Situation: Alan Mullaly was “awarded” a compensation package of nearly $30 M in 2011; Ford stock sold at $12.48 last week, and Mullaly has options to buy up to $22M worth of Ford stock. He was the highest paid CEO of any auto company in 2011: Since Mullaly “flew” away from Boeing and “landed” at Ford in 2006, he has earned over a $137 Million in compensation & benefits or about $27 M on average per year.
More Situation at Ford: The company made $20B in 2011; Market share is going up: Data-driven management is in place; the number of meetings that car companies have long thought necessary have been eliminated – instead there’s just one business plan review meeting each week with one other special meeting format to fight fires and deal with special issues; a deft facilitator and communicator, Mark Fields, runs these meeting and whips the team into performance based goals and action.
What did Mullaly “do” at Ford? According to the book “American Icon,” articles in WSJ, Financial Times, LA Times, and the Detroit Free Press, he changed the culture, knocked off the meetings that car people had come to use to never make decisions; attacked problems with data, created an organizational structure that worked, and insisted on strict and specific rules of the road; He and Ford HR managed to find, mobilize, and motivate a band of second and third echelon management for form an extraordinary group of talented car people.
Who actually turned things around at Ford? Although most CEOs get credit for the performance of the companies they lead, it really is the management team that surrounds and supports them that actually implements plans and makes things happen. That seems to have been the case at Ford in the last 5 years.
Who really makes who look good in Corporate America? If it were really possible to do a public performance review, one might find that it really was and is the team of really smart people at Ford (practically all males, and white ones at that) who made Mullaly look good and supposedly enabled him to earn every bit of this extravagant compensation. In 2006, Bill Ford knew he just did not have the stomach to take on what appeared be an end to the Ford Dynasty so he makes a deal with a guy from outside the industry and to do it – he had to give Mullaly the typical CEO “package” that will make him even richer over time, whether successful or not so.
Who are we talking about as the real “Turnaround Team”? Listing only a few: Derrick Kuzak, Stephen Odell, John Fleming, Jim Farley, Mark Fields, Scott Monty, and even Bill Ford, himself. Recently, maybe, also people like Lewis Booth and Joe Hinrichs, both of whom received big checks for what Ford did in 2011.
What one has to ask? [Maybe these are some questions that suggest another Wake Up call in Detroit]:
- Is this another example of excessive corporate comp?
- Are CEOs who come in on “White Horse” really the one(s) who turn thing around and make everything work?
- Does good team leadership and culture change warrant this kind of comp package?
- Is this good PR for Ford and the auto industry? (Particularly when compared with other manufacturing companies and car companies?)
- Is Alan Mullaly really that good?
- And if he is, then are his and other CEO Compensation packages out of whack with what is really going on in automotive industry and the country?
- What do people working on the line building F-150 really think about how fair this is?
- Do Mullaly or any of the Ford management team really need the money?
- Are he and key management at Ford in that 1% who have lost touch with the middle class – and who are their customers?
- Are they trying to sell vehicles to the top ten percent of the population who can afford them?
- Is this payment for “services,” really sending the right message to the industry, Ford customers, workers, and even investors? [Executive compensation gets paid before dividends]
- Would the structuring and payment of a compensation package that reflected the current economic situation in the country – and what will happen in the next five years in the car business – be great PR, driving customer incentive to buy Fords and make Ford one of the most respected companies in the world and its CEO a “hero”?
BTW—what ever happened to all that debt that Ford and GM had for the retirement and health benefit package negotiated over the years by the Auto Workers Union?