28 Million for Four Months of Work?!

[RichardJensen]

His base salary was $666,667, which works out to annual pay of about $2 million.

 

Nobody ever said you had to be good at math to be a writer. $666,667 per month is a wee tad over $2 million: try $8 million per year.

 

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.

 

So these options are worthless right now. The stock price will need to rise above $8.28 before they will be worth a dime.

Couple notes: Salary would be over period employed (4 months), not a per month rate, ergo the $2M is probably right.

 

Now to those pesky stock options.

 

They are 'worth' $7.8M.

 

But -- get this -- do you know what Mulally has to do to turn them into CASH?

 

Exercise them, and then turn around and sell the stock.

 

So. He's got 3M stock options with a strike price of $8.28.

 

If he exercises those stock options when the stock price is $9.28, how much will he earn?

 

$3M.

 

What would Ford's stock price have to be for Mulally to 'make' $7.8M?

 

$10.88, or c. 25% higher than it is right now.

 

Factor in that these options won't vest for a year or two (they generally don't), and you've got true PAY FOR PERFORMANCE

 

that MOST IMPORTANTLY!!!

 

DOESN'T COST THE COMPANY A D I M E.

 

aside from shareholder dilution.

 

You want to bellyache about how the company is screwing you over, and paying executives millions?

 

Why not look at the actual DOLLARS going into their pockets, instead of winding yourself up on newspaper hysteria?

 

Mulally made, from Ford, last year, a fair chunk of change for what he did, as well as compensation for income forgone when he came to the company.

 

You want to bellyache about stock grants and stock options? Go to a shareholders meeting and complain about excess stock dilution.

[RichardJensen]

Oh, and ONE MORE THING.

 

Maybe you'd like it if half your pay was paper that wasn't worth a dime for a year.

 

You want equality? You want an even playing field?

 

Then you start taking a big chunk of your week's wage in stuff that's of less value than an unsigned IOU.

 

Try going down to the grocery store and buying a gallon of milk with a fistful of Ford stock options.

 

Then come back here and cry about how Ford's board is screwing you over.

 

And like I said, you got 4,000 shares of Ford stock, go to the proper place to kvetch about dilution. The shareholder's meeting.

Edited April 5, 2007 by RichardJensen

[J-150]

Yes, but can you PROVE the loses were not due to his actions?

 

 

 

if the problems started before his/her arrival, of course.

 

Yes Alan is to blame for not bringing over the C1 Focus, or letting the Ranger and Crown Vic die.

 

Its not Alans fault the F150 still uses a 4sp tranny.

 

 

So yes you can prove someone innocent

[xr7g428]

Pioneer, We get it: Don't mess with another man's livelihood. However, this doesn't entitle you to be a suicide bomber and take everyone else out with you.

 

The UAW is going to have to cut a deal that is going to result in the members getting paid probably less than than what the they would like. The competition is not between the CEO and the hourly. The UAW is competing against Toyota and all of the non union factories. Like it or not, the only real difference between the transplants and Detroit is the UAW. In order to survive, the two have to be on par. Having a CEO that took no compensation has already been tried, it didn't make any difference.

 

There are only two real options: bring the transplants under the UAW, or make the UAW mirror what the transplants offer. Ford, GM and Chrysler cannot compete with a built-in, perpetual, handicap. Although we would all prefer that the UAW get their act together and get the job done down south, it is clear that the UAW's reputation precedes it.

 

The truth is that, thanks to the unions, there are not very many bad employers anymore. There are dozens of laws and countless federal and state agencies committed to eliminating unsafe work practices. It is sad to say, but a lot of those jobs that went over seas were just too dangerous, or too hazardous, to be performed in the land of the litigators. So the union is seen as offering little to people who want to work, and are seen as mostly benefiting the bad apples.

 

Now we have the particularly difficult situation where Toyota workers are getting more actual take home pay than the union members, before we even take the dues into account. So maybe it is time to take a look at exactly what the Toyota packages are and see how it really compares. It just might be that things are not so grim after all. As long as you want to work.

Edited April 5, 2007 by xr7g428

[RichardJensen]

Shoot. If the total package was worth 28 Million, you can keep 75% of it for a year. I can wait.

Oh, yeah. The other part is that you need to take about a $9M pay cut in your take home pay.

 

Mulally's comments at the analyst shindig yesterday, and other remarks subsequent to it, are that he has informed Gettlefinger where the UAW pay package needs to be, in gross amounts, and that they need to come up with a palatable means of divvying up pay, benefits, pension, etc.

