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.]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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Deferred ? given Ford's abysmal pre epidemic performance they should be taking a pay cut.
"noting that around 300 executives would see salary deferments of between 25 and 50 percent" This could be a hit to Lincoln. What's the hot vehicle for executive family members these days?