Ford Motor Co. said on Friday it would pay veteran aerospace executive Alan Mulally $18.5 million to join the troubled automaker as its new chief executive in addition to an annual salary of $2 million.
The one-time payments include a hiring bonus of $7.5 million and $11 million to offset the compensation Mulally gave up for ending his tenure as head of Boeing Co.
Mulally was also granted stock options worth about $10.5 million and $5.26 million in restricted stock grants .
( 600,000 restricted stock units in 2006 that vest in equal installments over three years. Based on Friday's $8.77 per share closing stock price, that grant was worth an additional $5.26 million.
Options on 3 million Ford shares vesting over three years. The options are priced at $8.28 cents per share, Ford said.
In addition, Mulally will also receive an option on 1 million shares based on the performance of Ford's common stock. Mulally would be entitled to the full option grant if Ford stock recovers to at least $30 per share and stays there for 30 trading days .The total value of those grants is about $10.5 million )
For 2007, Ford agreed to give Mulally a restricted stock grant worth at least $6 million if he meets all of his targets as determined by the company's board. He will also receive a stock option grant worth at least $5 million.
A clause in Mulally's contract also entitles him to a payment of $11 million if Ford undergoes a change in control or he is let go for any reason other than "cause" before 2011 ( The SEC filing did not specify what would constitute a "cause" for termination under the contract. )
As part of his package, Mulally has the option to live in temporary housing in the Detroit area for the first two years of his employment at company expense. Mulally would be required to use the company's aircraft for personal travel because of security concerns. He would be able to bring his family and friends on any trips he took at company expense.
Nice to know the next time your wages don't pay the bills and your Ford car fails its MOT .