Tag Archive | "Alan Mulally"

Ford CEO Fields Received $18.6 Million in 2014 Compensation


Ford Motor Co Chief Executive Officer Mark Fields made $18.6 million in salary and other compensation last year, below the $23.2 million that predecessor Alan Mulally received in 2013, the company said on Friday, reported Reuters.

Last year’s compensation for Fields, 54, was for half the year as CEO and half as chief operating officer. For 2013, he made $10.2 million as COO.

Mulally, who was replaced by Fields on July 1, made $22 million in salary and other compensation for 2014. Ford’s board decided he deserved a full year’s worth of stock awards because the company felt his impact for the full year, a spokesman said.

Earlier this month, Fiat Chrysler Automobiles said its CEO, Sergio Marchionne, received 31.3 million euros (about $38 million at end-2014 exchange rates).

General Motors Co has said its CEO, Mary Barra, would make about $14.4 million for 2014. The company has not yet disclosed her specific 2014 compensation.

Fields, Marchionne and Barra will have their compensation compared with that of unionized assembly line workers ahead of and during this summer’s labor talks with the United Auto Workers.

The Center for Automotive Research last week estimated that Ford labor costs for each of its U.S. union workers averaged $57 per hour, including benefits. Hourly pay is between $15.78 and $28.50 for Ford line workers.

Ford Executive Chairman Bill Ford made $15.1 million in 2014, up from $12 million in 2013.

“We remain absolutely committed to aligning executive compensation with the company’s business performance and to tying a significant portion of executive compensation to long-term shareholder value,” the company said in a statement.

Ford executives are compensated in part on meeting performance targets. The company achieved 91 percent of the targets last year, compared with 112 percent in 2013. It surpassed targets for automotive cash flow, Ford Credit earnings and quality, but missed on automotive revenue and operating profit margin.

The company’s pretax profit in 2014 was $6.3 billion, down from $8.6 billion the previous year, while net income fell to $3.2 billion from $7.2 billion. North American pretax profit in 2014 was $6.9 billion.

Ford shares closed on Thursday at $16.01, compared with $15.25 a year ago.

Ford will hold its annual shareholders meeting in Delaware on May 14.

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Ford Names Mark Fields as CEO


Via The Wall Street Journal

Ford Motor Co. confirmed Thursday that Mark Fields, its chief operating officer, will replace Alan Mulally as chief executive, effective July 1.

The Wall Street Journal had reported last month that Mr. Mulally would leave the company earlier than expected and as soon as July, after a more than seven-year run in which he oversaw a significant expansion of the U.S. auto maker.

Mr. Fields, who is 53 years old, is a Ford veteran who survived management turmoil in the years before Mr. Mulally’s 2006 arrival from Boeing Co. Mr. Fields, the company’s operating chief, has won praise along with Mr. Mulally for getting Ford’s diverse operations to function as a single business with shared parts, models and goals.

Mr. Fields will also be named president and will join the company’s board. Mr. Mulally said he won’t retain his board position and isn’t sure what he will do when he leaves the company.

Ford said the planned transition in July is about six months earlier than previously expected, following Mr. Mulally’s recommendation to accelerate the timetable.

“We’ve had very few, maybe never, had a planned and smooth transition, all the way back to my great grandfather,” Chairman Bill Ford said at an event announcing Mr. Mulally’s departure.

“That’s why this transition is so gratifying to me. Mark has been Alan’s partner every step of the way. People are always asking, ‘Gee, when Alan leaves, is the culture going to change back?’ Mark has been an architect of that culture along with the management here,” Mr. Ford said.

Mr. Mulally, 68, will leave Ford in a good position, with a booming business in China, record profit in North America and a European operation on the mend. Ford’s board met Wednesday and approved Mr. Fields as the CEO. On April 25, Mr. Mulally said there had been no change in his plan to stay through the remainder of 2014.

Mr. Ford said the board looked at outside candidates at some point but quickly decided that Mr. Fields “was by all measures, not only the best candidate, but a fantastic candidate.”

Mr. Fields is expected to step easily into his new role. He has been running the company’s weekly business review—Mr. Mulally’s signature creation—for more than a year. He also created his own Wednesday morning meeting with key executives to regularly receive updates on the company’s product launch schedule.

Mr. Fields said there won’t be a new chief operation officer named and he has no plans to change any management team positions.

Before becoming operating chief, Mr. Fields served as president of the Americas division. He previously guided the product-led transformation of Ford’s European operations.

