Ford had better be ready to share executive wealth with the UAW
In case you didn't notice, Ford Motor Co. released its executive compensation figures for 2010 on Friday -- the same day almost everyone was paying more attention to the industry's monthly sales performances.
But I suspect some folks at the UAW paid more attention to those Ford management compensation figures. For good reason.
Ford said CEO Alan Mulally collected $26.5 million in total compensation in 2010 -- a 48 percent gain over 2009. And that does not include the $56.5 million stock award Mulally was granted last month. Executive Chairman Bill Ford, after forgoing compensation since early 2005, decided to start cashing in last year. He received a $4.8 million salary, a $2.7 million bonus, and $19 million in stock option awards along with other compensation.
Several other Ford senior executives such as Mark Fields, Lewis Booth, and John Fleming came away with millions in 2010 as well.
Most of Ford Motor's constituency, including stockholders, many salaried workers, dealers and -- most importantly -- the Ford family will make compelling arguments that these senior executives earned every penny of this lucrative payday. No question.
And that's been the deal all along since Mulally became CEO in 2006. If the company does well, so does Mulally and his management team. Ford made a profit of $6.56 billion last year -- and would have made a lot more if it hadn't reduced its total automotive debt by $14.5 billion last year.
But here's where things get tricky.
Mulally and his executive team didn't run the most profitable company in the auto industry last year -- Volkswagen CEO Martin Winterkorn and his team did. According to Bloomberg, Volkswagen paid Winterkorn a mere $12.9 million in compensation for 2010 while his company earned $9.42 billion.
Well, if you are a union employee going into contract talks this year, you're going to want a piece of the action too. And you're not going to care if you make more than other autoworkers because your ultimate boss makes more than other auto CEOs.
Mulally and the automaker's labor negotiators have got to know the company's executive payouts will make labor talks much more expensive for the company this year -- particularly since the UAW can strike Ford. The union has a no-strike agreement with General Motors and Chrysler that stems from their government bailouts and bankruptcy reorganizations.
My educated guess is that Ford is going to offer the UAW some potentially very lucrative profit-sharing or even stock-option plans for the rank-and-file. They know they've got to let the hourly workers share in the profits. But that's not always an easy sell to workers who've sacrificed base wages and benefits for the last three to four years.
It was clear at the recent UAW bargaining convention that Ford workers want a raise and restoration of all lost benefits. Mulally's compensation in this contract year will make it hard for Ford to say no to those demands.
You can reach Philip Nussel at firstname.lastname@example.org.