Why Ford Motor Company (F)’s CEO Is Worth Every Cent

This month, when Ford Motor Company (NYSE:F) releases its documents and reveals Alan Mulally’s compensation, two things are guaranteed. One is that Mulally makes a lot of money , and the other is that people will complain that it’s too much money for one executive to earn.

My response to the complainers? Get over it.

In fact, let me show you why Mulally’s worth every single dollar as we review Ford under Mulally’s reign over the past six years.

History lesson
When Mulally first took over in September 2006, he had quite a hill to climb. Ford had long since deteriorated from the company that invented the assembly line and envisioned an automotive industry far ahead of its time. In 2006, Ford reported a $12.6 billion loss, almost $2,000 for every car or truck sold that year. That’s a staggering amount, and it was the worst loss in more than 100 years of Ford’s history. From 2006 to 2008, the company managed to lose a whopping $30 billion.

Now, take a look at how things have changed under Mulally.

The spike in 2011 was due to a one-time write-off, but you can clearly see the incredible turnaround. The stock price has reacted as well, gaining more than 50% since 2006.

From red to black
At the end of 2008, in the midst of a recession, Ford announced that it was confident it would return to profitability by 2011. It was hard to believe Ford Motor Company (NYSE:F) at the time, since GM and Chrysler had asked Uncle Sam for billions to stay afloat, and Detroit’s Big Three could barely give cars away. Yet a mere year later, Ford was able to report its first annual profit – for the full year 2009 — in four years. It was two years ahead of schedule because of $5 billion saved in manufacturing and advertising cuts. It also benefited from a $1.3 billing profit from Ford Credit, which is now helping offset losses in Europe.