 

He said that he's not drawing any lines in the sand, as far as the breakdown of pay, benefits, etc., but he has said that Ford can't pay more than the overall amount.

 

It's a pretty fair way of doing things, IMO. Sit down with the UAW and say, this is what we can do, how do you want to do it?

 

And with better access to Ford's books than anyone outside of their investment bankers, and their accountants, I think the UAW will be able to tell pretty quick if Mulally's trying to pull a fast one.

[goinbroke2]

Oh, yeah. The other part is that you need to take about a $9M pay cut in your take home pay.

 

Mulally's comments at the analyst shindig yesterday, and other remarks subsequent to it, are that he has informed Gettlefinger where the UAW pay package needs to be, in gross amounts, and that they need to come up with a palatable means of divvying up pay, benefits, pension, etc.

 

He said that he's not drawing any lines in the sand, as far as the breakdown of pay, benefits, etc., but he has said that Ford can't pay more than the overall amount.

 

It's a pretty fair way of doing things, IMO. Sit down with the UAW and say, this is what we can do, how do you want to do it?

 

And with better access to Ford's books than anyone outside of their investment bankers, and their accountants, I think the UAW will be able to tell pretty quick if Mulally's trying to pull a fast one.

 

If I have a company that my life is tied up in and I want to retire, then I will pay whatever it takes to get the new "boss" to treat my company as his own. PERIOD! If it's 28 million or 28 billion or whatever it takes to ensure the long term success of the company I started. All this whining is stupid, if he turns Ford around who cares what he's paid. If he doesn't, then the ultimate demise of the company won't be solely the amount he was paid. You want a proffessional to come in and fix the company, you got to pay for it.

[J-150]

If I have a company that my life is tied up in and I want to retire, then I will pay whatever it takes to get the new "boss" to treat my company as his own. PERIOD! If it's 28 million or 28 billion or whatever it takes to ensure the long term success of the company I started. All this whining is stupid, if he turns Ford around who cares what he's paid. If he doesn't, then the ultimate demise of the company won't be solely the amount he was paid. You want a proffessional to come in and fix the company, you got to pay for it.

 

 

 

well said!

[J-150]

I agree. But wouldn't you want him to actually turn the company around, or at least start to, before you give him the big bucks? Do you pay the mechanic to fix your car when you first take it in, or do you wait to see if he actually fixes it? Do you give the builder of your house the full amount before he breaks ground, or when you have an occupancy permit? Do you pay the tailor before he makes your suit to your measurements, or wait until you try it on?

 

I got a million (well, maybe not that many) analogies. All of them say keep your money until you get whats promised.

 

 

 

I don't disagree Pioneer, but part of the cost in bringing in someone capable is that the pay comes up front.

 

Doesn't make it right, but thats the cost or he doesn't take the job.

[RichardJensen]

Do you pay the mechanic to fix your car when you first take it in, or do you wait to see if he actually fixes it?

Doesn't work that way.

 

Say you're in trouble. Your car is broke, but your mechanic is working on another car, one that he's already been paid to work on.

 

You think you're going to get that mechanic to work on YOUR car unless you grease his palm up front?

 

And as far as the rest of it goes, unless Mulally does long time good for the company, most of the compensation that people have gotten their undies in a twist about won't even accrue.

 

See, Mulally already HAD a job (one for which is schedule 2006 compensation was $11M). He wasn't sitting down at the temp agency reading month old copies of US Weekly and waiting for the phone to ring.

[jpd80]

Break down that $28million

 

- $7.5 million hiring bonus

- $11 million offset for forfeited Boeing performance and stock option awards

- $55,469 for relocation costs and temporary housing.

- $666,667 in base salary for 4 months (About $2 million annual)

- $920,404 in Restricted Stock Grants

- $7.8 million, current value of 3 million stock options, not yet exercisable

 

If you want top flight executives you have to pay for them and compensate any losses they incur leaving their present employer. I can see around $20 million in non recurring costs here. The $11Million offsets something he already had and lost, he received 3 million stock options not $7.8 Million.

 

The sad fact is most fans will never know how much work he put in breaking down internal empires and barriers to free flowing corporate governance.

Edited April 6, 2007 by jpd80

[focus05]

Does you boss make over 450% more than you, and manage a company that lost almost 13 Billion dollars last year, all while working for a publicly traded company?

 

I hold over 4,000 shares of Ford stock. I can bitch all I want.

