Ford CEO is todays one-percenter

[cnsheets]

http://money.msn.com/investing/one-p...er-of-the-week

Huge numbers aren't new for Ford chief

Featured: Alan Mulally, CEO, Ford Motor
Originally published: April 6, 2012

Americans on tight budgets held off buying new wheels once again last year, driving the average age of cars and light trucks on the road to 10.8 years, a record high.

But while customers pinched pennies, one of the major car companies showed little restraint when it came to CEO pay.

Ford Motor (F) chief Alan Mulally got a monster 2011 pay package worth $29.5 million. That's not a record, but it's pretty high by several measures:

• His pay was three times the $9.6 million average 2011 pay for CEOs of companies on the Standard & Poor's 500 Index ($INX), as tallied so far by USA Today and GMI, an independent corporate governance researcher.

• His pay was so high that about $5.17 of the price of each car or light truck sold by Ford last year went to cover Mulally's pay, on average. That figure would have averaged $1.68 per vehicle had Mulally gotten pay in line with the average at S&P 500 companies.

• Mulally got that monster pay even though Ford stock was down a whopping 36.8% for the year, compared with a flat performance for the S&P 500 -- which had to leave Ford shareholders wondering what they got for all that pay.

For coupling such vast pay with such poor stock performance, I'm making Mulally my latest "One-Percenter of the Week."
"It's getting harder and harder to justify the big salary and big stock options he gets when the stock isn't performing," said Gary Bradshaw of Hodges Capital Management, which owns Ford stock, in published reports.
Mulally's 2011 monster pay package also seems remarkable in light of the mega-grant of stock options he got in March 2009, when Ford stock was trading below $2 a share. With Ford stock now trading around $12.50, that mega-grant of 5 million options -- much larger than normal -- is currently worth more than $52 million. (See "6 CEOs who won the options lottery" for more.)

That takes his total 2009 pay up to $65 million, when you include salary, stock grants and perks. Mulally also has $58 million worth of restricted stock from previous grants due to vest over the next four years, points out Paul Hodgson, an executive pay expert at GMI. Given the huge value of all these grants, "it seems to me there wasn't any point of awarding him any more," says Hodgson.

Nevertheless, fresh stock and options grants made up the lion's share of Mulally's 2011 pay. Last year, he received $21.4 million in stock and options awards. He also got a $2 million in salary, $1.82 million in discretionary bonus, a $3.6 million incentive bonus and $612,500 in perks, for a total of $29.5 million.

Those perks included $178,571 for personal use of the company jet and $89,277 for housing and living expenses. And despite getting nearly $30 million in pay, Mulally also got Ford to pay $59,907 for his security costs. That figure alone was more than $10,000 higher than the earnings for the typical U.S. household for an entire year, which stood at $49,445 in 2010. In published reports, United Auto Workers vice president Jimmy Settles called Mulally's 2011 pay "outrageous compared to the earnings of workers," and given the high level of unemployment.

Monster pay packages like the one Mulally received help explain the growing concentration of wealth at the top in our country, and the hollowing-out of the middle class. Many economists say these two trends are unhealthy for the economy.

Ford responds that Mulally gets a lot of stock and options grants to align his interests with those of shareholders, and that the company's stock is up 43% over the past five years, compared with a slight decline for the S&P 500. Ford says the stock's weakness last year was due to factors like concerns about the economy and the impacts of the Japanese tsunami and the European debt crisis.

The company says it produced its highest reported net income in more than 10 years last year, at $7.8 billion excluding one-time items. It says operating cash flow increased $1.2 million to $5.6 billion, and net cash increased by $8.4 billion to $9.8 billion. In addition, the company points out that it increased U.S. market share for a third consecutive year and initiated a dividend in early 2012.

And in fairness to Mulally, after he took over as CEO in 2006, Ford borrowed a lot of money, which helped it stay out of bankruptcy in 2009 -- unlike General Motors (GM) and Chrysler.

On the other hand, Ford's U.S. quality ratings slipped last year because of problems with touch-screen dashboard controls and shifting problems in some automatic transmissions. And, of course, Ford shareholders also had a tough year financially. Mulally, who works for them, did not

[HughCares]

And this is all somehow his fault? I say way to go.......if they are going to give it to you....take it.....I would and so would anyone else. It's the rest of the execs at Ford that are responsible for giving it all to him....they are to blame...not him.
There's no question that he isn't worth it...but tell me.....is Joey Votto worth the 10 year, $225 million contract he just signed to play baseball??? Absolutely not...it is ridiculous....but good for him!!!

