Is Ford Motor’s executive compensation excessive? It depends on where you sit.
In the bizarre world of 0.1-percenters, Ford Motor Company cut CEO Alan Mulally’s compensation by almost 30% because the company missed its 2012 profit, cash flow and market share goals.
Even so Mulally earned $2,000,000 in salary and $3,950,000 in cash bonus in 2012. His total listed compensation in 2012 – including the grant date value of long-term stock options and other performance-based equity awards – was $20,995,806. This is a drop from his $2 million in salary, $5.46 million in bonus and $22 million in other compensation for 2011. Ford Motor pretax profit dropped 9% last year to $8 billion as European losses grew. (Read AutoInformed on Ford Makes $8 Billion in 2012 – Almost all in North America)
Bill Ford, executive chairman and the great-grandson of Henry Ford, earned $2,000,000 in salary and $1,125,000 in cash bonus in 2012. Bill Ford’s total listed compensation – including the grant-date value of long-term stock options and other performance-based equity awards – was $14,836,013. While a grand total of only 63 people bothered to attend the Ford Motor Company annual meeting of shareholders last year, 29.5% of Ford investors voted against Ford family control of the company through their holdings of Class B stock. The Ford family gets 16 votes per share of B. Common stockholders get one vote per share. The disparity allows the Ford family to retain control of the publicly held automaker. The proposal is bound to resurface. The Ford Motor Company Board of Directors reinstated a dividend in 2012 and doubled the dividend during the first quarter of 2013, providing a financial return to the family and other investors. (Read AutoInformed on Ford’s Mulally to Remain as President CEO through at Least 2014 and Thirty Percent of Ford Shareholders Vote against Family Control)
Ford remains heavily dependent on the slowly recovering North American auto market, where it earned $8.3 billion, with an operating margin of 10% on sales of 2.8 million vehicles during 2012. Because of Ford’s 2012 financial performance, the company will make profit sharing payments to 45,800 U.S. hourly employees of $8,300 each. Ford expects similar North American results in 2013, with perhaps a profit increase if the pickup truck market – where it is the sales leader – continues to recover.
Ford Europe lost a breathtaking $1.8 billion in 2012, with an operating margin of -6.6% on sales of 1.35 million vehicles. The loss was much higher than Ford had forecast and is the result of the continuing deterioration of the European economy, which is outpacing Ford’s efforts to trim costs. Ford now expects full year 2013 results for Europe to be a loss of about $2 billion, compared to prior guidance of a loss about equal to 2012. The European market is now tracking sales volumes last seen in 1995. Ford said it expects the European market to hit bottom this year at about 13-14 million units. Worrisome is the pushing back of the launch of the New Mondeo until 2014 in an attempt to trim costs.
Mark Fields, Ford chief operating officer and heir apparent to the 67-year old Mulally, earned $1,385,833 in salary and $2,340,000 in cash bonus in 2012. His total listed compensation – including the grant-date value of long-term stock options and other performance-based equity awards – was $8,854,065.
Bob Shanks, Ford executive vice president and chief financial officer, earned $700,000 in salary and $790,000 in cash bonus in 2012. His total listed compensation – including the grant date value of long-term stock options and other performance-based equity – was $5,181,848.
Jim Farley, Ford executive vice president, Global Marketing, Sales and Service and Lincoln, earned $707,500 in salary and $655,000 in cash bonus in 2012. His total listed compensation – including the grant date value of long-term stock options and other performance-based equity awards – was $4,597,017.
Lewis Booth, retired Ford executive vice president and chief financial officer, earned $312,500 in salary and $234,375 in cash bonus in 2012. His total listed compensation – including the grant date value of long-term stock options and other performance-based equity – was $3,103,087.