Among Mr. Fields’s first challenges will be the budding political crisis in Russia, where the company has invested hundreds of millions of dollars, as well as currency devaluations in South America that are hurting profit. He also must manage the rollout of the company’s 2015 aluminum F-150 pickup truck, which introduces new production techniques to Ford’s most profitable vehicle.

Mr. Mulally, a longtime Boeing executive, was the first of a trio of outsiders including Dan Akerson at General Motors Co. and Sergio Marchionne at Fiat Chrysler Automobiles NV who took over Detroit’s big auto makers in the last decade.

While GM and Chrysler accepted billions of dollars in taxpayer funds to finance their bankruptcy restructurings in 2009, Mr. Mulally and Ford financed a drastic overhaul with a $23.5 billion borrowing completed not long before the financial markets began to seize up because of the subprime mortgage crisis.

Ford had a net loss of $12.6 billion in 2006, the year Mr. Mulally took over. Ford in 2006 sold vehicles under six big-name brands—Ford, Mercury, Lincoln, Jaguar, Land Rover and Volvo—and owned British exotic sports car maker Aston Martin.

Mr. Mulally sold the European luxury brands, closed Mercury and sold nearl y all of Ford’s stake in its longtime Japanese affiliate Mazda Motors Corp.

By 2012, Ford had just two brands—Ford and Lincoln—and reported net income of $5.7 billion.

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Car-Industry Insiders Ready to Retake Steering Wheel


Via The Wall Street Journal

Detroit car makers were rescued last decade by a group of outsiders with scant auto industry experience. Now the insiders are retaking the wheel.

Later this year, Ford Motor Co. Chief Executive Alan Mulally will pass the keys to Mark Fields, a 25-year veteran of the U.S. auto maker and its affiliates. General Motors Co. this year named Mary Barra, who started at the company as a college intern, to replace private-equity executive Daniel Akerson.

Within a few years, Fiat Chrysler Automobiles NV CEO Sergio Marchionne, the Italian-Canadian accountant and lawyer who took over Fiat in 2004, is expected to step down and name a replacement most likely from within its existing ranks.

The departure of the outsiders in many ways reflects the auto industry’s return to health. Directors in the last decade threw out their old playbooks—and in many cases were themselves tossed out—as executives failed to anticipate severe downturns. Bosses tied to the old ways were too plodding and trapped by earlier decisions to break the mold as the landscape changed.

“When things are going well, insiders are a natural place to look. When you are in trouble and needing a turnaround, you go to the outside,” said Sydney Finkelstein, a management professor at Dartmouth College’s Tuck School of Business.

Mr. Finkelstein cautions there is no evidence that outsiders do better, only that they are preferred when directors conclude big changes are necessary.

Outsiders with little ties to the industry orthodoxy, such as former AT&T Inc. Chairman Edward Whitacre, and later Carlyle Group’s Akerson and Boeing Co.’s Mulally, were recruited to bring fresh perspective and their records of success. Mr. Marchionne had successfully run a Swiss conglomerate in metals, packaging and chemicals before joining Fiat.

Often, management experts say, it is the speed of decision making that becomes critical during a crisis.

“The insider knows every reason why [they need] to move slowly, but it is really important in many instances to move quickly,” said Joseph Bower, a Harvard Business School management professor and expert on succession planning. “Companies really do have to reinvent their relationships to the markets and there is a terrible tendency for insiders to take too much time.”

Today, Ford, GM and Fiat Chrysler are profitable, having undergone major restructuring efforts to cut costs and, they hope, the old ways that brought them to their knees, such as keeping factories running to optimize production while being forced to heavily discount the excess output.

So why go back? Mr. Bower says directors look inward once the crisis has passed and choose insiders who have navigated the transition for greater responsibilities. “It turns out that insiders have the great virtue that they know how the place works. They know where real talent is and isn’t, they know how the communication works and how to get things done,” he said.

At Ford, Mr. Fields brings expertise in the auto maker’s global businesses. He has run operations in Asia, Europe and South America. Later, he tackled restructuring at its big North American car-making unit, and has been operating chief for more than a year. Mr. Mulally said in an interview last week that he has full faith in Mr. Fields to continue to execute the company’s business plan.

“I think most companies in the auto industry and their boards today know that what’s really important isn’t whether management is ‘insider’ or ‘outsider,’ but whether management is effective,” said John Hoffecker, co-president of the Americas at AlixPartners LLP, which managed GM’s restructuring during its bankruptcy. “Given the market and competition today, long gone are the days when anything else really matters.”

