How Come Alan Mulally Is Getting All That Money?

Alan Mulally

Ford CEO Alan Mulally just got a new deal from the company: $26.5 million in salary, bonus and options earned in 2010. And that’s just the tip of the iceberg.

Tom Walsh of the Detroit Free Press put it this way:

But that’s only a small fraction of the fortune Mulally stands to make from stock options he is eligible to cash in between now and 2020.

At Ford’s current price of $15.16 a share, Mulally could get nearly $300 million worth of stock awards if he meets his performance targets. And if Ford stock keeps rising—it gained 68% last year—Mulally’s hoard will increase accordingly.

No wonder the man is always smiling.

As capitalism works in the U.S., he deserves all this loot. If a company’s market capitalization improves the way Ford’s has, stockholders cheer, and the board happily dishes out the compensation.

In other parts of the world, however, the standard is somewhat different, and pay for even top honchos like Ferdinand Piëch at VW is much less. You could argue that the outrageous pay scales for top management is one thing that got the U.S. auto industry into trouble before 2008.

UAW President Bob KingWhile London’s Financial Times cheered Mulally on and gave him its Boldness in Business Person of the Year award, the UAW’s President Bob King came on with predictable outrage.

King called such compensation “morally wrong.”

I think Alan Mulally is a great CEO, but I don’t think any human being in the world deserves that much money. I think it’s outrageous.

As a former union guy, I have to agree. Everyone likes Mulally, but you can bet the upcoming UAW negotiations with Ford will be largely about the concessions they made to get the company through the bad years just past.

The union recently announced its membership grew by 6 percent last year, and King’s salary was $168,073.

Mulally got paid about $17 million in 2008, when Ford (along with others) had a very bad year. On the pay-for-performance standard, is that fair?

—jgoods

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3 Comments

  1. Sooo…if you just steered Ford Motors through some of the worst days in the automotive industry, and the company offered you this compensation, YOU WOULD TURN IT DOWN?

    Unless you own a large amount of stock in Ford, it’s none of your business. Good for him and his family.

  2. Beats giving some scumbag running a hedge fund tens of billions. At least Alan pays income taxes.

  3. I think it is an extortionate amount of money to be paid to one man, but that being said he did steer (pun intended) Ford through one of the toughest times the company has ever faced. Ford is a player again and as long as their profits increase and sales increase (which is inevitable with the amazing new cars they are rolling out) then I think he is worth the money.

    Also, yes the UAW grew by 6%, but that puts them at about 390,000 members which is a far cry from the 1.5 million they had at their peak. Also, can someone explain to me why the UAW is unionizing workers from places like Foxwoods Casino? United Auto Workers of Foxwoods Casino? Is it simply to boost membership?

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