Ford’s 1.4M Called Reasonable – Executive Chairman Gets Salary

In an era when pay for performance is the buzzword in executive compensation circles, it is reasonable to pay Executive Chairman Bill Ford a $1.4-million annual salary now that the Dearborn automaker's turnaround is on track, analysts said Friday.

Ford’s stock has climbed from a five-year low of $1.26 per share in November 2008 when all three domestic automakers were on the brink of collapse to $13.04 on Friday.

For the first half of the year, the automaker earned $4.7 billion, eclipsing the $834 million it earned for the first half of 2009.

On Friday, the company disclosed that it paid Ford $4.2 million as a salary for 2008, 2009 and the first seven months of this year as well as stock options valued at $11.6 million.

"The shareholders are doing very well right now and there is no question that Ford deserves money," said Paul Dorf, managing director of Compensation Resources.

Ford also was profitable in 2005, but its market share was declining and most of its profits came from Ford Motor Credit, Ford's financing arm.

That prompted Ford, who was chairman and CEO in 2005, to pledge that he would not accept a salary, bonus or stock until the company's automotive operations could consistently post a profit.

In 2006, Ford recruited Alan Mulally from Boeing and installed him as president and CEO. While Bill Ford gave up his salary as the company lost more than $30 billion from 2006 to 2008, the automaker paid Mulally millions for several years before the company's performance improved.

"Alan is worth his weight in gold and works very well with Bill," said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

Mulally accelerated a plan to cut costs and eliminate brands.

He also helped land $23 billion in loans, allowing Ford to be the only domestic automaker to go without federal emergency loans.

"They did the right things," Dorf said. "But ... the compensation committee should be held accountable for giving out what they did when the company wasn't doing well."