In 2008 Ford Looses $14.5 BILLION, CEO Makes $2 Million Salary Plus Options

DEARBORN, Mich. March 24, 2009; Kimberly S. Johnson writing for the AP reported that Ford Motor Co. President and CEO Alan Mulally received compensation valued at $17.7 million in 2008, down more than 22 percent from the prior year, as the automaker struggles amid the worst U.S. auto sales slump in 27 years, according to a federal regulatory filing published Tuesday.

The majority of his package came in stock options and awards valued at $14.6 million. Those options are underwater, as the value of company stock has dropped over the last year from the exercise price of $6.14 per share.

Mulally, who joined Ford two years ago from Boeing Corp., earned $2 million in salary but did not receive a bonus. The automaker lost $14.6 billion in 2008, its worst annual loss in its 105-year history, as its cash reserves dwindled to $13.4 billion at year's end.

Mulally saw his overall compensation fall in 2008, compared with the $22 million he earned in 2007, as the company continued to falter as tighter credit markets and a weak economy depressed sales. Ford sold 1.98 million vehicles in 2008, down 20.5 percent compared with 2007.

His compensation included $2 million in salary in 2007 and a $4 million bonus. The company also gave him stock options and awards valued at $12.3 million at the time they were granted, in March 2007.

None of the company's executives received bonuses in 2008. All of their stock awards and options are underwater.

Last month, the company said that Mulally would take a 30 percent pay cut for 2009 and would again forgo a bonus. Executive Chairman Bill Ford Jr. has had his salary and bonuses set aside since 2005. He will be paid retroactively from 2008 when the company turns a profit.

In the proxy submitted to the Securities and Exchange Commission, Ford said it is seeking shareholder approval to issue up to 305 million new shares this year to the United Auto Workers union. The automaker reached an agreement to make up to 50 percent of total payments to a union-run trust for retiree health care benefits in stock, in an effort to ease the burden on the company's cash flow.

Ford's board of directors is asking shareholders to vote in favor of the proposal that would allow payments to be made to the trust in stock this year and in the future. It has the option to pay up to $610 million of a December payment in stock, for which it must issue the new shares.

Mulally also received a little more than $1 million in other compensation or perks which include: $344,109 for the use of company and personal aircraft, $112,114 for home security and $109,697 for temporary housing, as he relocated from his home in Seattle.

Ford said it got rid of its corporate jets in 2008 after congressional leaders criticized auto executives for using such aircraft to fly to Washington, D.C., to ask for government aid. Mulally testified at the hearings "in support" of the industry, but the company doesn't plan on needing or asking for government aid.

Ford is in the process of selling its corporate aircraft and will pay the cost of chartered flights for Mulally because "company policy does not allow Mulally to fly commercially due to security concerns," said Ford in the proxy.

The Associated Press calculates total pay including executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock and options awards granted during the year. The calculations don't include changes in the present value of pension benefits or the company's cost of stock and options granted before 2006, and the figures can differ from the company's total.

Ford also announced that its annual shareholder meeting will be held May 14 at the Hotel DuPont in Wilmington, Del.