Penny pinching at Ford?

March 26, 2009

Remember last November, when the auto companies— CEOs flew in their corporate jets to beg the Senate Banking Committee for a taxpayer-funded bailout? After that public relations fiasco, the CEOs assumed contrite tones, assured Americans that they —got it, and promised to start running their companies in a more frugal manner.

As proof, when the CEOs went back to D.C. on December 4 to ask for —bridge loans (or, in the case of Ford (F), a $9 billion line of credit that it could use if necessary), the PR folks made sure everyone knew that the CEOs drove to the hearings and that Alan Mulally was working for just $1 a year. (According to the proxy, however, he earned $2 Million in salary last year and more than $13.5 Million in total compensation.)

But Ford’s frugality appears to be a bit of exaggeration, based on the preliminary proxy that it filed Tuesday. It’s true that the company disclosed some cash-saving measures such as a 30% reduction in Mulally’s salary for 2009 and 2010, (even if it’s not clear why that number differs from the $1 mentioned in the article), no merit increases for executives or salaried employees in 2009, a suspension of matching employees— contributions to their 401(k)s, and an elimination of the cash portion of Directors— annual fees. And it describes the measures as not “merely symbolic,” but “necessary.”

Yet those actions are inconsistent with others that the company continues to take. For example, while Ford’s filing says that it is “in the process of selling [the] corporate aircraft, it adds:

—Company policy does not allow Mr. Mulally to fly commercially due to security concerns. The Company will pay the charter costs of Mr. Mulally’s use of private aircraft for his business and personal travel. Mr. Mulally’s family will be allowed to accompany him on trips when he travels on private aircraft. In addition, the Company will pay the cost of coach-class commercial aircraft flights for his family when their travel is at his request.

The filing also says: —[F]or retention purposes the Company pays the costs, including first class commercial airfare, for personal travel for Mr. [Mark] Fields to and from his home in Florida. The Company continues to provide tax relief as a result of the imputed income associated with Mr. Fields— arrangement. There’s also the fact that Ford agreed to continue paying for Mulally’s temporary housing near corporate headquarters — something that was just renewed in September 2008, or just two months before Mulally and other executives came to Congress, hat in hand. Last year, that perk cost the company $109,697.

If frugality at Ford is really the goal, there’s more work to be done.


Photo source: I. M. Properties

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