Yup, the new face of executive pay run amok. Now at Ford. $28M in total comp for four months of work, while the company he manages looses $12 Billion (too high for even Dr. Evil to say). I wonder if I should really care since I’m not a shareholder (probably am somewhere in my mutual funds) and I don’t ever intend on purchasing another Ford vehicle. Maybe some of that money could have gone into designing transmissions that last more than 62000 miles. Now I’m not saying that they guy shouldn’t make all the money he can, but clearly there has to be proper measurement. If you’re hte head of a company and you have a loss for that year, all you should receive is a percentage of your base pay.
In fact, compensation should reflect the true performance of a company. An executive should be paid a percentage of the profits, straight cash, on a quarterly basis when the company reports their earnings. There should be no additional perks, stocks, etc. Simply cash, a percentage of profits. If that exec feels that strongly about the company’s stock, he/she can purchase it from their salary at the regular price.
The next rule, executives can not be members of the board, and the CEO definitely cannot be chairman. Who oversee’s the CEO when he runs the board? Also, board members should not be executives at other companies, especially when it’s in the same industry. For example, the CIO of Verizon shouldn’t be on the board of Sun Microsystems when he’s purchasing Sun servers for his company. Just makes no sense.
Ford CEO Mulally got $28 million for four months on job – Apr. 5, 2007 NEW YORK (CNNMoney.com) — Struggling Ford Motor Co., which posted a record $12.7 billion net loss in 2006, gave its new CEO Alan Mulally $28 million for four months on the job, according to the company’s proxy statement filed with the Securities and Exchange Commission Thursday.
The Ford (Charts) pay package for Mulally comes on top of the $7.4 million that aerospace company Boeing (Charts) had previously reported paying him for his eight months running that company’s commercial aircraft unit before he made the move to Ford at the beginning of September.
Mulally’s pay package at Ford included a $7.5 million hiring bonus, as well as $11 million that Ford described as an offset for forfeited performance and stock option awards at Boeing. In addition he received $55,469 for relocation costs and temporary housing.
His base salary was $666,667, which works out to annual pay of about $2 million. He also received restricted stock grants, which the company valued at $920,404, as well as 3 million stock options valued at $7.8 million. The stock options are not yet exercisable, and they have an exercise price of $8.28, or about 4 percent above current prices.
L u k e n . o r g 
Do you know what happens when you based an executives salary on the profits of the company?
January 1st 2006 – Company REV’s Ridebasket’s Headquarters.
CEO – Hmmm… I’ve got to get the company’s profits up by 2.5% percent this quarter to get my pay bonus of $ 100K and 10K options that will make me… hmmmm… let’s see… a million bucks. Should I get envolved and do some detail analysis of where we can make more money or save some money? NA… too much work – screw it, I AM THE MAN. I’m going to a "conference" in the company jet and work on the Art of Golf by Butch Harmon.<BR>
March 1st 2006 – Somewhere over the West Indies via airlink fhone.
CEO on a Board of Directors conference call > Yes, I have a great plan for March to get the company back to profitability. CEO hangs up the phone.
CEO makes call to CFO and Human Resources VP > Guys, we aren’t doing so well this quarter. I need you two to RIF (reduction in work force) 5% by the end of the month. We can then write off the "repurposing" costs and the company will be 2.5% more profitable.
CEO to himself – DAMN, I’m good… what am I going to do with the 2.5 million?