At GM, Ms. Barra is a veteran at a time when questions about whether the auto giant has changed enough since its prebankruptcy days. Now dealing with a troubled recall of small cars linked to 13 deaths, she is arguing the “old GM” that stumbled into bankruptcy has been replaced, even though most of its leaders are longtime GM employees.

With Ms. Barra taking charge in January, only Dan Ammann, a former Morgan Stanley investment banker who joined GM in 2010, later became CFO, remains with the company as its president. Gone are Steve Girsky, a former Morgan Stanley auto analyst and deal maker, who left after being passed over for the top job, and Chris Liddell, who joined from Microsoft Corp., and whose brash, high-tech style clashed with its executive team.

A changeover at Fiat Chrysler is a few years off, but Mr. Marchionne has signaled he expects an executive at the auto maker will replace him. Soon after taking over Chrysler, Mr. Marchionne assembled an executive council of 20 managers who oversee aspects of the company’s operations.

Harald Wester, who runs Alfa Romeo and Maserati sports car businesses, and Alfredo Altavilla, chief of its Europe, Middle East and Africa operations, are among the contenders, said people close to the company.

“The thing I’m most proud of, in addition to the cars we make, is the quality of leadership I was able to put together,” Mr. Marchionne said in January at the Detroit auto show. “I’m hopeful that with time they’ll mature into superb leaders and that one of them will eventually take my place.”

But guessing when the hand off might take place is the “biggest waste of time,” Mr. Marchionne said. “Buy a lottery ticket, you’ll have more fun,” he added.

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Ford May Be Close to Naming Fields to Replace Mulally As CEO


Via Forbes

Ford Motor Co. is poised to tap COO Mark Fields to succeed Alan Mulally in the company’s top job later this year, according to Bloomberg News.

Bloomberg, which cites unidentified sources, says Ford could announce the promotion and reveal Mulally’s retirement date as early as May 1.

It would be the second shoe to drop after Ford promoted Fields, 53, to the chief operating job in December 2012, making him Mulally’s heir apparent. A new announcement could reassure company employees and Wall Street. Both were rattled by rumors late last year that Mulally might leave to take the top job at Microsoft Corp.

He didn’t deny the conjectures until January.

Mulally, 68, has said he intends to remain the automaker’s boss through 2014. But disclosing his retirement date soon might give him an extra chance to bask in the glow of the strong first-quarter earnings Ford is expected to report on Friday.

Spokeswoman Susan Krusel says the company won’t comment on the speculation about an imminent statement about Fields. Ford has nothing new to say about its internal succession plans, she adds. “If anything were to change, we’d let everybody know.”

Ford’s board of directors next meets on May 8 in Wilmington, Del., just before the company’s annual meeting.

Mulally, who joined the carmaker as CEO in September 2006, is widely credited for turning around the struggling carmaker. Unlike rivals General Motors and Chrysler, Ford avoided bankruptcy in 2009. Bloomberg says Mulally has lined up an unspecified post-retirement position involving corporate governance or business policy.

Before taking the COO job, Fields had been president of Ford’s North American operations since October 2005. The 25-year Ford veteran previously held a string of operating jobs, which included running the company’s European unit and affiliate Mazda.

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Ford Reveals How Much Electric-Car Batteries Cost


One of the auto industry’s most closely guarded secrets—the enormous cost of batteries for electric cars—has spilled out.

Speaking at a forum on green technology on Monday, Ford Motor Co. Chief Executive Alan Mulally indicated battery packs for the company’s Focus electric car costs between $12,000 and $15,000 apiece, reported The Wall Street Journal.

“When you move into an all-electric vehicle, the battery size moves up to around 23 kilowatt hours, [and] it weighs around 600 to 700 pounds,” Mr. Mulally said at Fortune magazine’s Brainstorm Green conference in California.

“They’re around $12,000 to $15,000 [a battery]” for a type of car that normally sells for about $22,000, he continued, referring to the price of a gasoline-powered Focus. “So, you can see why the economics are what they are.”

Ford is currently promoting its $39,200 Focus EV at events around the country. It has a 23 kilowatt-hour battery pack. A Ford spokeswoman said Mr. Mulally’s comments were designed to provide a indication of the car’s battery costs.

Based on the price range that Mr. Mulally indicated, Dearborn, Mich.-based Ford appears to pay between $522 and $650 a kilowatt-hour for its electric-vehicle batteries. In the past, auto makers and battery makers have been reluctant to disclose the cost per kilowatt hour. Analysts have made projections that battery costs are between $500 and $1,000 per kilowatt-hour.