 

 

If you truly own Ford shares then you should be thrilled that they have increased in value from $24,000 to $32,000 since Mulally took over. Not just because he isn't Bill Ford, but because he has forced the entrenched to start shaking things up. He has cleared the way to let Mark Fields work. He demands accountability and gets it. He understands the cost cuts that have to be made and how they can make them. Boeing, even though it isn't an auto company, has many moving parts, product development, sales, labor unions, everything that Ford has to deal with.

 

So... what has Mullaly done? He is forcing a change in coporate culture. He is requiring certain cost reductions. He is pushing new product. He is pushing new marketing strategies. He is trying to help the dealer network realign. He is monitoring car quality. He is securing cash to push Ford forward. He is forcing changes in supplier relationships and contracts. Is he actively doing any of these things himself? Yeah, some of it. But not most of it because his job as CEO is not to show up at the design office and tell them to use a 3.5V6 or add a turbo to the 2.0 or how to tweak a fender. He's not there to negotiate with every supplier. He's not there to go to every dealer and talk. He is there to delegate; and delegate tasks that will push Ford forward. And based on what I've seen so far (the delay of Edge and firing of OAC guys, the reduction of material costs, the visits to dealer networks, the securing of financing, the change in marketing strategy, the $3.8 billion of growth in shareholder value, which helps boost capital) I'd say he is worth it.

 

Talent costs money, and he looks like talent. You cannot bring someone over for nothing, and it was quite clear that no one at Ford could change things. If you brought in someone lower with less experience, it is quite possible that all the old fiefdoms would have laughed and continued obstructing progress, that you'd still be seeing crappy commercials and Ford sales dwindling even further.

 

If anyone on this board got up in front of the Cs and the VPs, they would have laughed you off the stage. But Mulally brings YEARS of work at a very high level. Sure, people on this board know product. They know marketing. They know what cars are. But running a business, bringing the organizational change that makes it run efficiently - all of your best laid schemes of a good product will be ruined by the supplier network, quality management, operating costs and the dealer network.

 

I don't necessarily agree with CEO compensation, but Mulally is not a slouch, and relative to other CEOs is being paid fairly (maybe less if this turnaround is a success). He is doing GREAT things so far. If not in products that are visible at this very moment, certainly in cost savings, restructuring, strategy and organizational flow that are visible right now and will be CRITICAL when Ford presents its financial results early next year.

 

That will in turn boost 4k shares to maybe $40,000 or $44,000 by the end of the year and give another $3.8 billion to $5.7 billion boost to shareholder value.

[jpd80]

As the stock rises, watch the difference in confidence when cash starts flowing in. Once the market is satisfied Ford has made turnaround watch the action start when the experts say BUY!

[Extreme4x4]

Pioneer, I would like to hear your presentation to a potential top notch CEO. Lets see, would it go something like this....................... "So, we would like you to come and turn our 100 year old, fiefdom entrenched company around. In turn, we will offer you nothing until you show solid progress............... you know, in the way of profits. Since the auto industry takes years to cycle, do not expect to actually earn anything for 3-4 years. Oh, and as an added bonus, you will be losing compensation/bonus's that your current job was going to pay you. So............. when would you like to start???"

 

Do you have any idea how ridiculous, and bitter you sound??? You obviously hate your job, and are incredibly envious of anyone at it who is paid more than you. After all, CEO's are only talking heads............. right???

 

It actually scares me that you work for Ford............... and I am a Ford fan. BTW, I am buying stock. Ford is looking promising for the future. I really like the direction that Mullaly is headed in.

[Mark B. Morrow]

I was going to start a separate thread for this video, but didn't want to hear the complaints:

 

Money for Nothing?

 

The newsclip is a hatchet job. You cannot compare the ridicuolus severance packages or bonus compensation paid to CEOs who have run their companies into the ground with someone who is brought in to turn a failing firm around. Look at Home Depot, USAir, United et.al. These execs were at the helm when things went wrong.

 

Mulally could have stayed at Boeing, collected his pay based on his success there and retired. After you subtract the dollars paid to reimburse him for what he gave up by leaving Boeing, his package at Ford is very reasonable. I would agree that 2007 is going to be his year. He will deserve the credit/blame for the fruits of his decisions. I am a long time Ford shareholder too.

 

I am optimistic based on what I have seen so far. Making the executive ranks take responsibility is a great start. Trashing the "way it is done here" mentality is even better.

[focus05]

Want my NetBenefits password?

 

According to Fidelity, I have lost money on Ford stock in the last 6 months. Hell, I've been loosing money on F for over 5 years. I should have my head examined for continually buying it.

