Cato: Ford CEO isn’t a communist, he’s good at his job

Last week, fans of The Colbert Report were surely laughing with Ford Motor Co. CEO Alan Mulally.

Stephen Colbert, spoofing Fox News pundits, accused Mr. Mulally of being a communist. Mr. Colbert argued he's a "pinko" because he supported the 2009 government bailouts of General Motors Co. and Chrysler Group LLC.

No, Mr. Mulally said, reciting the familiar argument he offered to Yahoo Finance in 2012: "If GM and Chrysler would've gone into free fall, that could've taken the entire supply base into free fall also, and taken the U.S. from a recession into a depression. That is why we testified on behalf of our competitors even though we clearly did not need precious taxpayer money."

Mr. Mulally is no communist. He's a savvy businessman whose leadership at Ford has been excellent. He's been paid accordingly.

As Automotive News reports, in 2012 Mr. Mulally was the highest-paid CEO of a publicly traded North America-based automotive company with total compensation of $68.4-million (U.S.), after $68.2-million in 2011.

Ninety per cent of his pay for both years came from stock gains. His actual salary in 2012, for instance, was $2-million, plus about $4-million in bonuses. The stock? Ford's share price closed Monday at $16.56 – the closing price was $1.26 on Nov. 18, 2008. Thus, two-year pay of about $147-million.

At a time when executive pay reflects stock performance, Mr. Mulally is in good company. This is how 21st-century CEOs are rewarded. The irony is that Ford's performance in other areas – employment growth, profitability, market share increases – is better than the share price. Too bad for Mr. Mulally that those things aren't financially rewarded.

Mr. Mulally a communist? He's just a fine CEO and a better 21st-century capitalist.