The U.S. Department of Energy, as part of its efforts to help promote plug-in hybrid- and fully-electric vehicles, has set a goal of lowering the cost of batteries to $300 a kilowatt-hour by next year. The DOE has helped to fund battery plants in the U.S. to install the capacity, and ideally lower the cost of batteries.

Ford hasn’t provided projections for anticipated sales of its EV, but has made the point that it doesn’t need to achieve high volumes because it is building the Focus EV on the same line as the gasoline-powered version. It sold just 10 to fleet customers late last year and now is building more of the vehicles at its plant in Wayne, Mich.

The Focus EV is a direct competitor to Nissan Motor Co.’s Leaf, which sold about 9,700 in 2011 in the U.S. The Leaf starts at $35,200 and has a stated range of 73 miles on a full charge. Ford says its Focus can go up to 76 miles on a full charge and can be recharged in 3 ½ hours using a 240-volt wall charger, or about twice as fast as the Leaf.

Other auto makers including General Motors Co. and Fisker Automotive Inc. have struggled with high prices and slow initial sales of their battery-powered vehicles, but have committed to building new models.

GM is planning to introduce its all-electric Spark subcompact later this year. Its roughly $40,000 Volt car has a small gasoline engine that kicks in when the battery runs low.

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Ford Awards Mulally $58.3 Million in Stock


Ford Motor Co. awarded Chief Executive Officer Alan Mulally $58.3 million in stock as a reward for the automaker’s turnaround.

Ford paid the stock to its top executive as part of an incentive plan for 2009, according to filings yesterday with the U.S. Securities and Exchange Commission. Ford earned $29.5 billion in the last three years after $30.1 billion in losses from 2006 through 2008. The shares, which traded as low as $1.01 on Nov. 20, 2008, closed yesterday in New York at $12.09.

Mulally will receive other compensation for 2011, including salary and benefits, which will be revealed in a proxy report in the coming weeks. Dearborn, Michigan-based Ford withheld some of the stock award to cover Mulally’s income taxes. After taxes, Mulally received $34.5 million in stock. Ford has awarded him stock worth more than $100 million the past two years, reported Bloomberg.

“Our compensation philosophy is to align the interests of our leadership with those of our shareholders,” Todd Nissen, a spokesman, said yesterday in an e-mail. “Ford’s stock was $1.96 a share at the time of the 2009 awards, and is over $12 a share today. That is a more than a 500 percent increase, which benefits all stakeholders in the Ford turnaround.”

Last July, United Auto Workers President Bob King assailed Mulally’s compensation as “outrageous” and “excessive.” Last year, Ford rewarded Mulally with $56.6 million in stock. The executive’s 2010 compensation rose 48 percent to $26.5 million.

In his new awards, Mulally, 66, also received 1.28 million stock options with a strike price of $12.46, which he can begin to exercise next year, and he was awarded 376,016 restricted stock units that can be converted into shares in 2014.

Executive Chairman Bill Ford, 54, received 595,238 stock options with a strike price of $12.46, the first of which he can exercise next year, and he was awarded 175,473 restricted stock units that can be converted into shares in 2014, according to a separate filing with the SEC.

General Motors Co. CEO Dan Akerson, whose pay must be approved by the Obama administration’s special pay master, said Jan. 10 that he won’t get a cash bonus for 2011, the year the Detroit-based automaker earned a record profit and again became the world’s largest.

Akerson, who served as CEO for four months in 2010, received $2.53 million in total compensation for that year, including a $566,667 salary and $1.96 million in stock awards and other pay, GM said in a proxy statement last year. His annual salary was $1.7 million, the filing said.

Volkswagen AG Chief Executive Officer Martin Winterkorn was the highest paid CEO in Germany in 2010, with total compensation of 9.3 million euros ($12.2 million), a study from the DSW association for private investors showed.

Nissan Motor Co. Chief Executive Officer Carlos Ghosn received 982 million yen ($12.2 million) in total compensation for the 2010 fiscal year, including salary and stock options, making him the highest-paid leader among Japanese companies.

Toyota Motor Corp. President Akio Toyoda was paid 136 million yen in the year ended March 31, 2011, including a 24 million yen bonus, according to a filing last year to Japan’s finance ministry.

Ghosn’s pay was lower than the 2010 average for global automotive companies, estimated at about $15.3 million by Towers Watson & Co., a U.S. benefits consultant. Mulally’s 2010 compensation was the highest in the auto industry, the consultant said.

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