 

Cumulative Total Returns </FONT></B>

as of 02/28/2007

YTD -5.49

1 Month-2.37

3 Month-2.37

6 Month-5.26

 

I'm not sure how your Fidelity is calculating this or what trades or positions you took on those shares, but if you owned 4,000 shares in August of 2006 when the stock price bottomed around $6 just before Mulally was hired, then your shares were worth $24,000. If you owned the same 4,000 shares today with Ford's stock price around $8, then they would be worth $32,000. This is 3rd grade math.

 

Changes in your positions and buys in the interim period may push your yields to negative, however, the total value of each share you owned then is worth 30% more now (this is slightly more complex than 3rd grade math). Now, it's true that volatility in Ford and that market will cause that to fluctuate, but I don't think Ford has been under 7.00 for more than one or two sessions since September, indicating that Ford stock, which was sitting around 6.00 continually seven months ago has settled well above 7.00 per share - probably around 7.50-7.70 - now. If this current trend continues, then shares might be settling around 9.00 by the end of the year with periodic ventures into $10-$11 territory, especially if UAW negotiations go well.

[jpd80]

I have had a constant buy on Ford stock since Jan. 1st, 1996. Never had a trade, sell, or transfer.

 

In that case, your shares have been through this before and now they're rising again.

Ford shares have risen to $15 twice and fallen to $6 to $8 twice in the last 7 years.

Edited April 6, 2007 by jpd80

[RichardJensen]

They want the hourly workers to take the brunt of the financial concessions that need to be made to turn the company around

Uh. Did it ever occur to you that the bulk of those concessions came in the form of paid buyouts?

 

It's not like Ford is going to try and slash and burn the remaining work force, or tell Gettlefinger he's about to get an unexpected prostate exam.

 

You know I suffered through an abscessed tooth for 4 months because I was afraid to go to the dentist, and yeah the partial was real painful for about half a minute and uncomfortable the rest of the time, but it wasn't nearly as bad as I thought it would be.

 

I don't know what you think is going to happen this fall, but the bulk of your blue-collar brethren that really had nothing to do anyway, got paid nicely for leaving, and if that's how Ford sticks it to you, well it'd be nice if they came 'round my place and stuck it to me. I'll take $130k and promise not to draw retiree healthcare from them.

[RichardJensen]

I highly doubt those that left will be counted as concessions. You can't take away from somebody that is not there anymore.

 

And, if they did tell Gettelfinger that he was going to have an unexpected prostate exam, would Alan expect him to pay for it?

1) Ford needs to cut labor costs, right? So you do what..................? Cut payroll, or cut pay? The bulk of Ford's labor cost cutting came from paid buyouts.

 

2) Of course they won't ask him to pay. He's union. It's part of the contract.

[omix-ada]

telling half of the story to make a point is akin to lying.

would you care to tell the rest of the story?

Or do you wish to continue lying?

 

 

Reading comprehension seems to be a rare skill.

 

Lying? I merely posted the link to a news story concerning his salary. I assumed you were capable of reading the story yourself. I am sorry if I errored in this assumption. I never even stated my personal opinion on Alan Mulally salary. I personally believe that compensation for any job should be tied to the growth of the company. Does any one remember Lee Iacocca turning around Chrysler? His salary was $1.00 and stock. He profited from the long term success and revitalization of the company.

[J-150]

Lying? I merely posted the link to a news story concerning his salary. I assumed you were capable of reading the story yourself. I am sorry if I errored in this assumption. I never even stated my personal opinion on Alan Mulally salary. I personally believe that compensation for any job should be tied to the growth of the company. Does any one remember Lee Iacocca turning around Chrysler? His salary was $1.00 and stock. He profited from the long term success and revitalization of the company.

 

 

 

you made your opinion clear by posting the article with the thread title that you did.

 

Sorry if I outed you.

[TheLemon]

[ViperPilot]

2) Of course they won't ask him to pay. He's union. It's part of the contract.

Actually, he's not paid by Ford, GM or Chrysler; he's paid by the membership. What happens in negotiations will not affect Gettlefinger's union-paid benefit package.

[LincolnFan]

 

Finally, French boy made something that's actually funny.

Edited April 21, 2007 by LincolnFan

[RichardJensen]

Actually, he's not paid by Ford, GM or Chrysler; he's paid by the membership. What happens in negotiations will not affect Gettlefinger's union-paid benefit package.

Sheesh. It was a joke!

[kevinb120]

A lot of it is signing bonus related. $28 mil to run an automaker, about the same Tiger gets paid to wear a Nike hat and be seen driving Buicks....