GENEVA - I ran into the two of the happiest – if not THE happiest – car company CEOs in the world today: Ford's Alan Mulally and Rupert Stadler, head of the Volkswagen Group's profit engine, the premium automaker Audi.
Both were here to beat the drum in support of two very small cars, the new Audi A3 and the Ford B-Max wagon. The A3 will certainly come to Canada within a year to replace the current model, while the B-Max, said Mulally, most likely will have a spot in Ford's North American lineup.
Exactly when he would not say, but he was pretty emphatic about the B-Max having a future in Canada and the U.S.
Mulally had another reason to feel cheery, too, and it had everything to do with Ford having earned $29.5 billion in the last three years after $30.1 billion in losses from 2006 through 2008 (all figures in U.S. dollars): on the very day he was B-Maxxing, a filing with the U.S. Securities and Exchange Commission revealed that Mulally was awarded $58.3M in stock as part of a 2009 incentive program.
Then there's Stadler, the newly-promoted member of VW's management board who has been running Audi since 2007 - and with stellar results.
Audi is now the No. 2 premium brand in the world by sales, surpassing Mercedes-Benz in 2011. With these sales have come stunning profits: Audi's operating income rose to €5.35 billion ($7.13billion) in 2011, up from €3.34 billion in 2010.
Stadler has also been amply rewarded: his 2010 pay packet, according to Bloomberg, amounted to about $5.75 million based on a combination of salary, bonus and long-term incentives.
Mulally has been awarded stock worth more than $100 million in the past two years, reports Automotive News. But unlike so many over-paid CEOs – the vast majority of them, in fact – Mulally has earned every penny.
As Ford spokesman Todd Nissen told Bloomberg, "Ford's stock was $1.96 a share at the time of the 2009 awards, and is over $12 a share today. That is a more than a 500 per cent increase, which benefits all stakeholders in the Ford turnaround."
Ford is now growing, adding employees and expanding around the world. Six years ago, when Mulally came aboard, Ford was essentially bankrupt. When I suggested to him here in Geneva that the Ford story during his tenure would be essential learning in business schools for decades to come, he shrugged and in his usual "ah, shucks," way, demurred.
"It just goes to show you what can happen when you have a plan and you stick to it," he said of the One Ford turnaround strategy he has drilled through the company.
Audi's Stadler, meanwhile, talked about the healthy competition percolating between his own company, BMW and Mercedes-Benz.
"It's good for everyone," he smiled, clearly enjoying the latest results.
Audi has made no secret of its goal of dethroning BMW as the world's largest luxury automaker. He has confirmed that Audi is on track to reach 1.5 million in world-wide sales earlier than planned, in 2015. And when I talked up the fact Audi has been Volkswagen's largest earnings contributor in recent years, he – like Mulally – demurred.
As he should. He is, after all, the leading candidate to replace VW Group CEO Martin Winterkorn when he retires in 2016.
The truth is, most of the 10 brands in the VW Group lose money. Audi does more than its part in propping up profit-sapping brands such as SEAT in Spain.
When talk turned to the cars being unveiled here in Geneva, Stadler said Audi plans to add a plug-in hybrid version of the redesigned A3 in 2014 and, of course, various body styles are also coming. A two-door hatchback goes on sale in Europe this September and a sedan version is coming to North America for the 2014 model year.
The new A3 will be underpinned by the same platform as the VW Golf. A fundamental reason Audi prints money is right there, in the A3. It shares some very expensive mechanical bits and pieces with mainstream VWs, though the Audis have been fine-tuned and styled to compete as premium cars.
Meantime, the B-MAX is as clever as clever can be. The highlight is the Ford Easy Access Door System. It allows for an unobstructed entry and exit with hinged front doors and sliding rear doors integrating the central body pillars. In other words, there is no traditional B-pillar obstruction on either side; the side openings are therefore much more functional.
"The Ford B-MAX really challenges traditional small car thinking, and pioneers a concept not attempted by any other manufacturer," said Stephen Odell, chairman and CEO, Ford of Europe said at the unveiling. Its ingenious design opens the doors – quite literally – to exciting new ideas about what's possible with a compact vehicle."
Mulally was quick to point out that the 2013 Ford B-MAX will be available with low CO2 emissions gasoline and diesel engines in Europe and it will also be the first European car to offer the SYNC in-car communications system.
So, two of the happiest and richest car company CEOs in the world were here in Geneva to tout small cars that middle class folk can afford. They both seem to understand the market and how to run companies capable of capitalizing on emerging and apparently profitable opportunities.
Unlike most in the landscape of CEOs – especially those in the financial sector -- Mulally and Stadler have earned their good fortunes by running car companies that make things people want and often need, while at the same time employing hundreds of thousands earning decent wages – salaries on which most families can live decent lives.
They should be smiling; this is how capitalism is supposed to work.
