Seems to me the sense of entitlement is far more exaggerated at the executive and boardroom levels.

LLC has got this right.

In reality, these decisions are being made by people who may not have even bought the stock. The stockholders have become too far removed from the process, just like healthcare, just like Congress.

Seems to me the sense of entitlement is far more exaggerated at the executive and boardroom levels.

jurisb, I’m not quite sure you understand what’s going on with the commercial aircraft market. Let me help you.

Boeing has toyed with the idea of a blended wing large plane for some time, this much is true. Blended wing planes vastly outperform aircraft in what has become the standard configuration in virtually every aspect of performance. However, passengers don’t like the idea of not having windows. This doesn’t matter in a military application though, so Boeing certainly hasn’t wasted any time with their research. BTW, there IS a mock up flying, which NASA is very interested in. X-48. Look it up.

Explain to me how it would be economically feasible to drop 10 or 15 billion designing a new superjumbo for a niche market that so far hasn’t really demonstrated that it can even support the A380. Designing the 747-800 was the smartest thing Boeing could have done, and that project very well may have broken even before it’s even flown. That’s actually pretty impressive, considering how “old” the 747 is.

737 sales have been pretty competitive with the A320, despite having what you describe as a fuselage from the 60’s. If you do some research, you will find that the 737NG really doesn’t have a whole lot in common with the 737 classic. By your logic, the A340, A330 and A310 are all pieces of shit because they share similar fuselage design with the A300, which was also designed in the 1960’s (the A340 is, indeed, not competitive anymore, despite being introduced in 1993.) Designing a fuselage is hard-that’s why Airbus has only done it 3 times (A300, A320 and A380.) Hell, they tried to get away with not designing a new one for the A350 either, using that same one from the 60’s.

717 design was inherited from MD when Boeing acquired them, so it was pretty much free, and isn’t in production anymore.

787 production problems stem from avionics and supply chain shortages, not from the design itself. So far, the 787 has outsold the A350 way more than 2:1, so I’d say that most airlines find it to be far superior, despite having an expected in service date 5 years earlier. Look at the technical features of both planes-the 787 is a game changer, the A350 is just more of the same.

Robert F: I do not buy into class warfare arguments—and never will. I also agree with others that if Mulally was in it JUST for the money—he never would have taken this job. He seems like a relatively stand-up guy to me.

I believe it’s very disingenuous the way people characterize this part of his income last year; that’s simply the cost of recruiting a talented leader at his level. How much additional money would Ford be out right now if they hadn’t recruited him? How much more would they be out in the next 5 years? My guess is that last number is in the billions. I’d say it was worth the upfront investment.

Considering what he has set in motion at Ford including the improvement in its balance sheet ($7 billion net improvement) through streamlining and assset spin-off, the more open and communicative environment at Ford, the hiring of Jim Farley, and the realignment of the development process there, Mulally is getting probably what he deserves relative to the market.

I’m sorry that the UAW workers “only” get paid $75,000 and only have measely $1000 bonuses, but considering the skill level and the market, they are making good money. Honda just got 11,000 applications for a job that paid $14/hour. If all of Ford’s workers quit, Ford could replace all of them for less money (this ignores a lot of other things like institutional knowledge and skills, but it’s hypothetical to begin with).

If Mulally quits, it would be hard to find someone who has the experience, known success and reputation that he does; qualities probably needed to keep Ford on track to recovery. And if they did find him/her, it would cost them the same to recruit that person.

I don’t pretend to agree with CEO compensation being as high as it is. I think it says something negative about our society. However, I understand Economics perfectly. Right now, there are maybe a few dozen Mulally’s who have overseen complex business structures, who have managed large industrial processes, and who have successfully turned around failing units or organizations. There are probably 200,000 unemployed UAW skill-level workers in Michigan alone without a job or with lower paying jobs than the UAW.

It might be unfair – but that’s life. The UAW are more than welcome to take their $100,000 buyout, Ford’s small-business start up assistance and become rich CEOs themselves some day. But they are being compensated fairly in their current job – and so is Mulally.

As for the Dreamliner, methinks Boeing vastly underestimated the challenges of building a game-changing plane WHILE reinventing the supply chain for it.

No. He was rich before Ford. He’s filthy rich now.

Mulally was filthy rich already. Hell, he may have been better off staying at Boeing if money were his only motivation.

Almost right. His reputation was important to Ford. And when you have $40+m in the bank, I reckon any worries about your reputation rapidly diminish.

Again, if his only motivation was monetary, he could have just stayed at Boeing and not risked taking over a company that was almost beyond hope of saving. He wanted the challenge.

