• Mar 23, 2011
After the miracle Ford CEO Alan Mulally and his One Ford team pulled off in turning around the company in the face of an industry meltdown, it might seem hard to argue about the amount of money the CEO makes. But that's exactly what United Auto Workers President Bob King did in front of reporters at an event in Detroit, calling Mulally's $54.5 million stock payment "morally wrong."

CNN Money reports that King said that he liked Mulally, but added, "It creates problems for Ford in both the salaried work force and the hourly work force. It seems like one individual is getting all of the gain."

So how and why would King bring up Mulally's pay at a time when Ford just doled out $5,000 in profit sharing checks to the union? King's statements come as the UAW prepares to negotiate with the Detroit 3 automakers on a new labor contract to replace the last deal that was ratified in 2007. Yeah, that may have something to do with it...

King wouldn't go into specifics when asked what the UAW is looking for in the next contract, but did add that he'd like to get back some of the concessions the UAW agreed upon when the Detroit 3 were losing money by the bushel full. The UAW boss also said that he wasn't looking for a contract that will make Detroit automakers uncompetitive.

[Source: CNN Money | Image: Bill Pugliano/Getty Images]


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  • 119 Comments
      • 3 Years Ago
      Mulalley increases the prosperity and success of Ford, thus increasing its share prices, and he receives profits from the shares he has in Ford...

      ...and that's wrong?
        • 3 Years Ago
        Sure Mulally deserves a bigger bonus than normal workers for his leadership. But 10,000 times bigger? Does he really deserve 1/4+ of the 4th quarter profits for the whole corporation - when those profits are still down by 75% from the same quarter last year? We're not creating socialism - we're creating a monied aristocracy. How American is that?
        • 3 Years Ago
        Well said. Who wouldn't pay a man more money if he makes the company more money? Even better, stock options that are tied to performance that both lose on if the company's profit dips. I'll pay someone $10 to make me $100. I'll pay $1,000 to make me $10,000. I'd give $54.5 million on stock to make my company very profitable, with great cars, and who allows me to keep my logo that I borrowed against and feared losing after 100+ years
      • 3 Years Ago
      Morally wrong?

      The guy who saved your jobs. he deserves it and as opposed to thinking he's entitled to it Mr UAW
      • 3 Years Ago
      NOBODY IS WORTH ALMOST 55 MILLION DOLLARS. PERIOD!!! Yes he has 'delivered" Ford. BUT, so have all Ford workers. This was NOT a one man job, and.....even if it was,...NOBODY IS WORTH ALMOST 55 MILLION DOLLARS, PERIOD.
        • 3 Years Ago
        It's called a free market. Neither you, nor anyone else outside the company should get to decide that the CEO gets paid to much.
        • 3 Years Ago
        You know your local pharmacist at Wal-Mart makes $120k just for counting pills and putting them in the right container (which they seem to still get wrong), kids fresh out of college at top consulting, law, and investment firms make $150k+ and that your local big four partner makes $2 million+ per year?

        Now put those salaries in perspective to what these people actually do and what Mulally has done. Mulally is worth every penny.
        • 3 Years Ago
        What about Warren Buffet, Bill Gates, Mark Zuckerberg, Larry Page, etc...? How about Athletes?
        • 3 Years Ago
        AMEN! No one is worth $55M. They should be comfortable and that's it. The rest of the poor schlubs should be brought up...not squashed down like a bug, like those evil public school teachers. Shame on the anti-labor folks here. SHAME! Doing the dirty work for Wall Street.
        • 3 Years Ago
        Agreed, Mullaly did a fantastic job, but too much is too much and 54 mill is too much.
        Those who blindly argue that executive compensation is high because finding a good CEO is competitive have never watched the show undercover boss. That show is full of moronic bosses who make millions and display nothing other than an ability to delegate and possibly parents who started the company.

