Ford CEO Alan Mulally called out as a tax dodger

[Catalepsy]

There's a very simple test. Can anyone else do a better job? Is it worth the risk to switch up?

 

It's strange how we are evaluating how much other people should get paid. Maybe we should all post our position and compensation and let everyone else judge our worth as well. LOL

 

 

Thank God we all don't think alike. As with most threads online, the subject got expanded to include all CEO's in general and how many are overpaid and underperform. Furthermore, many are rewarded many more millions when they fail and are booted out. And lots of this doesn't sit well with shareholders. Also add in the CEO's who decide to merge with another company, take on huge amount of debt that is dubious at best, punish share price, eliminate scores of employees, reward Wall Street underwriters, and skirt anti trust issues. As for Mulally, maybe he is worth every penny, maybe not. As the years pass and how Ford performs over coming quarters, we will see if he's worth the many, many millions he makes every year.Some say Ford will post better operating profits in 2012 than 2011, some say not. It will also be interesting to see if Ford's quality ratings start to go back up, or continue to go down. I would suspect not since Ford is launching so many all new vehicles. I certainly rate CEO on share price, profitablilty, debt, quality of product, relationship with union, market share, and so on. Yeah, Mulally has been exceptional in most areas, but exactly how much that is worth is the business of shareholders as they do own part of company technically even though only a few show up at shareholder meeting since Ford decided to move way off to Delaware.

[Mark B. Morrow]

It wasn't always like it is now. CEOs didn't make such huge sums in comparison to the average worker until the 1980s. In 1965 an average CEO made 24 times the pay of the average worker. Did we have rich people in 1965? you bet. Most of the really rich didn't make their fortunes running companies they didn't own or create. The great fortunes in America were made by people who created something, not managers. Ford, DuPont, Carnegie, Frick, Vanderbilt, etc. managed for the long term, not the next quarter's bonus schedule.

 

The reason Ford was able to shake American industry with the $5 day wage in 1914 was that he was creating his own customers. It was a long view strategy that enabled him to have the pick of the workforce and cut his costs in training and turnover. At $5 a day the people who built Fords could own them, and homes, and other consumer goods. The manufacturers of other products had customers and they raised the pay of their workers to compete and those workers bought Fords and other products. That commerce flooded up the economy. It was the opposite of the "Trickle Down" nonsense.

 

By 1989, the ratio of CEO pay to the average worker had nearly tripled to 71 times and by 2000 was at 300 times the worker's average. Did CEOs become that much smarter between 1965 and 2000? I don't think so.

 

There was a rockstar mentality that infected business, helped along by interlocking boards that approved each other's pay scales. The standard for rating CEO performance became short term gain in stock price or the ability to fend off takeovers. This also led to the greenmailing of leveraged finance artists like Boesky, Milken, Dunlap, Pickins and the boys at Goldman Sachs and Bain Capital.

 

These players didn't create, they looted. Being profitable wasn't even enough if there was a quick score to be made.

 

Pittsburgh was particularly hard hit since it was the country's third largest corporate HQ for Fortune 500 companies in the 60s and 70s. The buyouts and mergers of companies like Gulf Oil didn't create jobs or wealth except for a tiny number who gamed the system.

 

The appetites were never sated and the political power of the business titans translated into abandonment of safety valves like Glass-Steagle and oversight of commodities trading and creation of the casino games of gambling on unrestricted Credit Default Swaps, tranches of Collateralized Debt Obligations of which no one can explain who own what.

 

When the game went bust in 2007-2008 the players came up with new dodges like the Robo-signing scandals to cover up their crimes. The final kicker was Too Big to Fail. The threat that if the biggest crooks weren't bailed out and made immune from prosecution, they would crash the economy and bring on a catastrophic depression.

 

Was America really such a bad place to do business in 1965?

Edited April 16, 2012 by Mark B. Morrow

[Catalepsy]

...World is a lot different now. It isn't just USA any more, you're now dealing at items at an international scale. CEO's job have expanded massively while the average worker still does what that average worker does for a living. Pre-80s CEOs are still working in an largely isolated US-near region Euro environment. Now the world has drastically changed.

[Mark B. Morrow]

...World is a lot different now. It isn't just USA any more, you're now dealing at items at an international scale. CEO's job have expanded massively while the average worker still does what that average worker does for a living. Pre-80s CEOs are still working in an largely isolated US-near region Euro environment. Now the world has drastically changed.

 

 

That doesn't explain the gap between CEO pay at Toyota and GM.

