Will Ford CEO's pay cut sway UAW members?
The "we are in this together" gesture rings hollow to me. After all, Mullaly got a huge pay package when he joined the struggling car company in 2006 from Boeing Co. (NYSE: BA). Investors hoped that he would bring the same magic that earned him kudos for running Boeing's commercial plane business to Ford.
The automaker, which "promoted" his successor Bill Ford to chairman, had high hopes for Mulally too. He got a $7.5 million signing bonus as well as $11 million to offset the value of forfeited performance and stock option awards. He also received $55,469 for relocation costs and temporary housing. That's not a bad deal for someone with absolutely no experience in the auto industry.
Several months ago, Mulally pledged to take a salary of $1 if Ford takes government money. He should bite the bullet now if he really wants to show solidarity with this workers. A multi-millionaire like Mulally won't miss the cash compensation he is forgoing. Bill Ford does not collect a salary.
Of course, Mullaly is not to blame for Ford's woes entirely. He may deserve some credit for keeping the Dearborn, Michigan-based automaker in better shape than its rivals which want $39 billion in government loans to avoid bankruptcy. Ford sales plummeted 42 percent in January, outpacing General Motors Corp. (NYSE: GM), which fell 49 percent, and Chrysler L.L.C. which dropped 55 percent.
Nonetheless, Mullaly has been paid remarkably well for running a company that lost $14.6 billion in 2008. Bloomberg estimates his total 2007 compensation at $21.7 million in total compensation. Shares are down more than 69 percent over the past year though they have rebounded recently amid hopes that the company would benefit from the economic stimulus.
For autoworkers, the last few years have filled with job cuts, salary cuts and reductions in their pensions. Of course, there have been tens of thousands of layoffs. Judging from the media reports, Ford workers are about to experience even more pain.
"Local officers of the United Auto Workers, the automaker's biggest union, also yesterday approved concessions and set March 9 as a target date to get approval from rank-and-file members," Bloomberg News reported. "The concessions include buyouts worth as much as $75,000 and cuts in overtime and layoff benefits, people familiar with the tentative agreement said."
The UAW members are the ones sacrificing here. Ford's top executives are merely being inconvenienced.