Source: CNN.comFord CEO: $28M for 4 months work
Former Boeing exec got $18.5 million bonus, almost $9 million in stock and options and base salary at annual $2 million rate, according to proxy.
April 5 2007: 6:31 PM EDT
NEW YORK (CNNMoney.com) --
Struggling Ford Motor Co., which posted a record $12.7 billion net loss in 2006, gave its new CEO Alan Mulally $28 million for four months on the job, according to the company's proxy statement filed with the Securities and Exchange Commission Thursday.
The Ford pay package for Mulally comes on top of the $7.4 million that aerospace company Boeing had previously reported paying him for his eight months running that company's commercial aircraft unit before he made the move to Ford at the beginning of September.
His base salary was $666,667, which works out to annual pay of about $2 million. He also received restricted stock grants, which the company valued at $920,404, as well as 3 million stock options valued at $7.8 million. The stock options are not yet exercisable, and they have an exercise price of $8.28, or about 4 percent above current prices.
The details of the compensation packages and costs come as Ford moves ahead with plans to close plants and cut more than 30,000 hourly positions from the company in an effort to stem losses.
The company had disclosed in a footnote buried on page 228 of an earlier filing with SEC that Mulally saw the value of his stock bonuses increase to $6 million from the originally agreed upon $5 million "after reviewing the company's 2006 performance results and Mr. Mulally's leadership role in progressing his key priorities."
The filing was made the day after Mulally was the keynote speaker at the start of the New York auto show.
Executive Chairman Bill Ford Jr., who had held the CEO post until Mulally was hired, had agreed in May 2005 not to receive any pay, bonus or stock grants until the company's core automotive operations returned to profitability.
But the proxy listed Ford's compensation for 2006 as $10.5 million, down 21 percent from $13.3 million listed in 2005. Most of that compensation for 2006 was the estimated value of earlier stock grants and options that vested and were recognized during the year, according to the filing. The great-grandson of the company's founder had started as CEO of the company in 2001.
The proxy also discloses that Mark Fields, the head of Ford's operations in the Americas, used company jets for personal travel at a cost to the company of $517,560 in 2006.
Ford executives' use of corporate jets for personal travel cost the company almost $1 million in 2006, as Ford, Mulally and Jim Padilla, who retired as president and chief operating officer on July 1, were required to use the jets for all of their business and personal travel "for security reasons."
An earlier filing by Ford had disclosed that Mulally can request that his wife, children and guests be able to use Ford corporate jets at company expense, even without him being on the flight. The proxy filing does not detail if that occurred during his time with the company in 2006.
The Ford family's $581 million loss
Bill Ford's personal use of the jets cost the company $185,232, while Mulally's use cost the company $172,974 and the cost for Padilla was $82,265 for the six months he was with the company during the year.
Fields's use of the jet to fly back and forth to see his family in Florida on weekends was part of his employment contract with the company. But it became a subject of controversy when it was first reported by a Detroit radio station in late 2006. At that time the company had only disclosed Fields use of the jet had cost it $214,479 in the last three months of 2005. In January, Fields announced he would fly commercial jets instead, at company expense.
The filing comes as Ford, General Motors and DaimlerChrysler's Chrysler Group prepare to start negotiations with the United Auto Workers union to see concessions and labor cost savings when their current contracts end in September.
Ford, traditionally No. 2 in U.S. auto sales, could lose that long-held position to Toyota Motor this year as the Japanese automaker opens plants here and gains market share as the traditional Big Three lose ground.
Ford announced in March that all full-time staff would receive some form of modest bonus for 2006, as it attempted to improve morale in the middle of a downsizing.
Most salaried workers and supervisors received between $300 to $800, depending on their location and rank in the company. Most union members received about $500. The company did not detail the overall cost of the bonus program, but the widespread bonuses cost the company at least $62 million, based on the 125,000 employees who were eligible for the payment.
Two questions, just off the top of my head:
#1 - Is it any wonder these guys are in so much financial trouble? Hello? Bueller? Anyone?? Your BIG problem isn't the quality of your products, and it isn't the United Auto Workers. Get a mirror for the corporate boardroom. There you go.
#2 - Where is the exalted Free Market that should correct this abject stupidity, or does the free market only work to make the wealthy wealthier at the expense of everyone else?
Not trying to be political, I'm just sayin' .....