 

From 2008:

 

http://joulesbeef.newsvine.com/_news/2008/11/19/2128569-ceo-of-gm-makes-14-times-what-ceo-of-toyota-makes-but-we-are-to-be-outrraged-the-employees-get-double-what-toyota-employees-make

 

2010:

 

http://www.businessweek.com/magazine/content/10_28/b4186014341924.htm?chan=magazine+channel_news+-+global+economics

 

http://voices.washingtonpost.com/ezra-klein/2010/07/ceo_pay_in_japan.html

Edited April 16, 2012 by Mark B. Morrow

[SoonerLS]

It was the opposite of the "Trickle Down" nonsense.

Actually, it is the epitome of trickle-down. It all started with Henry Ford investing into his company and his employees; you don't get any more "trickle down" than that.

 

As for the hullabaloo about Mulally taking chartered flights instead of flying business class, that's a load of horsefeathers--if he's on a commercial flight, he is essentially incommunicado for the duration, whereas he can still be working on Ford business on a chartered flight. He certainly can't be dealing with confidential Ford issues on a commercial flight; that really is a security risk.

[akirby]

That doesn't explain the gap between CEO pay at Toyota and GM.

 

From 2008:

 

http://joulesbeef.newsvine.com/_news/2008/11/19/2128569-ceo-of-gm-makes-14-times-what-ceo-of-toyota-makes-but-we-are-to-be-outrraged-the-employees-get-double-what-toyota-employees-make

 

2010:

 

http://www.businessweek.com/magazine/content/10_28/b4186014341924.htm?chan=magazine+channel_news+-+global+economics

 

http://voices.washingtonpost.com/ezra-klein/2010/07/ceo_pay_in_japan.html

 

I could be wrong but I'm reasonably sure Japan is a totally different country.....

[grbeck]

I can understand the concern over the disconnect, in so many cases, between CEO performance and pay.

 

I agree, for example, the Rick Wagoner's pay and what he ended up taking from General Motors were wildly out of proportion to his actual performance.

 

The solution usually put forward is higher income taxes on the rich, which has two problems.

 

One, not all rich people are CEOs.

 

Two, I'm not seeing how a higher federal income tax rate would have inspired Rick Wagoner to do a better job at GM.

Edited April 16, 2012 by grbeck

[SoonerLS]

ALL MEN ARE CREATED EQUAL, CEOs do not deserve special treatment from the government. their vote counts the same as my vote.

All men are CREATED equal; what we do with it after that is up to us. And Ford is not getting special treatment. They're taking advantage of the rules of the game, to be sure, but that doesn't preclude you from doing the same if you had the wherewithal to do it--and that is equal treatment under the law.

[Mark B. Morrow]

I could be wrong but I'm reasonably sure Japan is a totally different country.....

 

 

Two worldwide car makers battling for the No. 1 spot. Seems like an apt comparison. Look at the last 15 years. Which company did better? Which company did better in the USA? Which one is sitting on Billions and which one owes Billions?

 

Looks like we should be outsourcing our CEOs to Japan. Their CEOs are a bargain.

 

The very same people who have no problem outsourcing workers to the lowest cost country shouldn't have a problem doing the same with management.

[Mark B. Morrow]

Actually, it is the epitome of trickle-down. It all started with Henry Ford investing into his company and his employees; you don't get any more "trickle down" than that.

 

As for the hullabaloo about Mulally taking chartered flights instead of flying business class, that's a load of horsefeathers--if he's on a commercial flight, he is essentially incommunicado for the duration, whereas he can still be working on Ford business on a chartered flight. He certainly can't be dealing with confidential Ford issues on a commercial flight; that really is a security risk.

 

 

Henry's plan wasn't trickle down. It was the exact opposite. He raised the purchasing power of the employees at a time when the going rate was much lower and they bought his products making him one of the world's richest men. BTW he did this at a time when income taxes only applied to the rich.

 

Honestly I don't care if Mulally takes chartered flights or flys first class on commercial airlines. The issue is whether it should be taxed as income. If I get a company car as part of my employment I would be taxed on a portion of the value of that perk.

Edited April 17, 2012 by Mark B. Morrow

[akirby]

Two worldwide car makers battling for the No. 1 spot. Seems like an apt comparison. Look at the last 15 years. Which company did better? Which company did better in the USA? Which one is sitting on Billions and which one owes Billions?

 

Looks like we should be outsourcing our CEOs to Japan. Their CEOs are a bargain.

 

The very same people who have no problem outsourcing workers to the lowest cost country shouldn't have a problem doing the same with management.

 

Different country, different culture. Japanese CEOs can't run American companies any more than American CEOs could run Japanese companies.

 

Not saying that American CEOs are not overpaid (in general) but using Japan as a comparison isn't valid.

[Biker16]

All men are CREATED equal; what we do with it after that is up to us. And Ford is not getting special treatment. They're taking advantage of the rules of the game, to be sure, but that doesn't preclude you from doing the same if you had the wherewithal to do it--and that is equal treatment under the law.

 

I should not be taxed to commute to work everyday.

