Ford Motor Co boosted chief executive officer Alan Mulally’s total compensation by 11 percent to nearly US$30 million last year, despite the automaker falling short of its targets on market share, quality and costs.
Mulally, 66, got US$2 million in salary and US$5.5 million in cash bonuses. Including stock options and equity awards, his compensation was US$29.5 million, up from US$26.5 million in 2010.
The bulk of Mulally’s pay increase was in the form of stock awards. Last year, when the No. 2 US automaker’s shares fell 36 percent, Mulally’s cash bonus was 42 percent less than it had been in 2010.
Ford said in last year’s proxy statement for with the US Securities and Exchange Commission that it had surpassed its goals for annual profit and cash flow in automotive operations.
Mulally became CEO in 2006 when Ford was facing its own financial crisis. Ford borrowed US$23.6 billion from banks in late 2006 to fund its turnaround. This allowed Ford to avoid a federal bailout, unlike its Detroit rivals General Motors Co and Chrysler Group LLC, three years later.
Last year, Ford reported its highest net income in more than a decade and reinstated its quarterly dividend for the first time since 2006. In the period from 2009 to last year, Ford shares have risen 370 percent.
“Our stock has appreciated under his leadership,” Ford spokesman Jay Cooney said of Mulally. “So, clearly, he has delivered shareholder value.”
However, Ford did not improve its market share worldwide as much as it had expected and fell short of its cost performance targets in every region but Europe, according to the filing.
Ford also failed to meet its quality objectives last year after the company fell in widely watched quality and reliability surveys because of complaints about the touch-screen entertainment system in some models.
Ford executive chairman Bill Ford, 54, earned US$14.5 million last year, including stock options and equity awards. That is down significantly from US$26.4 million in 2010, when the Ford scion received deferred compensation from 2008 and 2009.
Mulally’s 2010 compensation raised the ire of the rank-and-file, particularly second-tier workers who earn about US$15 an hour. Last year, United Auto Workers (UAW) president Bob King called Mulally’s payout “morally wrong.”
A union official said in a statement on Friday that it was “hard to justify” an increase in Mulally’s compensation given the company’s stock price and falling wages of workers.
“It’s as if there’s an echo in here,” said Jimmy Settles, a UAW official in charge of relations with Ford. “CEOs of the nation’s largest companies, like Alan Mulally, continue to receive pay raises at a rate [that] is outrageous compared to the earnings of workers.”
From 2009 to last year, Mulally’s total compensation package totaled about US$74 million, Ford figures filed with the US Securities and Exchange Commission show.
However, some of that compensation is tied up in stock options that have not yet vested and have option prices per share that are more than Ford’s current value on the New York Stock Exchange of about US$12.50 per share, Ford said.