[VinceL]

I love it, that is the American way. A man (or woman) gets an education, works his or her ass off, and reaps the benefits. THAT is the American way.

But I suggest keeping politics out this forum and putting it into an off topic lounge or something like that.

[spitfisher]

When I was a little boy, I'm 54 right now, I remember walking with my dad, I was probably around 6-8 years old, we were walking along our sidewalk in suburban Boston. Our neighbor slowly drove by in a new ford mustang convertible, he tooted and waved. My dad and I both admired the shine and the sound of the red car, my dad said to me that Mr. Perednia works very hard at work, he commands perfection, and his company is very lucky to have him as an employee. My father then said you should always try to be the best no matter where you work, or what you do, get good grades in school and work hard when you find a job and someday you too can own and drive a beautiful car like that.

It sickens me that people feel that this wrong or somehow insensitive to other people's plight.
Good job Alan!

[NEWPORTNJ]

This is not a political web site, ford took no goverment bail out and alan well deserved !!! You make ford a great company people just like to BITCH !!!

[OffTrac]

Congratulations to him! He's doing a great job and I think Ford should do what they need to to keep guys like him around.

[fifthranger]

It is a fact of life that CEO's pay is not in line with "everyday workers". I agree with the comments above, and I would like to add that w/o an exceptional talent like him, who would want to work as CEO of any company? It is because of his success or failure that a company, such as Ford, can stay afloat, and while I agree that he isn't worth that amount of money, does it change anything to have the article published, and who are we to decide what one is worth?

[Kjeffery]

Good for him and his pay.

Most of the occupy people forget that is finding some to pay you what you want and proving it with hard work.

My last job was in the semiconductor industry. Hired on at a low pay rate. The first year after working my but off, I got a raise big enoughto pay off bills and buy a new truck.

End of my second year I was still working my but off and making 20k more than one of my coworkers that had been there 10 years. Reason, he just sat at one machine andpushed one button. Never learned or operated another peice of equipment.

At the end of my second year I was operating 10 differrent machines. Responsable for the testing and maintance for 63 different machines and processes. Also I taught machine specific courses on how to maintain and operate equipment. I taught over 5000 people in eight years.

Secret to good pay is usually hard work and sweat.

[Turdle]

I do not see this as political discussion -- it is Ford business discussion.

JMO

I doubt anyone would look at their pay stubs and say " hmmm, I think I should give some of this back"

[Joe Dirt]

Congrats, Mr. Mulally! I choose to admire your work ethic and congratulate your success instead of chastising you because I can't have what you've earned.



From the Mulally schedule:

He lives within three miles of his office at Ford's global headquarters in Dearborn, Michigan, arrives at 5:15 AM every morning, and works for twelve hours.

Yeah, that'd be a good start...

[VinceL]

The only reason I was advocating keeping politics out of the forum was because of the inclusion of the 'one-percenter' in the title. I was afraid it would become a one-percenter vs. occu-toddler discussion. I'm tired of that crap. My fear seems unfounded (gratefully).

Happy driving

For Joe Dirt: Occu-toddler is what the hosts of our local news-radio AM station call the protesters. It makes me chuckle every time.

[Joe Dirt]

Ok, occu-toddler made me lol... Never head that one.

Editing my post to remove the occu-toddler cross-thoughts...

[EX-SV]

Job well done, and a lot more to do.

[jrmexplorer]

I think you guys are jumping to conclusions about the intent of the OP's post and the article.

He isn't saying CEOs are overpaid. He is saying that compared to other CEOs of fortune 500 companies and given the horrible performance of Ford stock lately that Mullaly is overpaid for a CEO.

I think the OP's point, and the article's conclusion, is that Ford may have made a poor business decision in this regard.

Not saying I agree or disagree - but just offering some clarification.

