Ford Defers Payment for Top Executives to Cope With Coronavirus
While Ford Motor Co. plans to reopen several factories by early April, it’s not doing much of anything at present. That’s a standard problem among domestic brands with the coronavirus afoot, and two of them — Ford and General Motors — are coming off sizable restructuring efforts that included staffing reductions in the thousands. Additional cutbacks aren’t desirable; not with everyone watching how these companies handle the outbreak.
As it secures extra spending power from credit lines, Ford knows the steep financial cost of having the majority of its workforce stuck at home (to say nothing of its customers) will be steep. A plan is now afoot to keep jobs secure.
With plants idle, the company has shown its usefulness by pivoting towards the production of medical supplies, including ventilators, with partners General Electric and 3M. A recent filing with the Securities and Exchange Commission, however, reveals Ford’s top-level executives are deferring their salaries to help the business hold on to a little more cash during this rough patch.
The document, first shared by Automotive News, stipulates that a percentage of most executive officers’ base salary will be deferred for at least five months. The accumulated deferred salary amounts will be paid after the Company has repaid at least $7 billion of its debt. Chairman Bill Ford will see 100 percent of his pay pushed back (don’t worry, he’s very rich) while other executives see half their pay delayed.
That includes CEO Jim Hackett, who issued a letter to Ford employees explaining that the firm does not want to cut staff unless it has to. He said the automaker will need all hands on deck after the virus recedes to help make up lost production time. Unspecified “tougher actions” may be necessary if the industrial shutdown takes longer than presumed, he added. For now, Hackett says Ford just wants to ease the company’s burden from the top down — noting that around 300 executives would see salary deferments of between 25 and 50 percent, starting in May. Ford is also freezing hiring for all non-critical positions, delaying merit-based salary increases, and suspending overtime.
Not wanting to ignore health concerns, Hackett said Ford employees that cannot work from home due to the nature of their work could see their payment and schedules tailored. Some may even be offered voluntary sabbaticals. Minimizing the spread of COVID-19 is essential, as no factory wants to be shut down a second time due to a surprise outbreak. Ford said it will continue offering employees infected with the virus paid time off to cover the mandatory 14-day quarantine period.
[Image: Ford Motor Co.]
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