The new CEO of Ford Motor Co., Alan Mulally has been all smiles. Why not, the automaker is paying him a bundle — $2 million in annual pay plus $18.5 million for just showing up for the job this year.
Ok, ok. It doesn’t sound like a lot when you think of the mucho grande payouts that so many corporate bigwigs get these days. But it’s sort of odd given Ford’s plans, disclosed today in the Wall Street Journal, to cut jobs and benefits for many of its workers as part of a restructuring effort.
Don’t corporate boards and executives ever learn? If you want the rank and file, and mid level supervisors to come along for the restructuring ride you have to be fair.
Let’s all play the history game. In 2003, faced with bankruptcy and general turmoil, American Airlines embarked on a $1.8 billion plan to cut wages, benefits and thousands of jobs. While this was going on, it turned out the top executives of the firm had quietly funded a pension trust to ensure their retirements and hefty bonuses, with the airline’s CEO Don Carty included in the payout. (The move led to Carty’s ouster.)
It was a slap in the face to the workers who wondered how they’d ever be able to trust the company again.
I’ve covered the airline and auto industry as a reporter, and people who work in these industries have some of the toughest jobs around. They can also be among the loyalist employees around, but they definitely don’t like being disrespected – asked to sacrifice while the top dogs are sipping 1995 Krug, Clos du Mesnil.(Really expensive champagne.)
Exactly when did it become the corporate credo that the head honchos of the nation’s mega firms had to be hooked up to the point that they’d be swimming in money?
If Mulally’s really worth the money, why not tie the big bucks to his ability to really turn Ford around?
Given the fact that he got $9.9 million in compensation in 2005 as the head of Boeing’s commercial jet building unit, he probably would have agreed to such a deal.
If he trades in his Lexus LS 430 for a Ford, like he’s been quoted as saying he’ll do, he’ll probably be okay. Sorry Alan, no Lincoln Town Car for you. How about a Taurus?
September 15th, 2006 at 3:44 pm
okay…although i am no career diva, i will agree with you. why are these big wigs getting so much. i thought ford was in trouble. how is it that they can pay the ceo so much? this is definitly a problem. they are cutting jobs but raising the salary of the ceo. does that concept help the company? i doubt it! but he is smiling so it must be working for him….
September 17th, 2006 at 5:37 am
hey mary mary . i quite agree with you. however some ceos like the ones who actually bring something to the table are worth the multiples they are paid. for instance, some investment firm ceos , and tech ceos . are paid average salaries,and paid 100% in stock . this insures that the ceo has the shareholder interst at heart.
but not to get on to my old beliefs, if ford did not have to deal with union issues , pension issues, it would not have the debt it has , and their leverage problem, and therefore would not have to be hirng a ceo for a huge package, the stock would nt be trading at 8 dollars share..
September 17th, 2006 at 5:18 pm
Alas, Ford, as other corporations, have for years had to “deal” with the vexing question of paying workers a fair wage and benefits.
September 18th, 2006 at 5:35 pm
It always makes me nuts to see how much most of these CEOs are making. It really is obscene, especially when the spotlight of layoffs and/or cutbacks or other cost-saving measures comes to rest upon their big, fat compensation packages. If some of these guys — and, rarely, gals — took a 50 percent pay cut, they could probably manage to eke out a living…
And maybe their employees could then have access to subsidized day care, or retirement packages, or better health benefits, the costs of which are currently cutting into their grocery budgets.