Ford cuts CEO Alan Mulally pay as company fails to hit performance targets

Article by Andrew Christian, on March 18, 2013

The $20.99 million compensation that Ford Motor Co. CEO Alan Mulally received in 2012 is 29% lower than the $29.5 million he got in 2011 as the company failed to hit several performance targets, according to a proxy statement that Ford recently released. Last year, Mulally had a salary of $2 million, a cash bonus of $3.95 million and stock awards amounting to $14.3 million.

Ford surpassed its goals in quality and cost performance but failed to reach its worldwide goals for profit before taxes, operating cash flow and market share. In the proxy statement, Ford said that its 2012 performance clearly shows that its management team had an excellent performance in an environment that’s highly challenging. Ford surpassed its quality targets based on what things went wrong as well as warranty expenses.

However, Ford's $8 billon profit before taxes didn’t reach its goal of $8.7 billion. Ford’s executive chairman Bill Ford received a $2 million salary and cash bonus of $1.125 million. He received a total compensation of $14.836 million composed of stock options and other performance awards. But smaller bonuses were given to Bill Ford and Mulally since Ford only posted a global automotive operating cash flow of $4.63 billion, which only accounts for 32% of its target. In addition, the company attained only 3% of its target for market share.

Also mentioned in the proxy filing are: (1) Mark Fields who was named CEO last year. He got $1.385 million in salary and a $2.34 million cash bonus for a total compensation of $8.85 million. Fields is the top candidate to succeed Mulally; (2) Bob Shanks, who has served as the CFO since April 2012, got $700,000 in salary and a $790,000 cash bonus. He received a total compensation, including stock options and other equity, of $5.1 million; (3) Jim Farley, the executive vice president of global marketing, sales, service and Lincoln, received $707,500 in salary and a $655,000 cash bonus. He received almost $4.6 million as his total compensation.

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