Ford Motor Company (F): Is The Company’s CEO Alan Mulally Overpaid?

Over the past 30 years, the U.S. has seen CEO compensation rates increase quicker than ever. Intense debates have raged throughout the country over CEOs who were setting their own outrageous pay scales. It’s an especially a hot topic when companies fail under terrible management, as was the case with General Motors Company (NYSE:GM) and Chrysler. Ford Motor Company (NYSE:F) avoided bankruptcy and a taxpayer-funded bailout, but does that justify Alan Mulally’s $20.8 million compensation?

Ford Motor Company (NYSE:F)Comparisons
To put that figure in perspective, let’s look at other CEOs across Detroit. GM CEO Dan Akerson received $11.1 million in 2012, barely over half of Mulally’s pay. In fact, if you combine the three top salaries at GM — $11.1 million, $6.6 million, $5.4 million — you still barely top Mulally’s pay alone.

The story is similar at Chrsyler, where the CEO hasn’t taken a cash salary since he came on board in 2009. If you go down the list of other top executives at Chrysler, you find that Mulally’s pay is almost double that of the top three salaries combined. There is a caveat here, as Chrysler’s CEO gets a big paycheck from also being the Fiat CEO — for a combined total of $22.2 million in compensation. That’s right in the realm of what Mulally received.

Part of the reason GM’s CEO pay looks so much lower is that the U.S. Treasury — and rightfully so — has to approve the pay scales of GM’s top executives. The government will lift the pay restrictions when its remaining shares of GM are sold off.

Worth every penny
As a shareholder in both Ford Motor Company (NYSE:F) and GM — as well as a taxpayer — I strongly believe Mulally deserves to be paid much more than his counterparts. Consider that the U.S. government is likely to lose around $11.5 billion out of the nearly $50 billion spent to save GM. Thanks to Mulally and his decisions, there’s no such situation with Ford.

When Mulally came on board in 2006, he took out a huge loan to help fund the company’s restructuring. It was a lifeline that Ford Motor Company (NYSE:F) soon needed, as the automaker would lose $12.6 billion that year — nearly a $2,000 loss for every vehicle sold. When taking out the loan, Mulally said he wanted to make sure the company could survive unforeseen events — like a recession. As we all know, there was indeed a huge recession waiting right around the corner.

Through Mulally’s “One Ford” strategy, Ford was able to fix its massive losses and returned to profitability by 2009. It was an incredibly quick turnaround for a company that had long been producing terrible vehicles. That’s what a good leader and CEO does, and those results will get you paid — and handsomely. In reality, Mulally’s compensation isn’t that outlandish and doesn’t even rank him in the top 50 on Forbes‘ 2012 CEO compensation list.

Bottom line
When investing, the most important thing — in my opinion — is finding proven and talented management. Ford’s executive team is second to none in Detroit and has positioned Ford to succeed for many years to come. Ford Motor Company (NYSE:F) is led by the industry’s best CEO, and I’d be thrilled to give him a large raise — if only he would agree to delay his retirement.

Yes, Mulally makes a lot of money, but he’s earned every penny.

The article Is Ford CEO Alan Mulally Overpaid? originally appeared on Fool.com.

Fool contributor Daniel Miller owns shares of Ford Motor Company (NYSE:F) and General Motors. The Motley Fool recommends Ford and General Motors and owns shares of Ford.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!