Mulally’s Pay: How Much Is Too Much?
I remarked last Friday on Ford CEO Alan Mulally’s exorbitant pay package, while CEO Sergio Marchionne took no pay at all from Chrysler for 2011, though he is getting undisclosed compensation from Fiat.
Actually, Alan’s haul seems to be worth $58.3 million (before taxes), not the after-tax figures I reported. Marchionne got $4.5 million from Fiat in 2010, plus $600,000 in stock awards; GM’s Dan Akerson took home about $9 million in salary and stock.
So, did Ford give away the store to this guy, despite the fact that, as everyone says, he brought the company back from the brink? UAW President Bob King complained last year that his stock package ($54.5 million) was “morally wrong,” even as he praised him for being a great CEO.
So far, not a peep from the union. Because, under its 2011 contract with Ford,
American plant workers received about $16,000 in bonuses, between a $6,000 signing bonus, a profit-sharing deal that was said to be worth about $3700, and a $7000 inflation protection/cost of living increase.
Most people want to credit him with the very impressive turnaround that Ford has made, claiming in good old American business style that he’s “worth every penny.” And yes, the company took tremendous losses before finally stabilizing in the last two years.
I don’t care, it’s still too much money—particularly when compared to what his rival bosses earned. According to investor reports, Volkswagen CEO Martin Winterkorn earned $12.2 million total compensation in 2010 and was the highest-paid CEO in Germany. Carlos Ghosn received about the same amount from Nissan-Renault. Akio Toyoda earned 160 million yen (about $1.9 million U.S.).
Is Alan that much better than these guys? Did he have more to overcome? Some give him all the credit for not going to the government for a bailout. But Ford went into debt bigtime instead.
What I do give him credit for is making Ford truly a performance-based company and changing its policies and culture in order to bring it to a valuation now six times what it was in 2008.
Does that make him worth so much bread? I don’t think so, particularly when you factor in the message it sends around the world, where Ford intends to do a lot of business.
What do you think? Is Alan Mulally worth his $58.3 million stock bonus?