Ford Motor Co
It's part of our long-term incentive plan to tie compensation to the performance of the company and the performance of the shares for investors, Ford spokesman Mark Truby said of the option award.
The options for Mulally carried a strike price of $1.96. The stock closed on Friday at $2.19.
Mulally may exercise one-third of the options a year from now, two-thirds after two years and all of them by March 2012. The options expire in March 2019.
Mulally also received 136,005 shares of restricted stock under another long-term incentive plan based on Ford's 2008 performance. Because the automaker failed to meet company targets last year, the award was 15 percent of the maximum.
Mulally has agreed to take a 30 percent salary cut for 2009 and 2010. Performance bonuses for 2009, which would be paid next March, have been eliminated for Mulally, other senior executives and global salaried employees.
The automaker previously eliminated a performance bonus for 2008 that would have been paid this month, merit pay increases for salaried workers in North America and has made other cuts.
Ford has said it believes it has the liquidity to continue a restructuring through the global recession without seeking emergency U.S. government loans as long as industry sales stay above 9.2 million units.
Still, the automaker has said it does not expect its results to return to break-even or a small profit until 2011 amid an industry where U.S. auto sales have fallen to the lowest monthly adjusted levels in 27 years.
Ford's rivals, General Motors Corp
(Reporting by David Bailey, editing by Leslie Gevirtz)