The overall compensation of Ford Motor Co. CEO Alan Mulally increased by 11% in 2011 but it could have been considerably higher. In its annual proxy statement, Ford said that the total compensation for Mulally is comprised of salary, cash bonuses and stock awards that in 2011 had climbed to $29.5 million from $26.5 million in 2010.
Ford said that Mulally got a salary of $2 million, cash bonuses amounting to $5.46 million, and $22 million in stock awards. However, Ford had reduced his cash bonus by 42% during a year that saw its stock dropping by 36%. The 66-year-old Mulally moved from Boeing Co. to Ford where he was able to achieve a turnaround by pursuing a globalized operations, reducing costs, and adding fuel-efficient models like the Fiesta subcompact.
Ford’s shares declined last year over uncertainty with regards to the worldwide recovery. However, its shares increased by 16% this year. Mulally is doing “a lot better” than Ford’s shareholders, according to Gary Bradshaw, a fund manager at Hodges Capital Management, which owns around 250,000 Ford shares. Bradshaw added that Mulally’s performance is excellent but it has become more difficult to justify the size of his salary and stock options when the stocks aren’t doing so well.
Ford's compensation committee considers the company's performance when deciding on the awards. Ford said that in 2011, it hastened its transformation to become a growing company under the One Ford Plan. Ford said that it has been consistent in improving results over a continuous period of time. Ford added the results have had an impact on shareholder return.
Executive Chairman Bill Ford got total compensation of $14.5 million, 45% lower than in 2010, when he got pay deferred from 2008 and 2009. For the year 2011, Bill Ford was given his salary of $2 million, bonuses amounting to $1.56 million, and $10.9 million in stock, option awards and other compensation types.