By Doron Levin
March 9, 2012

In Detroit, hometown of the United Auto Workers, the awarding of lucrative executive bonuses routinely provides the spark for outrage on the part of union factory workers. No one blinked last summer when Bob King, UAW president, condemned Ford chief Alan Mulally’s pay.

This week, Ford (F) disclosed that the stock portion of Mulally’s 2011 pay, not including salary and other benefits, was worth $58.3 million before taxes and $34.5 million after. He earned a similar amount in stock grants last year. This time, the spark seems to have been dampened.

Could any executive be worth so much money? For those of a certain mindset the answer surely is “no,” regardless of the executive’s accomplishments. In the case of Mulally, his feats as CEO are widely acknowledged, even by some union rank-and-file who may owe their livelihoods to him. When he was hired in the summer of 2006 Ford’s stock was selling for $7 and change; it’s been over $18 and now hovers between $12 and $13. The company has been profitable for ten straight quarters, following horrendous losses.

“Whoever follows Mulally is going to have big shoes to fill,” said Brian Johnson, an analyst for Barclays Capital (BCS). He has an “overweight” rating of Ford Motor shares and says the company’s goal should be to improve profit margins, while “balancing cost control and product excellence.”

The former Boeing (BA) executive’s most important leadership achievement took place when Ford avoided bankruptcy, the fate that befell hometown rivals General Motors (GM) and Chrysler in 2009. Had Ford been forced to file, the Ford family almost certainly would have lost their controlling interest. The company’s stock has resumed paying a dividend during his tenure, another reason the family doesn’t mind compensating him generously.

Mulally, 66, is a year older than Ford chief executives of yesterday customarily have retired. Bill Ford Jr., executive chairman, has publicly stated that Mulally can stay on as chief executive as long as he wants — which doesn’t answer the question of who would succeed him. Last month Derrick Kuzak, 60, head of product development and Lewis Booth, 63, chief financial officer, announced their retirements, possibly a portent of more changes.

Mark Fields, 51, president of Ford’s operations in the western hemisphere, is seen by many as the front-runner for Mulally’s job. A 20-year Ford veteran, Fields has worked in Japan as a Mazda executive when the company was a Ford affiliate. His career was thought to have slipped sideways when Mulally arrived; by most accounts he has gained the chief executive’s confidence since then, and no doubt has learned a thing or two by watching the boss.

Any global automaker needs an extraordinarily talented leader, backed by executives who work well as a team. Ford had neither when Mulally arrived. Those who weren’t willing to put their ambitions aside and scale back corporate infighting were shown the door.

In a radio interview during the Geneva auto show in Switzerland, broadcast on Wednesday, Mulally professed to be enjoying his work and dismissed talk that he might be ready to wind down. As usual he used the interview to talk about new Ford models, rhapsodizing about “neat” features developed for customers by Ford engineers.

Mulally and Bill Ford will be sizing up Fields and his colleagues, making sure they’re ready when the time comes. In the meantime, Mulally will have no trouble getting used to the lengthening string of annual bonuses measured in the tens of millions of dollars.


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