mobile-menu-icon
Ford Authority

Senior Ford Management To Get Bonus Percentage Cuts

As Ford Authority reported earlier today, Ford Motor Company posted disappointing financial results both in Q4 and the entirety of 2022, losing $2 billion in profit as the automaker continues to battle everything from quality issues to supply chain problems. CEO Jim Farley admitted that he is “frustrated” with these results, as one might imagine, and now, it seems as if senior Ford management will lose out on some bonus money as a result of the poor performance, according to The Detroit News.

Currently, senior Ford management bonuses are determined based on what the automaker calls its Annual Incentive Compensation Plan (AIP), which contains certain performance targets that are used to calculate a Business Performance Factor – or a multiplier that factors into determining bonus payouts. FoMoCo exceeded some targets in 2022 by posting $10.4 billion in earnings before interest and taxes, which resulted in a 148 percent factor. However, the automaker also posted a $2 billion net loss and missed its guidance on earnings before interest and taxes by $1 billion, while earnings before interest and taxes (EBIT) came in at $1.1 billion below the automaker’s guidance of $11.5 billion.

With Farley and Wall Street seemingly less than impressed with the automaker’s overall performance last year, not all of the company’s salaried workforce will see their personal bonus targets multiplied by 148 percent – rather, senior Ford management at the LL3 level and above will only get 90 percent, a move that is being made in an effort to hold them more accountable for these disappointing results.

“This decision was not made lightly, but accountability starts at the top,” Farley and Ford CFO John Lawler wrote in a note to employees. “Our senior leaders have a significant impact on driving the business results and must live up to the high standards we need to create a vibrant, profitably growing Ford. However, the reality is we still have a lot of work to improve execution and strengthen our business, as demonstrated by our earnings results. We are committed to fostering a culture of excellence, and taking accountability when our overall performance doesn’t meet expectations – our own and those of our stakeholders.”

We’ll have more on Ford’s 2022 earnings soon, so be sure and subscribe to Ford Authority for 24/7 Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

Subscribe to Ford Authority

For around-the-clock Ford news coverage

We'll send you one email per day with the latest Ford updates. It's totally free.

Comments

  1. RWFA

    40% salary+bonus for upper and top management. Appropriate.

    All bucks both good and bad have to affect the top.

    Everything good in a company comes from employees delivering on solid instruction from the top, everything bad comes from management inadequately guiding the troops.

    Glad to see the rate reduction not being applied to the middle and lower parts of the organization.

    Reply
    1. Larry Mc

      You are full of $hit. Upper management doesn’t deserve bonuses for failure. Farley should get a pay cut.

      Reply
  2. mabe

    Hernry Ford is rolling in his grave like a pig on a spit. Dump Farley quick.

    Reply
    1. Will

      They still made 10 billion and have almost 40 billion cash on hand.

      Reply
    2. RWFA

      The rolling in grave is about the stupidest take.

      Henry’s first two attempts at auto making failed. Henry himself almost brought his 3rd try 1903 Ford Motor Co to bankruptcy in the late 1920’s and again in the mid 1940’s.

      Henry’s eponymous grandson The Duce left the Company in a precarious financial condition when he retired in 1979/80.

      It may not be apparent to the casual observer but Ford is in much better shape now than it was in either those two eras or 2009/10 when it was again fighting an uphill struggle.

      Reply
      1. Cigna

        Today, Ford would have filed bankruptcy if it was in the same position of 2009/10, the only reason it survived is because Alan “Goofy” Mulally sold Ford’s valuable assets (Jagaur, Aston Matin, Land Rover and Volvo) at Dollar General Store prices, however, it was enough to stave bankruptcy. Farley does not have this luxury today.

        Reply
        1. RWFA

          Actually dumping those brands helped cut operating losses and allowed Ford to Focus on One Ford.

          (Ps your envy of Mulally comes through. Try to work on that.)