        How much is enough?
        • 3 Years Ago
        @stereodude: there is no "free market". The only time there's a free market is when the term is used to confuse poor souls like yourself into voting against your own interest. Then it's "free market" this and "free market" that and "freedom" blah blah blah, while the top takes all the money and the middle class disappears with the hope of striking it rich. You're delusional if you think there's a "free market" in the US.
      • 3 Years Ago
      Some time ago, I saw an interview of Robert Reich, Clinton's Labor Secretary, on CNBC. He argued that CEOs and other high-level executives deserve the large pay packages that they receive.

      First, companies don't run themselves the way that they did 30 or 40 years ago. The business model, operations, and the competition must be evaluated on virtually a daily basis.

      Second, competition is no longer solely domestic but global. Either U.S. companies have expanded into foreign markets, or foreign competitors have entered the U.S. market.

      Third, being a CEO is no longer a 9-to-5 job. The typical CEO probably puts in 11 or 12 hours a day, and he travels a lot more. I can vouch for that, because my father worked for a Fortune 50 companies in the 1960s and 1970s. He often saw the CEO on the same train he took, and he usually took a train that left downtown at either 5:15 or 5:30. That is considered a rarity, rather than common.

      Fourth, a CEO is far better known that 20 or 30 years ago, thanks to the likes of CNBC, Fox Business Channel, and Bloomberg, as well as the internet. It used to be that quarterly reports were issued as press releases. Now, CEOs and other officers of the company discuss results on conference calls with reporters and analysts, and the general public can monitor those calls live. When my wife worked for publicly-traded companies, she always listend to the analysts' calls while sitting at her desk.

      There is an old saying that risk must be rewarded. Even though a CEO of a Fortune 500 company isn't considered an entrepreneur, he probably needs to have that kind of mentality. If a CEO is willing to gamble a company's fortunes on a new product, and it hits a home run, naturally he has to be rewarded.

      Mullaly has certainly taken some risks at FoMoCo, and they have paid off. By the same token, Mullaly was highly regarded as the head of the commercial aircraft unit at Boeing. Even though he was passed over for CEO, he was still one of the best known people in commercial aviation and headed the 777 project, after Phil Condit became CEO, and pushed for the all-composite 787. To get someone with that kind of track record to leave a very secure position was going to take some big bucks.

      Considering that a number of people think Boeing should fire its current CEO and try to lure Mullaly back to Boeing, it's not surprising that Ford is making the cost to lure Mullaly back prohibitive.
      • 3 Years Ago
      King: "WAAAAAAAA!!!!"

      That's all I hear
      • 3 Years Ago
      Time to break all unions. Any man who can't stand on his own recognition shouldn't be holding any job that pays more than minimum wage.
      • 3 Years Ago
      "he wasn't looking for a contract that will make Detroit automakers uncompetitive."

      Who does he think he is!? What does satisfying the UAW have to do with being competitive?
      • 3 Years Ago
      The UAW:

      Protecting the grossly incompetent, over-fed and over-entitled for more than 70 years!
        • 3 Years Ago
        Yeah, god forbid someone actually makes a decent wage for an 8 hour work day. And gets health benefits. God forbid.

        It's disgusting, isn't it?
      • 3 Years Ago
      Bill Ford saved his company by swollowing his pride. He needed the right man and who takes over when Mulally goes?
      Pay him and hope he sticks around for awhile.
      He hocked the whole company right down to the pencil sharpeners for a 25 billion dollar loan just before the finacial meltdown.
      Subperb move and it took guts along with few few pulled strings to do it.
      • 3 Years Ago
      The CEO of Toyota, the largest automaker on the planet, makes around $1M a year and that company has been consistently more profitable for decades and decades (hell, they had their first loss 2 years ago).

      At Honda, the top 10 Executives earned less than $10M COMBINED.

      The CEO of Nissan makes 20% of what Mullaly makes.

      As a Ford stockholder, I think Mullaly has done a great job, but no way in hell should he be making even a fraction of that amount of money. His salary should be inline with what most of the rest of the industry pays its Executives. His $50M compensation would be way better served being reinvested back into the company or paid out in higher dividends.
        • 3 Years Ago
        @Hazdaz

        Giving stock options doesn't cost the company anything. It's completely different from employee salaries. Ford didn't have to buy the stock on the market in order to give it to him. They just issue more shares of stock and give them to him. There was no cost to the company in that action. You're really stretching it by claiming they have an effective loss of revenue because could have sold those shares instead. Using that logic Ford's refusal to constantly issue stock costs it money because they could be issuing stock and collecting that money and by not doing so they're losing revenue.
        • 3 Years Ago
        @

        "Giving stock options doesn't cost the company anything."

