Auto industry executives poised for major payout
BY MARK KLEIS
Due to the unique circumstances that placed automakers’ stocks at record lows in 2009, many auto executives are now set to receive substantial net payouts as a result of the drastic increase in stock values. Before the stock increase, many executives were working for substantially below-market wages, making the merit-based payout a welcome change.
The Associated Press recently performed an in-depth analysis of standard and Poor’s 500 index, tracking the compensation for all CEOs representing companies in that list. The APanalysis reviewed CEO compensation from 2008 through 2010, and found that rebounding stock prices have created the possibility for a major payout for top executives which have been relying heavily on stock options for compensation during the recent recession.
One glaring trend spotted during the AP analysis was that many CEO’s pay had been assigned via stock options in early 2009 while stocks were at a 12-year low, providing for substantial growth opportunity in the future. At the time, however, many CEOs were faced with stock options from 2008 that were in fact lower than their original estimates.
Now, by 2010, the markets have largely recovered and in some cases the increase was as large as a ten-fold jump in value. In the auto industry, Alan Mulally’s pay stood as a prime example Ford granted Mulally 5 million stock options with an estimated value of $5 million in March 2009, as derived from a unique formula. At the time of Mulally’s 2009 stock assignment Ford stock was trading at $1.96, which has since increased to a value over six times that amount – putting a value of $48 million on those stock options.The AP also pointed out that Mulally’s 2008 options – then valued at $9 million – are now worth over $20 million. In the same year, both Alan Mulally and then-Chrysler CEO Robert Nardelli accepted $1 annual salaries due to the dire circumstances facing their companies. By contrast, the top paid CEO for 2009 was Carol Bartz, of Yahoo, with $47.2 million in total compensation, with 90 percent coming as a result of stock options and awards.
GM’s executives may also potentially cash in on stock options in the future, but since the automaker is not yet publicly traded, the gains will likely not be as high. GM’s CEO, Ed Whitacre was given $1.7 million in salary for 2010, with $5.3 million in stock options beginning in 2012 as well as $2 million in restricted stock.
source: leftlanenews.com
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In: Business Stories · Tagged with: Alan Mulally, Auto Executives, Auto Industry, Automakers, Ceo Compensation, Ceo Robert, Drastic Increase, Growth Opportunity, Industry Executives, Prime Example, Record Lows, Representing Companies, Robert Nardelli, Standard And Poor, Stock Increase, Stock Options, Stock Prices, Stock Values, Substantial Growth, Top Executives
