Alex Trotman's Compensation Package: A Relative Bargain in the Auto Industry

Alex Trotman, the former chairman and chief executive of Ford Motor Company, received a substantial compensation package in his final year, totaling more than $73 million. Despite this, Graef Crystal, a compensation expert, believes that Trotman was underpaid, considering the company's stock performance and industry standards. Trotman's compensation package consisted of a $18.8 million salary, bonus, and other benefits, as well as a $24.1 million 1997 incentive-plan payment and $30.1 million from exercising previously granted stock options.

Key Takeaways:

• Alex Trotman's total compensation package in 1998 was over $73 million, consisting of $18.8 million in salary and bonus, $24.1 million in 1997 incentive-plan payment, and $30.1 million from exercising stock options.
• Graef Crystal, a compensation expert, estimated that Trotman was worth about $54.9 million in 1998, considering the company's stock performance and industry standards.
• Trotman's 1998 compensation package represented a 50 percent increase from the previous year, when he received approximately $12.4 million.
• His 1997 long-term incentive payment of $24.1 million was almost 2.5 times the size of his $9.8 million payment for 1996.
• Trotman received a $2.5 million salary last year, up from $2 million in 1997, and a $10 million bonus, which was a $3 million increase from the previous year.
• The company valued Trotman's options to buy 431,400 Ford shares at $41.07 apiece, an award worth $3.95 million on the day the options were granted.
• Trotman held unexercised options worth about $30.3 million at the end of 1998.
• His successor, Jacques Nasser, received $15.8 million, with more than half reflecting the value of option and stock appreciation grants.
• Two other retired Ford executives, Edward Hagenlocker and Kenneth Whipple, received $6.2 million and $5.2 million, respectively, including the present value of option grants.

Statistics:

• Alex Trotman's total compensation package in 1998: $73 million
• Estimated worth of Trotman in 1998: $54.9 million (Graef Crystal)
• Increase in Trotman's compensation package from 1997: 50%
• Size of Trotman's 1997 long-term incentive payment: $24.1 million
• Value of options granted to Trotman: $3.95 million
• Unexercised options held by Trotman at the end of 1998: $30.3 million
• Compensation package of Jacques Nasser: $15.8 million
• Compensation packages of other retired Ford executives: $6.2 million (Edward Hagenlocker), $5.2 million (Kenneth Whipple)

Sources:

• [Ford Motor Company proxy statement filed with the Securities and Exchange Commission]
• [Graef Crystal, editor of the Crystal Report]