Ford will pay new CEO Mulally at least $20.5 million in first year

[SparcEE]

http://www.detroitnews.com/apps/pbcs.dll/a...PDATE/609080443

 

"Ford will pay new CEO Mulally at least $20.5 million in first year

 

by Bill Koenig / Bloomberg News

 

Ford Motor Co. will pay at least $20.5 million in the first 12 months to new Chief Executive Officer Alan Mulally, recruited from Boeing Co. to restore profit at the world's third-largest automaker.

 

Mulally will get a $2 million annual salary, a $7.5 million hiring bonus and $11 million to offset forfeited payments he would have received at Boeing, Ford said in a U.S. regulatory filing Friday.

 

Mulally's total compensation last year at Boeing, where he headed the commercial airplane unit, was $9.96 million, including $7.58 million in long-term incentive pay.

 

Mulally took over as chief executive from Bill Ford Jr., who remains as executive chairman, as the automaker reached outside its ranks for a leader for the first time since 1946.

 

Bill Ford recruited Mulally after a $1.44 billion first-half loss and amid a plan to cut 30,000 jobs and close plants to help revive North American auto operations.

 

"I'd gladly pay $21 million to get a creative, talented manager who could cut much more than his compensation out of the expense line," said Brian Bruce, who helps manage $18 billion at PanAgora Asset Management in Boston, including Ford shares.

 

At Boeing, Mulally eliminated more than 30,000 jobs to make the commercial airplane business profitable as demand slumped. Bill Ford, 49, said Mulally's experience at the aircraft maker would apply to the world's third-largest automaker. Mulally, 61, led the Boeing unit as demand for commercial planes plummeted after the Sept. 11, 2001, terrorist attacks.

 

Mulally's hiring date was Sept. 1, Ford said in the filing. That would mean he would collect about $600,000 in salary the rest of 2006. His annual salary is more than double the $825,000 he was paid last year. His hiring bonus and payment to offset potential Boeing payments are to be paid by Sept. 15.

 

Dearborn-based Ford also said Mulally will have the opportunity to earn at least $6 million in restricted stock units, at least $5 million in stock options and a target bonus of $3.5 million for 2007.

 

The company granted Mulally options to buy 3 million shares at $8.28 a share, with one third vesting after one year, another third after two and the final third vesting after three years. The options have a term of 10 years. The grant price is based on the average of the high and low price on Sept. 1.

 

He also received options for 1 million more shares, also at $8.28 a share. Those 10-year options vest depending on when Ford's stock reaches prices ranging from $15 to $30.

 

Mulally was granted 600,000 restricted stock units, of which one-third vest on Sept. 1 of each of the next three years. The value will depend on the closing price when the restrictions lapse. At today's close, the value would be $5.26 million.

 

Ford shares Friday rose 19 cents to $8.77 at 4:18 p.m. in New York Stock Exchange composite trading.

 

Bill Ford, a great-grandson of company founder Henry Ford, collected $13.3 million in compensation last year as chairman and chief executive officer, a 40 percent decline from 2004. He has taken most of his pay in options and restricted shares.

"

 

Must be nice...

 

SparcEE

[Ron W.]

Must be nice...

 

 

I would rather see Ford promote from within than hire just one more guy from outside the industry that doesn't need the money. What percentage of upper management positions are held by people that have stayed with Ford?

[bb62]

I would rather see Ford promote from within than hire just one more guy from outside the industry that doesn't need the money. What percentage of upper management positions are held by people that have stayed with Ford?

 

 

Promote from within??????????? Who could turn this around? They need someone who actually knows hopw to run a business. Ford threw out its management talent with the one-two punch of "Ford 2000" and "Jac(ass) Nasser". Their product cevelopment group had the most professional team going that led to competant CEOs like Don Peterson and Product development VPs like Lou Veraldi or Ed Hagenlocker - all with 30+ year of experience and the right balance of conservatism and true boldness - whichever was needed at the time.

