Alan Mulally Makes a Killing

Why leaving Boeing may have been the Ford CEO's best decision yet.

It seems that leaving Seattle was the best thing that ever happened to Alan Mulally. In 2006, it was hard not to feel just a little sorry for the outgoing head of Boeing Commercial Airplanes. Yes, he was finally becoming a CEO—but at Ford Motor, a company immersed in the malaise of the car industry. He had been passed over for the job he was said to really have wanted—chief of the entire Boeing Company. But look at him now. He ranks as the eighth-highest-paid CEO nationwide in The New York Times' annual report on executive pay, which came out Sunday. Mulally's total compensation rose 48 percent in 2010 over the previous year—to $26.5 million.(Starbucks' Howard Schultz was the other local to make the Times' top 30 list, earning $21.7 million last year.) Mulally is widely credited with resuscitating Ford without relying on the government bailouts that saved his Detroit competitors. Yet the former Boeing man also serves as Exhibit A in the immense pay discrepancy between CEOs and their workers in the dwindling days of the recession. How did Mulally achieve his results? At least in part by winning concessions from workers, of course. A trade publication called The Truth About Cars summarizes the give-backs wrenched from the United Auto Workers in 2009: cost-of-living adjustments (COLA) were suspended; break time was limited to 40 minutes per eight-hour shift and 50 minutes per 10-hour shift; direct deposit became standard; performance bonuses were suspended for entry-level workers and Christmas bonuses suspended for all. The Easter Monday vacation day was suspended for the remainder of the contract period. Oh, and job security became a relic of a bygone era. Mulally closed plants and laid off tens of thousands of workers. Union leaders noted at the time that all the company's "stakeholders" were sharing in the pain—including its CEO. Mulally took a pay cut and got no bonus in 2009, although he still managed to earn $17.9 million in total compensation. With the era of CEO "sacrifice" officially over and the UAW heading into new contract negotiations, union president Bob King is taking a different tone. He calls the Ford chief's momentous pay increase "morally wrong."

 
comments powered by Disqus