Tim O'Brien | Mar 25, 2009

How much would you expect to get paid if you had presided over a $USD14.7 billion (AUD$21 billion) loss and a 53 percent fall in share value over the year?

Not the USD$13.6 million pay-packet that Ford US CEO Alan Mulally pocketed for 2008 I'd wager.

Now - and I'm guessing here - but I reckon the likes of you and me would more likely find our arses jammed into the shredder followed by a kick out the door. But that is not the way things work in corporate America. As the AIG debacle has demonstrated, the reward for mediocrity runs to millions, while reward for absolute failure to the tens of millions.

ford-dearborn

It's a wonderful world for those who are a part of it - not so good for long-suffering investors and tax-payers left to carry the can. (Yup, most US tax-payers have a new understanding of that old phrase: "as flat as a shit-carter's hat".)

To be fair, and to Mulally's credit, Ford US is in far better shape than GM and Chrysler. Ford, having first struck trouble in 2005 and in 'junk status' by 2007, was smart enough then to read the writing on the wall. It had completed its recapitalisation nearly a year before credit markets froze over in the great unpleasantness following the Lehman Brothers collapse, and started working like hell on its model mix.

Now, of the US big three, only Ford has not sought the tax-payer funded bail-out loans now running to the tens of billions for GM and Chrysler. And it doesn't expect to need them, predicting it will return to profitability in 2011.

It has also, through its European operations and its smart 'one Ford' global strategy, developed a strong line-up of small and mid-size model offerings.

It might also be said that Ford's current difficulties (and for that matter, those of GM and Chrysler) are just partly of its own making. There is red ink everywhere thanks to a stalled US economy in deep, deep recession.

Sure, Ford has not been able to respond as quickly as it might have liked to the rapid shift in consumer buying preferences, but its F-Series 'trucks' are still number one in the US. The real cause of its current woes is the meltdown in credit markets, global recession and consumers too frightened to spend a dollar on anything. You can't make a profit if you don't have buyers in showrooms.

So, yes, maybe there is a case for reward in simply 'not doing as bad' in such a sea of corporate failure. Mulally agreed to 30 percent pay cut in 2009 and 2010, and has also agreed to forgo his bonuses for 2008 and '09.

That said, his take-home is still a helluva lot more than the $1 pay-packet GM's Rick Wagoner and Chrysler's Bob Nardelli agreed to as part of the Federal bail-out agreement.

Last year, Wagoner struggled by with a paltry $5.4 million compared to the $14.1 million he pocketed in 2007 (we're talking US dollars there). How much did GM lose last year? Try USD$30.9 billion. When did it last make a profit? That was 2004. How much has it lost since? USD$82 billion.

That's one damned big hole.

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