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.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
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 World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!