CEO gets $28.2 million - Ford package give Mulally soft landing from Boeing to save automaker

The struggling Ford Motor Co., which posted a record $12.7-billion loss in 2006, agreed to pay its new CEO, Alan Mulally, more than $28 million to help rescue the 103-year-old automaker, according to a Thursday filing with the U.S. Securities and Exchange Commission.

Mulally, a former Boeing Co. executive who was the keynote speaker at the New York auto show this week, publicly accepted the Ford job in September.
 
While his annual salary is set at $2 million, his compensation package for last year included $666,667 in salary for the final quarter of the year, as well as a host of other add-ons. That included bonuses totaling $18.5 million -- a $7.5-million hiring bonus and another $11 million to offset stock options and other compensation he forfeited when he left Boeing.
 
Ford also booked $8.68 million for Mulally's stock options and other stock-based awards. The remainder of his compensation, about $335,000, included $172,974 for his required use of the corporate aircraft and $55,469 for relocation costs and temporary housing.
 
The federal regulatory filing also laid out what Mulally would receive if he were terminated "not for cause" or for "good reason," such as a change in control, at the automaker. His severance package will be worth $27.5 million, including salary, incentive-based pay and stock and options. If he is terminated "for cause," however, he would receive nothing.
 
When considering the 4.6 million stock options and awards Mulally was given in 2006, and their fair value on the date they were granted, Mulally's compensation package was worth an estimated $39.1 million last year.
 
Daniel Moynihan, a principal at Compensation Resources Inc. in New Jersey, which specializes in executive compensation, said Ford had to pay Mulally that kind of money to attract him to the troubled company from Boeing, where he worked for 37 years.
 
"It takes serious money to do that," he said, noting that the amount was similar to what Hewlett-Packard Co. paid its former CEO Carly Fiorina to leave Lucent Technologies Inc.
 
Meanwhile, Mark Fields, Ford president of the Americas, received a total of $5.6 million in 2006. In addition to his $1.2-million salary, the expense for his stock options and other stock-based awards totaled $567,308.
 
He also received $2.7 million in performance-based compensation, which included a $375,000 payment under the company's annual incentive compensation plan and a cash settlement of $2.3 million under the 2006-2008 Senior Executive Retention Incentive Arrangement for certain executive officers.
 
The Americas division, which manages operations in the United States, Canada and Mexico, was the company's most troubled, posting a pre-tax loss of $5.6 billion in 2006. But Fields' senior executive incentive retention award was based on his performance on the following objectives related to the Way Forward restructuring plan, which aims to make Ford's North American unit profitable again by 2009:
 
Reduction of manufacturing capacity, as measured by plant closings, which represented 75% of his award.
 
Completion of Automotive Components Holdings transactions, which represented 25% of his award. ACH, as that Ford subsidiary is called, aims to sell or close former Visteon Corp. plants and facilities that the parts company and Ford spin-off gave back to Ford as part of an agreement.
 
"Each of these metrics was designed to influence executive behavior to transform Ford's business into a more efficient global enterprise," the federal filing said. Fields' compensation also included an increase of $437,318 in the value of his pension benefits. The remainder of his compensation totaled $656,791, including $517,560 for personal use of the company aircraft, a perk he gave up after public criticism of his weekend trips home to Florida.
 
Bill Ford, executive chairman and former CEO, received no cash salary, bonus or other awards in 2006. His 2006 compensation, however, totaled $10.5 million, which came from previous stock awards, options and other compensation. The company spent $185,232 on air travel for Bill Ford, and $85,708 for his security in 2006.