DETROIT – Ford Motor Co.'s (F) new chief executive will get an annual base salary of $2 million and an immediate payout of $18.5 million for taking the job, the company said Friday in a filing with the Securities and Exchange Commission.
Alan Mulally, who joined Ford from Boeing Co., where he headed the company's commercial jet-building division, is getting a $7.5 million hiring bonus. On top of that, Ford will pay him $11 million to offset forfeited performance and stock option awards from Boeing.
Ford also granted Mulally 4 million stock options and 600,000 restricted stock units.
At Boeing, Mulally's 2005 compensation totaled $9.9 million, including a base salary of $825,000 and a $736,000 bonus. Most of the total came from long-term incentive payouts.
In 2007, Mulally's target bonus will be $3.5 million. He will also have the opportunity to earn at least $6 million worth of restricted stock units, as well as more options, the value of which depend on the stock's performance.
"Alan Mulally's executive compensation package was determined by the board's compensation committee based on the competitive environment for world-class talent, the demands of the position, and the need to recruit Mr. Mulally from a long, established career at Boeing," Ford spokeswoman Becky Sanch said.
Sanch noted that most of Mulally's compensation will be tied to performance.
"The committee believes the package is fair and reasonable given his qualifications and the magnitude of the position," she said.
Executive Chairman Bill Ford announced Mulally's appointment Tuesday, relinquishing the jobs of CEO and president of the company his great-grandfather founded to make room for the 61-year-old former airplane engineer. Mulally guided Boeing's commercial airplane business through crisis following the Sept. 11 attacks, which devastated the company's airline customers.
Dearborn-based Ford lost $1.4 billion in the first half of 2006 and has vowed to speed up its stalled turnaround. The restructuring first announced in January calls for cutting 30,000 jobs and closing 14 facilities by 2012.
Ford and other U.S. automakers have been battered by rising health care and material costs, tough competition from Asia and, recently, the rapid decline of the market for pickups and sport utility vehicles — high-margin products that for years have sustained their bottom lines.
Ford shares gained 19 cents, or 2.2 percent, to close at $8.77 on the New York Stock Exchange.