          The thing that saved Ford for Mulally to work with was Ford CFO Don LeClair building a 23 Billion cash pile and putting the big liquidity package in place before Mulally showed up and the credit markets locked up.

          But you can read it here (remove space before com):

          fortune. com/2011/05/25/fords-forgotten-man/amp/

          Reply
  3. Cigna

    How about pink slips instead of bonuses? It will take years to fix their quality issues, as this company is determined to remain the industry leader in recalls, future earnings statements will be in the red.

    Reply
    1. RWFA

      How about using your head.

      Have you missed Farley’s moving key management out and replacing with new talent where required?

      He’s literally been doing that since day 1 as CEO.

      There’s only so much that can be done with existing product. The big improvements only come with a completely new design.

      Reply
      1. Raider

        Farley may be replacing prior management however the needle has not moved to the positive rating. Rivian has produced more trucks than the F-150 lightning. Farley has admitted F left some 2 billion of profits on the table. The special dividend is to fund the Ford family with their shares. Why not pay down debt? Farley may be a good race car driver but as chief executive, Nope.

        Reply
        1. RWFA

          LoL you think he decides on dividend? Hahahaha

          As for Rivian vs Lightning, you clearly don’t understand the purpose of these two vehicles.

          R1T better sell because it’s Rivian CH11 if not.

          Lightning is only there, like the gold Apple Watch, it’s to show they are in the game. It’s also to put a stake in the ground ahead of all the competition and to defend the F-series while showing its future while keeping customers warm for 2G Lightning.

          As we can see, Lightning doesn’t have to be built in large quantities to achieve all that – and it has.

          Now that battery contracts are solidified, Ford is preparing to go 3 shifts on Lightning, more but still not big production, but that will change dramatically when 2G Lightning debuts.

          Reply
    2. Tony

      Well said, Pink Slips for all! I’m sure you all agree even RWFA who should get the first pink slip! Maybe Ford should pay GM a consulting fee to show how to build vehicles and make a profit.

      Reply
  4. billc

    Nobody in senior management should get any bonus until all the manufacturing issues and recalls are corrected.

    Reply
    1. RWFA

      Bil The Cat gurgling up another hairball of an idea.

      You do what he suggests you lose talent, good people are portable today, you cut bonuses too much and the best of them leave.

      Even Iacocca when he was taking a dollar a year in salary (made possible by his compensation bring backloaded with a pile of gold) didn’t subject his management team to the same 1$/yr promotional stunt rate.

      Reply
      1. Randy Z

        Except most of the upper management (namely LL3) is garbage.

        Reply
        1. RWFA

          Sounds like someone got a lousy annual. Poor you.

          Reply
  5. PaulQual

    Jim Farley recently said that quality was now Ford’s top priority. It does not appear that quality is part of the bonus formula. If he were to sum up the visible and hidden cost of quality, the amount they left on the table for 2022 would likely be multiple of two billion dollars . . . and therefore no bonus. Ford executives getting 90% of their bonus for leaving billions on the table makes it appear as though Ford is not serious about overall performance.

    Reply
    1. RWFA

      But your comment is heavy on speculation, by your own measure, how can it be serious about overall accuracy or veracity?

      As far as I know, Ford has never disclosed the elements of its bonus formula.

      Trick with bonuses is to not reduce them so much that the talent is demotivated or jumps ship. (I do suspect that if they do better this year the bonus will be greater to partially compensate for the 40% cut this year.)

      Ps Qual translates from German as “torment” if Qualm, it means “smoke”.

      Reply
  6. HenryL

    I guess Ford Motor Company is the only place you can work, mess up and be rewarded all at the same time. Then start all over again. I’d be heavy mad if I were a stockholder. The Ford brand is garbage, and the Lincoln brand is even more garbage sliding downward for the past 20 years. I thought Lincoln would be allowed to get their act together once PAG was finally gone and done. Demand better!

    Reply
  7. Jamie

    The TRUCKS cost too much

    Reply

Leave a comment

Cancel