Why Mulally's $58 Million Payout Shouldn't Bother People

Alan Mullaly
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Alan Mullaly

Somewhere, Alan Mulally is reading this and cringing.

I know the Ford CEO is probably thinking, "Please don't focus on the millions in stock awards that just vested in my account."

Mulally would rather we talk about the turn around at Ford and how a once struggling company is now the envy of corporate America.

But this is really about the average person feels about corporate pay.

When Ford announced that 4.8 million shares of company stock vested with Mulally over the weekend, the payout totaled $58.3 Million dollars. At first glance it's a whopper of a number that could have made Mulally look like the stereotypical CEO getting an outrageous payout.

In reality, what I've heard has been a steady stream of "Good for him," "He earned it," "That was a great investment by Ford."

For what it's worth, I agree with all those sentiments.

Here's why.

Ford award the 4.8 million stock options to Mulally in 2009 when F shares traded at $1.86. Back then the auto industry was on the brink of collapsing and Ford was close to going into bankruptcy. Mulally steered Ford away from bankruptcy and into a rebound that has resulted in 2010 and 2011 being two of the most profitable years ever for Ford.

As a result, Ford shares have gone from $1.86 to $12.09 and the value of Mulally's stock options soared from $9.4 Million to $58.3 million ($34.5 million after taxes are withheld).

But as I said earlier, since reporting this story I have heard few complaints. And for good reason. This is a case of an executive delivering and being rewarded with the company stock appreciating in value. Tom Webb with Manheim Auctions summed it up best when he Tweeted, "(this is) 1 of those cases when the exec was really worth the comp."

It's true. So while Mulally may not like the headlines most people probably don't have a problem with it.


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