight in gold. Would you care to name concrete examples in which changes spearheaded by Mullaly and his boys made a positive difference at Ford, resulting in higher sales and profits? Mullaly had a successful track record at Boeing, in the aerospace industry. But as far as the automotive industry is concerned, he is a complete newbie, underscored by his visit to Toyota to "study with the master", as he put it. Paying that kind of money to a complete newbie with no track record in your industry is excessive, especially when your company is in poor financial health.
Dainel: Stop with the juvenile behavior and name-calling already. If you don't have anything substantive to say, then don't.
Link:
http://www.autoblog.com/2007/01/04/mulally-sheds-more-light-on-toyota-visit/
Tsunami Racer 7:14PM (4/04/2008)
that is the only way you will ever get any decent executives to come work for a failing company. why would anyone want to take the helm at ford, now of all times, unless you were being compensated that much.
mullaly can go work for any company he wants with his credentials. ford is lucky to have him.
give 20 million to someone who can save your company, or lose your cush UAW job after Ford files for bankruptcy and become a greeter at Wal Mart. Your choice.
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Big Rocket 8:39PM (4/04/2008)
It has been 1 year and 7 months since Mulally joined Ford. Exactly what has Mulally done so far to save the company? Inquisitive minds want to know.
mike 9:03PM (4/05/2008)
Pay an MBA out of College a 1 Million Dollar salary. He can't do worse.