Ford’s CEO comp package: Two views
Posted by Marc Hodak on March 23, 2010 under Executive compensation, Reporting on pay | 
Be the First to Comment
Ford CEO Alan Mulally made the news today with a $17.9 million payday for 2009. This included a $1.4 million salary and $16.5 million in stock and options–a total of about $1 million more than Mr. Mulally made last year. The article noted, as journalists always will, that the CEO got his increase in a year when he secured significant union concessions. This brings us to the first view of his pay:
“It’s an outrage after all the sacrifices we have taken and the pay he gets,” said Gary Walkowicz, a bargaining-committee member for UAW Local 600, representing workers at Ford’s Dearborn truck plant. “His pay is coming out of our concessions.”
So, the CEO got the union to reduce their pay, and he got more pay. Ergo, his pay was coming out of their concessions.
According to this view, Ford Motors is kind of a zero-sum game; the pie is fixed, and the shareholders or the CEO get more if labor gets less, or vice versa. In this view, it’s not fair if the CEO drives down compensation to improve the profitability of the company, only to suck some of that profitability back for himself in the form of higher pay. That is the view implied by this article. It’s the view assumed by most of the readership.
Another view is that Ford is part of a market. Several markets, actually: