The Ford Motor CEO’s $54 Million Pay Put in into Perspective

Mar 26 2011 Published by under Uncategorized

Any Guess Why He's Smiling? (Hint: It's not a .25 cent raise)

How much is too much in this new Gilded Age? At a time when workers and the middle class are struggling to keep or find a job and to put provenance on the table for their families, when Republicans have declared open war on collective bargaining, unions and the working class, the $54.5 million pay package received by Ford Motor CEO Alan Mulally is obscene.

UAW (United Auto Workers) President Bob King says it is immoral.

“I think is a great CEO, but I don’t think any human being in the world deserves that much money. I think it’s outrageous,” King told reporters during a three-day union convention in Detroit.

It’s true that Mulally, who is known for his results-oriented leadership style, turned Ford around over the past two years, but he did not work in a vacuum.

CNNMoney says,

Mulally has been CEO of Ford since 2006, coming in when the company was generally seen as the weakest of the three U.S. automakers. Ford was the only U.S. automaker to avoid both a federal government bailout and a trip through bankruptcy in 2009.

“I like Alan Mulally. But I just think it’s morally wrong,” said King, who assumed the leadership of the union last year. “It creates problems for Ford in both the salaried work force and the hourly work force. It seems like one individual is getting all of the gain.”

It does seem that way. Why should Mulally be the only one to see the benefit? Oh sure Ford employees got bonuses, but how much of a reward was that compared to Mulally’s $54 million? The $6.6 billion the company earned in 2010 was its best year since 1999, earning UAW members an average of $5,000 each in profit sharing bonuses. $5,000 compared to $54 million.

You can retire on $54 million. You can’t survive a year on $5,000.

The Republicans in Congress are taking issue with funding smaller than that awarded one individual by Ford. Some of these defunded federal programs can help many people, not just a single recipient.

By way of contrast, federal funding for NPR, such a hot-button issue for Republicans, is on the order of $90 million. This is enough to cause outrage in conservative ranks, as though $90 million will break the federal budget. But when a little over of half that amount is directed at a private individual, we’re not supposed to bat an eye?

Planned Parenthood, another victim of Republican outrage, receives about $300 million, and that money helps thousands, all across the country, providing not only abortions, but also cancer screenings and contraception, helping not only women, but men. Mr. Mulally is receiving about 1/6th of that amount all by himself, and it won’t be helping thousands.

It sort of puts things in perspective, this gap between the rich and the poor, which always widens when Republicans set our Nation’s economic policies.

Mulally’s pay can benefit only him. It won’t put anyone to work; it won’t create jobs; it won’t fill stomachs or treat diseases.

If Mulally retired today, he could live for 54 years with an income of $1 million per year excluding what was earned by investments and interests, uses to which it must be assumed he would put that money. How many people would find that a hardship? How many people could get college educations on that $54 million?

Look at the pay scale of those who work under Mr. Mulally (Salaried, from PayScale Report of January 2011):

Service managers: $42,180 per year;

Mechanical engineers: $84,964;

Manufacturing engineers: $80,000; and

Product development engineers: $74,008.

For Mr. Mulally’s pay alone, Ford could employ 675 manufacturing engineers. That’s a job, a roof over their head, and food on the table for 675 individuals and their families.

Or we can take the $50,000 or so an assembly line workers makes make: Mr. Mulally’s pay would employ over a thousand assembly line workers. A thousand.

CNNMoney reports that,

King wouldn’t get into details about the union’s goals for upcoming negotiations, other than to say it wants to restore some of the concessions made during the crisis four years ago, along with other concessions it made in the intervening years. The current contracts with Ford, GM and Chrysler all expire Sept. 14.

This seems fair and reasonable, though it’s easy to imagine the company will balk at restoring those concessions while paying their CEO $54 million. Remember, in the new Gilded Age, it’s always the fault of the unions that the economy is in shambles. It’s not pay scales like Mr. Mulally’s that do any damage.

Of the two-tier wage scale agreed to for new hires, King said the $14 an hour for entry-level workers is not enough to maintain a middle-class standard of living. But he added, “In fairness we don’t want to make the companies we have a good relationship with uncompetitive in the market place.”

King is correct about the $14 an hour rate, and many Americans make less than this and have to provide for not only themselves but for their families. How many entry-level positions could Mulally’s pay provide? Almost 2,000.

To give you a further idea about the pay of Ford employees:

The location of employment can determine pay, with the highest-paid Ford workers located in California, where they earn a median $101,000 per year. Jobs in Michigan, where many Ford plants are located, pay $86,789. In the South, Florida workers receive $45,912, while New Yorkers make $70,000. In the Midwest, those in Ohio get $67,193, while those in Illinois are paid $70,749.

And Mulally is far from alone. ABC News reported yesterday that “The owner of USA Today increased its CEO’s pay package by 80 percent to $7.9 million last year amid cutbacks in the struggling newspaper industry.”

Eighty percent. Chew on that for awhile, and then listen to the Republican rhetoric about how people making union scale are destroying our economy with their unreasonable demands. Most of us are lucky to see a pay raise of 2-3 percent! Looking forward to a yearly raise of .25 cents are not part of the problem; they are its victims. Figures like 80 percent and $54 million ought to be raising red flags everywhere, and with them, cries of outrage.

It’s clear that big business has learned nothing from the recent Great Depression, no more than has Wall Street. Corporate compensation packages continue to be out of all proportion with what’s needed. Yes, CEOs need to be compensated for their accomplishments, but all too often they’re rewarded for failure. Mulally at least succeeded but again, he did not do it alone, and rewarding him with pay that is on a par with some federal programs is outrageous.

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