Payment for What?

According to the San Francisco Chronicle of September 9th, in the Daily Digest, Alan Mulally, the incoming new CEO of Ford, will be paid:

  • An annual salary of $2 million.
  • A signing bonus of $7.5 million.
  • $11 million to offset the compensation he is giving up by leaving Boeing.
  • $10.5 million in stock options.
  • $11 million if Ford changes control or lets him go for any reason other than “cause” before 2011.

What promises do you suppose this man is really making to the stockholders, to the customers, to the citizens of Detroit, Michigan, and the United States? That he will “try harder”? That he will turn around the situation that has been brewing at Ford for 40 or 50 years? Impossible. No single human being, from outside the company, can fulfill such a promise. If no promise of that sort is being made, then what crazy habits have we arrived at for compensating senior executives in this country? What kind of a world are we making in which business executives are paid like rock stars and world-class athletes, to “play” in games where the play of the game is private, and success is measured the way it is in a modern business like Ford.

What is the board of Ford doing? Cutting 30,000 jobs, closing 14 plants, and investing $30 million in the dream that Mr. Mulally will leap tall buildings in a single bound?

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

5 thoughts on “Payment for What?

  1. Robert Wilson

    I agree – what is he going to do for all that money? A good deal more than the 30,000 people directly “bought out” by Ford will lose their current livelihoods on the promise that this one man will turn the ship around. How many families could the payment to this one person support? What is he really going to change? Is Boeing really any better than Ford? If it is, is Boeing better because of what he did?

  2. Well said.

    My question: how long shall we (and many others) exchange such comments and mutterings before boards of directors actually have the gumption to do something about it? (or before shareholders have the gumption to force them to?)

  3. Seems to me he is not being paid as a person who makes promises and fulfills on them. Instead he is a pawn in a competitive game between big companies like Boeing and Ford where they win if they get a big name CEO. Then, the game ends and we all have to sit around and watch the messy aftermath as these fellows fail to live up to their heroic personas.

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