        :facepalm:

        You just lost and and all credibility that you might have had on the topic. Join the rest of the herd that is willing to blindly over-compensate US Executives simply because they *think* its not coming out of their pockets.
        ... but the reality is that it is.

        It comes out of your pocket in the form of less competitive companies because they have less money to reinvest, higher prices and usually poorer results because lets face it, what's the drive to increase your company's sales if you already have more money than god.

        And as a shareholder, simply "creating" an extra 4 million shares and giving them to Mullaly dilutes every other share of FoMoCo stock out there. Mullaly alone controls somewhere between 1/500th to 1/1000th of all of FoMoCo's shares. That's ridiculous... and it was all given to him free.
        • 3 Years Ago
        @ Stereodude

        I realize in the whacked-out corporate compensation system that we have here, some people think that salaries don't cost anything... "its just stock options, so like, its free and stuff, man. No worries."

        First of all, not all of his compensation is stock options. Secondly, of the compensation that is stocks, that's ~4 million shares of Stock that are not making FoMoCo money. They were GIVEN to Mullaly as compensation, as opposed to other shares, which were PURCHASED by shareholders, and thus adding to FoMoCo's bottom line.

        It is anti-competitive to over-compensate your executives to the point where it impacts your bottom line. No one is saying that these guys shouldn't be well-paid, but this is absurd. Spend that money on reinvesting it into the damn company, like VASTLY better run companies have been doing for ages now.
        • 3 Years Ago
        @Hazdaz

        You still haven't explained how it took money out of Ford's pocket. You make it sound like they were just about to sell 4 million more shares to the public, but now suddenly can't because they gave them to the CEO instead. That's imaginary thinking. If they wanted to more money and needed to sell stock to get it, they'd just create more shares out of thin air and sell them.

        And yes I realize issuing stock dilutes the stock price because there are more shares in circulation, but that doesn't cost the company money.
        • 3 Years Ago
        Bill Ford was paid $1 per year for a while so your Toyota exec was making 1 million times his salary, seems kind of extravagant doesn't it?

        These numbers are always skewed depending on the point someone wants to make. There's annual salary, stock, bonuses, contract buy-outs, options...

        So Toyota make $1 million USD per year, and that isn't adjusted for cost of living (exchange rate adjustments don't paint the full picture). Also, I thought Toyoda had 4.5 million shares valued at $160+ million.

        Let's also not forget over there they have a special word for "death by over work" - karoshi.
        • 3 Years Ago
        @Haz...don't bother with facts with the Teabaggers on here. They want to drive America into a hole. Third world status here we come! Just like Somalia with no regulation, no taxation. Free market all the way! Crush the worker. Crush the elderly. Crush the public school teacher! Crush public education. Crush healthcare for the idiots who can't afford it! Everyone for themselves in the world of teabaggin' AB commenters.

        But hands off their Medicare!!!

      • 3 Years Ago
      Did 13 years of union under Teamsters. It was always funny watching guys in cheap pants, shirt and ties driving Lincolns and Cadillacs and making a decent salary while telling us all to vote blindly for whatever Democrat is in office and to make the same salary and especially not to work harder than anyone else. People used to get mad at me for putting in a days work. Now I am self employed and can afford a Cadillac. The company I worked for is out of business and we all know how the union mindset is working out. Do miss the health care though :)

      He is just doing his job which is posturing and rhetoric to represent his union. It's a real shame, it's a decent idea for unskilled labor since you get treated so poorly but like anything with good intentions the people at the top tend to be as corrupt as they get. The Teamsters is the poster child for that. Not much has changed.
      • 3 Years Ago
      Better they get a CEO to work for free, but that runs the company into the ground? UAW, just go away.
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