DETROIT Ford Motor Co (F.N) Chief Executive Alan Mulally made about $1.7 million through a stock option that kicked in after Ford shares traded above $15 a share for 30 straight days, the automaker said on Friday.
On May 13, Mulally bought 250,000 Ford shares for $8.28 each. He sold them for $15.25 a share the same day, according to a filing with the U.S. Securities and Exchange Commission.
Ford shares fell 1.2 percent on the New York Stock Exchange on Friday. They rose as high as $15.29 before closing at $15.08.
Mulally made a little more than $1.7 million through the transaction, before taxes. Mulally was able to exercise that option after Ford shares traded above $15 for 30 consecutive trading days, Ford spokesman John Stoll said.
"This is another example of Ford's commitment to aligning executive compensation to company performance and long-term shareholder value as the award is entirely based on the performance of Ford's stock," Stoll said in an e-mail.
Mulally's compensation has become the subject of derision by union officials in recent weeks and is likely to come up during talks with the United Auto Workers this year.
Mulally received a pay package of $26.5 million in 2010, a year when the company turned its best net profit since 1999.
UAW President Bob King called Mulally's pay, including stock options not available to most union workers, "morally wrong." This week, Mulally said it was right to tie his pay to performance.
As part of Mulally's 2006 hiring agreement with Ford, he was awarded options to buy as much as one million Ford shares at $8.28 each if Ford's stock price traded above certain levels over a period of time.
The agreement allows Mulally to buy the shares in four tranches, each tied to a different stock performance target. Mulally was able to vest the first tranche of these options when Ford shares traded above $15 each in late 2010, Stoll said.
For Mulally to buy the next 250,000 shares, Ford shares must trade above $20 per share for 30 straight trading days. The third and fourth tranches of this option can be vested when the share price rises to $25 and $30, respectively.
The options expire on August 31, Stoll said.
(Reporting by Deepa Seetharaman; editing by Carol Bishopric, Gary Hill and Andre Grenon)