 

Now the planning organization is kaputt. Guys like Phil Martens when he was PD guru had no depth to draw from he had to do everythning by himself (and quite frankly he never would have gotten where he was so soon if PD was orgainzed as it was in the early 1990s - he just wasn't ready).

 

Now who's doing the strategic planning??? NO ONE. No one in marketing is worth a damn. The same guy has been at the helm of "Marketing Plans" for the last 10 years and has accomplished NOTHING. The Executive director of PD Strategy spent most of his carrer in a PT manufacturing and engineering environment - disgusting.

 

Look at what Maryann Keller is saying about Ford - Since January, Ford has lost $1.4 billion in its North American business. Says longtime industry watcher Maryann Keller, "They have finally figured out that they have no management, no product plan, and no leadership."

[RangeRover]

Look at what Maryann Keller is saying about Ford - Since January, Ford has lost $1.4 billion in its North American business. Says longtime industry watcher Maryann Keller, "They have finally figured out that they have no management, no product plan, and no leadership."

 

Let's not be overly dramatic. I think Ford realized that they had a lack of management talent, product plan and leadership a long time ago. To say they just realized the problem and to say that they have none of those things is a bit sensational.

[RichardJensen]

Promote from within??????????? Who could turn this around? They need someone who actually knows hopw to run a business. Ford threw out its management talent with the one-two punch of "Ford 2000" and "Jac(ass) Nasser". Their product cevelopment group had the most professional team going that led to competant CEOs like Don Peterson and Product development VPs like Lou Veraldi or Ed Hagenlocker - all with 30+ year of experience and the right balance of conservatism and true boldness - whichever was needed at the time.

 

Now the planning organization is kaputt. Guys like Phil Martens when he was PD guru had no depth to draw from he had to do everythning by himself (and quite frankly he never would have gotten where he was so soon if PD was orgainzed as it was in the early 1990s - he just wasn't ready).

 

Now who's doing the strategic planning??? NO ONE. No one in marketing is worth a damn. The same guy has been at the helm of "Marketing Plans" for the last 10 years and has accomplished NOTHING. The Executive director of PD Strategy spent most of his carrer in a PT manufacturing and engineering environment - disgusting.

 

Look at what Maryann Keller is saying about Ford - Since January, Ford has lost $1.4 billion in its North American business. Says longtime industry watcher Maryann Keller, "They have finally figured out that they have no management, no product plan, and no leadership."

1) Ford's PD department did not implement the lessons learned from Team Taurus. Read "Car" to discover that. Ford's PD department was lousy throughout the 90s, stumbling onto hits, consistently executing only a few products (Mustang, and F150), and generally setting the stage for the early 00s meltdown. I dispute the idea that Ford's PD department was doing great before Ford 2000.

 

2) Phil Martens failed to turn around PD. It amazes me that people can nail Bill Ford to the wall because he didn't turn around an entire company in five years, while supporting Phil Martens who couldn't fix a single division in three years.

[Bluecon]

This is starting to look more and more like the same management that has led the Detroit Lions since 1964.

35 million to hire a CEO with no auto experience?

 

And even worse Bill Ford is still going to be involved.

 

http://www.detnews.com/apps/pbcs.dll/artic.../609070371/1148

 

 

"I don’t think that new Ford boss Alan Mulally will rescue The Blue Oval from the abyss. I have plenty of reasons for holding this opinion. Chief amongst them is Billy Ford’s refusal to step aside. By retaining his powers as Executive Chairman, Mr. Ford has more or less guaranteed a replay of the Jacques Nasser debacle, where the Ford family sabotaged Nasser’s administration (such as it was)."

 

http://www.thetruthaboutcars.com/?p=2200

Edited September 9, 2006 by Bluecon

[DCK]

Look at what Maryann Keller is saying about Ford - "They have finally figured out that they have no management, no product plan, and no leadership."

