The Situation: Alan Mulally, Ford’s CEO, made $21 million in 2012. Few in the automotive industry have ever been compensated at this level. He made $ 29.5 million in 2011. And twice as much as Dan Akerson at GM. On the other OEM “hand,” Marchionne at Chrysler was paid only $1.2 million last year. And even more astounding is that Bill Ford was paid $14.8 M in 2012 — for doing what? The Lions did not do well last season either.
The significance of this Comp Payment: How much did Alan Mulally really have to do with Ford’s supposed success? They only attained 75 percent of their targeted performance in 2012. Even Mark Fields pulled down $8.5 million in 2012 and the finance guy they brought in got over $5 million. $21 million (2012 pay) is about 75 percent of $29.5 million (2011 pay) so maybe that is how the comp committee on the Ford Board came up with the number.
The resultant numbers are mixed: The dividends and the investment grade ratings have been restored at Ford by Mulally single handedly? The stock has gone nowhere in right up to last Friday, hanging around $13.50 with a target of $15 per share.
Who is truly responsible for Ford’s survival and turnaround? Yes, Mulally and Fields set the tone, made the conference room and dealer speeches, and charged up Wall Street, but the people who really produced what every degree of success Ford has experienced were the second and third echelon management in the trenches and in the field.
Tell the world who really did it: It would be so refreshing if the management of the OEMs or for that matter, any corporate entity, would say publically that they and the company accomplished “X” results because of an incredible performance of a management team composed of about 250 really competent people busting their butts to make it happen with the day to day support and commitment of thousands of employees.
What is the message these Big Comp packages send? What should the Genk, Belgium workers who got whacked when Ford closed the plant think? And what about current Ford manufacturing and staff workers? Is there a job problem in the U.S. and now Europe or what?
People have had it with Fat Pay Packages: More so, the American and European public is getting weary of CEOs including Wall Street pulling down Fat Cat comp plans when the rest of the country is struggling and working on budgets that don’t add up. The general consensus is that CEOs are paid too much, are not worth the enormous wealth or praise that is heaped upon them and are generally only as good as the team of management people around them.
Competitors about to have Ford’s lunch? Toyota, Hyundai and now VW are out to take market share away from both Ford and GM and they are doing it. And GM is buying back the company from the Feds and Akerson is a no BS kind of guy plus GM is getting its marketing and advertising reorganized and focused. Read what the WS analysts are saying about the risk of investing in automotive companies
The culture of the “Factory” is the industry culture: When we as journalists sit with knowledgeable industry experts, consultants and observers and they talk of how the automotive industry is doing, particularly the “culture”— you immediately gain the impression that not much has changed in the last 5 or more years. White guys running car companies and the dealerships who retail the product output; resistance to change all around to vehicle performance, new power trains and plants, Internet sales, build to order, stock for employees, women “leaning in,” technology at the management table, employee turnover, huge TV spends for relentless and ineffectual advertising and general indifference to how people want to buy or gain the use of a vehicle.
Are America and the car business working? This week’s issue of the world’s greatest magazine, the Economist, features a theme and cover about “The America that works” — an inspirational treatise about the progress of our country at a time when the U.S. needs to feel good about what we as a people are doing in spite of Washington. Now if we can just get to feeling that the car business in America is also “working” — that would be what we all want, thought we were going to “get” and somehow it is still a long time coming.