God knows I’m no fan of the UAW, or any union. BUT building cars is a team effort. (While I’m sure Ford’s management would LOVE to eliminate American auto workers from the picture entirely, they still need them to screw the damn things together.) When the coach is that far removed from the players financially, well, that’s not good for morale.

It’s really not fair to compare wages on a pure numerical basis. For the most part, Ford’s workers are unskilled and, quite frankly, easily replaceable. Mulally is one of the few people on the planet who stand even a small chance of saving that company, which means he’s not replaceable. If Mulally only made 2 million dollars a year, his wages would still be far, far removed from UAW workers, but considering how much more important he is to the organization he would still be under compensated at that pay scale.

And lets be honest here, if my pay were being cut, there’s no way I would be happy about it, regardless of whether or not my original pay was excessive. UAW workers suffer from a nearly unmatched sense of entitlement, so there’s little hope of keeping morale up when you cut their pay (although I think I read that they’re getting a healthy bonus this year, no?)

NRTrackStar :

Robert, you said it yourself-Mulally is already filthy rich. He’s been filthy rich since he saved Boeing.

No. He was rich before Ford. He’s filthy rich now.

His reputation is the sole reason Ford recruited him, so I’d say his reputation is pretty important to him.

Almost right. His reputation was important to Ford. And when you have $40+m in the bank, I reckon any worries about your reputation rapidly diminish.

And regarding the workers, who cares what they think? Ford is trying to get rid of them, so apparently they don’t feel that they’re particularly important.

God knows I’m no fan of the UAW, or any union. BUT building cars is a team effort. (While I’m sure Ford’s management would LOVE to eliminate American auto workers from the picture entirely, they still need them to screw the damn things together.) When the coach is that far removed from the players financially, well, that’s not good for morale.

Robert, you said it yourself-Mulally is already filthy rich. He's been filthy rich since he saved Boeing. His reputation is the sole reason Ford recruited him, so I'd say his reputation is pretty important to him.

You don't get to where Alan Mulally is today by jumping ship when it gets tough and, considering how bad a shape Boeing Commercial was in when he became president, I'd say that it's pretty ballsy for you to call his work ethic or dedication into question.

The man doesn't need money anymore, but I'd be willing to bet an extreme Type-A personality like himself isn't about to simply roll over and let a company he's been entrusted with go under, simply because it got too hard. People who think like that don't make good CEO's, and I think what we've seen him do at Ford over the last 1.5 years should be enough evidence to tell you that he's pretty successful at what he does, regardless of the bullshit obstacles he has to face.

And regarding the workers, who cares what they think? Ford is trying to get rid of them, so apparently they don't feel that they're particularly important. A company's job is to make money for its investors, NOT to lay golden eggs for union workers. They've been living the good life for a long time now, so I think it'd be pretty hypocritical for them to think that someone actually trying to help the company is being overcompensated. But alas, I'm not a union worker, so I'm sure that's exactly what they think.

dwford:

Think of it this way: He gets $4m of stock at a sub $6 price. Imagine what it’ll be worth if he’s successful? Thats his motivation to succeed. It’s worthless if he fails…

Big Al has already received OVER $30m. That's money in the bank. No matter what happens to FoMoCo, it's his to keep. Like GM's Wagoner, Mulally's pension (did I forget to mention his pension?) is most probably bankruptcy proof. There's no downside to a Ford bankruptcy for Alan Mulally personally. Even with five kids, the guy's never going to be hurting for money ever again.

So what we're depending on here is Big Al's sense of duty. His personal pride. His desire to protect his "reputation." A latent need to prove himself to a cold and distant father (for all we know). But it ain't greed. Greed I trust. Fear I trust. The rest? Meh.

And again, this kind of mind-boggling executive compensation sows rancor through the ranks. How does a man making $20m a year plus tell an assembly line worker contemplating a $100k buyout, and the reduced financial expectations that come with it, that he's getting a good deal?  

starlight mica:

Whether or not he’ll get Ford out of its supersonic nosedive remains to be seen.

Whether or not Mulally cares about Ford's fate– or cares as much– now that his nest is feathered with platinum is also an open question. Past a certain point, too much money in the bank saps motivation.

While I don't expect a turnaround CEO to work for nothing, surely the bulk of their compensation should hinge on his or her performance. This is doubly true when said suit is shedding employees and asking suppliers, dealers, etc. to "take one for the team."

Basically, I think Mulally is the only thing between Ford and the bankruptcy court within five years If Ford is going to survive, two things will have to happen: Chrysler will have to go under, creating more market share for the remaining domestics, and Mulally will have to fix the product line. The first is pretty much a given, the second, well, it’s a crapshoot but if anyone can do it Mulally is the man.

Whether or not he’ll get Ford out of its supersonic nosedive remains to be seen.