 

I don't think truer words have ever been spoken. Ford is changing for the better, but when they hit rock bottom last year those three things were 100% true

Edited September 10, 2006 by DCK

[Guest Sixcav]

The truth is we'll probably never know the whole truth, just bits and pieces of it. None of us here are present at the board meetings, privy to the phone calls, emails and anything else that goes on at that decision making level. We can speculate all we like based on what we saw in the media, but we all know how the media can get things wrong or least not all the way right. I say give this Mullaly guy his shot. He's a lot more qualified to run Ford than any of us here who are so willing to "speculate" about his capabilities.

[bb62]

1) Ford's PD department did not implement the lessons learned from Team Taurus. Read "Car" to discover that. Ford's PD department was lousy throughout the 90s, stumbling onto hits, consistently executing only a few products (Mustang, and F150), and generally setting the stage for the early 00s meltdown. I dispute the idea that Ford's PD department was doing great before Ford 2000.

 

2) Phil Martens failed to turn around PD. It amazes me that people can nail Bill Ford to the wall because he didn't turn around an entire company in five years, while supporting Phil Martens who couldn't fix a single division in three years.

 

Ford's PD department for both car and truck were doing fine through the early 90s. I would agree with you that by the mid 90s they were beginning to lose their way. Ford 2000 was indeed a catalyst to the demise of the entire organization. Many people had the idea that they had to be rotated all over the organization to develop their careers and as such ruined any continuity the older system put in place. This, among other things, ruined the development process and caused lower quality and faulty launches. The whole Ford 2000 effort was predicated on an incorrect notion - Toyota was moving from a purely functionally driven organization to a program management oriented organization. Ford assumed that the pendulum would continue to swing in that direction and thus created the market driven VCs. The sad thing is that Toyota changed their organization to something close to what Ford had before Ford 2000.

 

As for Phil Martins, you couldn't get me more wrong. I do not support anything the guy "accomplished", for he accomplished very little. His career, and the way it progressed, is part of the reason Ford is in such trouble today. The guy walked into Ford with an almost "annointed"aura surrounding him. I personally knew many better planners. His first big role as program manager for the Town Car is what killed the car for Ford. He personally advocated an exit strategy for the vehicle. Yet Cadillac was able to bring their large cars back. martens took a vehicle that brought about $1billion in before tax profits selling at about 135K per year and cut the volume in half (precisely the opposite of what Cadillac managed to achieve). He went to Mazda and did nothing (which is what the Mazda guys will tell you if you ask them) essentially trying to take credit for the things that Martin Leach did. His GPDS initiative was also devoid of all the up-front requirements that Mazda performed but that the rest of Ford refuses to put in place. In the whole, when Ford goes bankrupt, Phil Martins will be a significant reason for that event.

 

BUT, that all being said, the planning department was so denuded by the time Martens got to the VP level that he still had to attempt to do too much by himself. And that was due to the reduced role of planning since the Ford 2000 debacle. (Not that Martens helped matters by selecting people like Szopo - an engineer, to be one of his leading strategy guys).

[RichardJensen]

Ford's PD department for both car and truck were doing fine through the early 90s.

I don't agree.

 

They were going to ax the RWD fox Mustang.

 

They got the Explorer right, but got the Thunderbird all wrong.

 

They sat on the Tempo too long (it was about 12 years old when it was replaced by the Contour)

 

They sat on the Escort too long (thing was about 15 years old before it went to the Mazda B1)

 

They did not sufficiently update the Taurus in '92

 

All that is mid-late 80s screwups, on into the early 90s.

 

Then you have the '96 Taurus/Sable--vehicles so well built, and yet so poorly designed and poorly conceived that they represent sort of the pinnacle of Ford's greatness and folly all at once.

 

Ford got the Taurus right, but they failed to apply the Taurus' lessons across the board.

[Roadrunner]

<< They did not sufficiently update the Taurus in '92 >>

 

Personally, I think the 1993 Taurus is one of the nicest looking sedans built in the past 15 years. Much better than what Toyota was building until the 1998 Camry (but then they uglified it all with the 2002 refresh)