[nitzer51]

im glad to see that everyone on here recognized that he works hard day in and day out and has earned what the board has decided to give him. I am also glad to see that you guys recognized that ford DID NOT take the bail out money.. i think that in itself says a ton that he lead ford to turn a profit without uncle sam's $$$

[beach]

I think their issue is the stock has been on a downward trend avg since 10' and stagnant for the most part.... that's where it seems their picking the issue with him on "performance". Their not saying he's a bad ceo or anything like that, their saying his comp wasn't worth it since the stock has underperformed for two years now, since generally comp packages are tied to company performance..

edit - JRM beat me lol

[Joe Dirt]

No, I'm pretty sure the point of the author's article was to demonize Mulally for making money and receiving perks no matter what the OP's point of posting was. Not saying the OP's view was the same, but that was certainly the author's point of writing it. It was no deeper than "Hey- this guy made money, he's the 1%!" and that was it. Otherwise, he wouldn't even headline it the way he did in the article.

[fifthranger]

I think you guys are jumping to conclusions about the intent of the OP's post and the article.

He isn't saying CEOs are overpaid. He is saying that compared to other CEOs of fortune 500 companies and given the horrible performance of Ford stock lately that Mullaly is overpaid for a CEO.

I think the OP's point, and the article's conclusion, is that Ford may have made a poor business decision in this regard.

Not saying I agree or disagree - but just offering some clarification.

I can't speak for others, but I can read and comprehend. Ford is a company in business to make money -- very similar to 95+% of other businesses, and what they chose to do with their money is their business (pardon the pun). In order to retain employees, like CEO's, companies often overpay. I wouldn't want the responsibility a CEO has and make a meager 100 or 200K. Also, not all the problems are the CEO's fault. Is it his fault that the economy is in bad shape? Is it his fault that it is cheaper for companies to move operations overseas? Even Ford has a plant in China that builds the Excursion? Do the Chinese employee Americans? Probably not? The plant employes Chinese laborers. Either way, the CEO has the authority to make tough decisions, but he is still an employee of the company. The Ford family, I'm sure, has the final say on whether or not to listen and/or take all his ideas/suggestions, so whether or not he is worth the money, he was "given" it as someone earlier said. And, Ford is making money unlike some of the bailout companies that paid their CEO millions of taxpayer money regardless if the company turned a profit.

[RangerX]

Moved to appropriate forum.

[Rick]

Of course CEOs deserve exponentially more money than the working man. There are more hours in a CEOs day than in a regular working mans day. Only makes sense

The federal government on Wednesday revealed the indentity of companies it aided during the financial crisis through the Federal Reserve's Commercial Paper Funding Facility.

Set up in 2008, the CPFF helped companies obtain high-interest, short-term loans -- known as commerical paper -- during the height of the international credit crunch. Some outlets, such as Fox Business, have referred to the program as the "commercial paper bailout."

Hyde correctly points out that Ford's credit arm registered to sell the federal government around $16 billion in commercial paper. Like the financing wing of most automakers -- Toyota, BMW, GMAC and Chrysler also participated -- Ford found itself in need of liquidity when the lending markets dried up.

But what Hyde (and more glaringly, his headline) incorrectly suggests is that Ford's borrowing was a secret. Spokeswoman Brenda Hines told Bloomberg back in October of 2008 that Ford Credit had applied for the program.

Fellow Ford spokeswoman Christin Baker this week pointed out that Ford reported its participation in the CPFF in its public SEC filings. She also said Ford participated in the Federal Reserve's Term Asset-Backed Security Loan Facility, noting that "these two programs addressed systematic failure in the credit markets, and that neither program was designed for a particular company, or even a particular industry.

"Ford was a fractional participant in both of these credit programs, and the federal government made healthy returns on all of these limited transactions."
Bottom line? Yes, Ford's credit arm participated in a federal program meant to free up short-term lending at a time when very few investors were spending. It's no secret.

A Ford TV ad slams competitors for accepting bailout funds, even though the company’s CEO lobbied for the bill. The company — the only one of the Big Three not to receive a bailout — feared a collapse of GM and Chrysler at the time would have hurt suppliers and, in turn, Ford itself. Ford Chief Executive Officer Alan R. Mulally also asked Congress for a “credit line” of up to $9 billion in case the economy worsened.

In other words, Ford was for government bailouts before it was against them.

Although Ford did not need money from the $80 billion bailout program, Ford did receive $5.9 billion in government loans in 2009 to retool its manufacturing plants to produce more fuel-efficient cars, and the company lobbied for and benefited from the cash-for-clunkers program — contrary to the ad’s testimonial that Ford is “standing on their own.”