[RichardJensen]

I should not be taxed to commute to work everyday.

Then become so important that you need bodyguards.

 

Look, life's not fair. It's not even remotely fair and it hasn't been for a long, long time.

Edited April 17, 2012 by RichardJensen

[fordmantpw]

Two worldwide car makers battling for the No. 1 spot. Seems like an apt comparison. Look at the last 15 years. Which company did better? Which company did better in the USA? Which one is sitting on Billions and which one owes Billions?

 

Looks like we should be outsourcing our CEOs to Japan. Their CEOs are a bargain.

 

The very same people who have no problem outsourcing workers to the lowest cost country shouldn't have a problem doing the same with management.

 

And Mulally hasn't been CEO of Ford for 15 years either. Since Mulally took the helm, I think it is safe to say that Ford has outperformed Toyota.

 

Then become so important that you need bodyguards.

 

Look, life's not fair. It's not even remotely fair and it hasn't been for a long, long time.

 

 

Amen!

[xr7g428]

Henry's plan wasn't trickle down. It was the exact opposite. He raised the purchasing power of the employees at a time when the going rate was much lower and they bought his products making him one of the world's richest men.

 

Mark you have got to be kidding. That statement fails in so many ways...

 

For "trickle up" to occur Henry would have started the business by over paying his labor force in anticipation that they would then be able to afford his products. Clearly this was not what happened.

 

Ford made the money first, and then started using it to improve the quality of life for the employees, first by reducing the length of the work day from 9 hours to 8 (to facilitate three shifts...) and then increasing their pay and benefits. This is a trickle down as you can get.

 

His employees did purchase Ford products, but the number was inconsequential to the over all success of the company. What was important was that his customers, who by and large earned far less than his employees, could afford to buy the product. The whole concept of a perpetual motion company where employees buy enough product to fuel the company is like a snake swallowing its own tail: it just doesn't work.

 

Ford didn't pay every body the premium wage. As the number of cars built per employee exploded, he realized that those employees were both more valuable, and also more critical to the success of the company. He could afford the best and that is what he got for his money. The demands that he made on those who got the premium became so severe that it helped spark the union movement within Ford.

 

Ford's mass production eventually revolutionized the entire automobile industry. His Piquette plant operation used 450 workers to produce 10,607 vehicles in 1908. By 1921, 32,679 workers at Highland Park produced 933,720 vehicles. Ford's market share rose from just over 9 percent in 1908 to 48 percent by 1914.

 

With mass production putting more money into his bank account, Ford stunned the world in 1914 by increasing workers' pay to $5.00 per day. The raise allowed his workers to purchase a new Model T with the equivalent of only four months' pay. Ford also instituted an on-sight safety and health department, hospital, drug store, butcher shop, grocery, shoe store, and a trade school for boys, as well as two factory apprentice schools for adults.

[Extreme4x4]

I get so tired of these same inane class warfare/jealousy posts, that I could scream.

 

Why is a CEO paid what he is?? Because that is what it takes to attract a really good one. Top CEO's in this world economy are few and far between. If you tell a potential company saver that you really want him to work for your company, and you are willing to pay him 1/4 of the going rate, and................ oh yeah, you are going to have to uproot your family and move it to a city that looks like a war zone on your own dime, fly first class on commercial airlines even thought it could constitute a security risk, and only get paid if the company does very well, which may or may not be seen for years after you leave the company.................... exactly how many top notch CEO's are you going to attract??

 

On that same note, no company hires a CEO banking on the fact that he is going to suck, and take the company with him. Compensation packages are based on the going rate, along with the risk involved in being CEO of said company. A CEO of today is a ridiculously complicated affair, and much can happen out of your control. Golden parachutes were designed based on the CEO you hire being successful. Unfortunately they also apply if you suck. You just don't get as much. Also, remember that much of the compensation is often stock options that cannot be excercised for years, which will make the future pay out look very skewed.

 

As for the Japan comparison.................... you like how they do it better, move over there. In Japanese culture, being CEO is an honor of the highest magnitude. They are often treated like kings. Much of their compensation is not cash based, but is perks that noone sees. Everything that CEO's here make is 100% transparent, and everyone knows what everyone gets. People know the base salary and bonus's that Japanese CEO's get, but nothing about the perks, as they are not disclosed. Japanese tax law is very different from ours. You cannot apply our tax code to Japanese compensation.

 

I have a suggestion to those who spend so much of their time begrudging what others have.................... stop it. You will be a much happier person. You want what they have, then go after it. Nothing will just be bestowed on you because you decided to suck air. Noone is truly special, as that is something that is achieved, and not bestowed, and not everyone wins. However, anyone can make something of themselves.

 

Basically, be thankful for what you have. It is way too easy to take everything for granted, until it is gone.