Ford CEO's Pay Rises to $17.75 Million for ‘Mediocre’ Year

(Bloomberg) -- Ford Motor Co. Chief Executive Officer Jim Hackett’s compensation rose about 6 percent in 2018, a year the CEO characterized as “mediocre by any standard” for the automaker.

Hackett received $17.75 million in total compensation, up from about $16.7 million in 2017. Increases to the CEO’s salary, stock awards, perks and benefits offset a reduction in bonus payments, according to a regulatory filing Friday.

Hackett, 63, is leading an $11 billion restructuring of Ford that involves slashing jobs, closing plants, updating an aging lineup, exiting the North American sedan market and pouring billions into electric and self-driving cars. Last year, net income fell by more than half, as Ford lost money in every region of the world other than North America. The company’s shares fell 39 percent as Wall Street criticized Hackett for moving too slowly and failing to explain his turnaround plan.

In an internal memo sent in January, Hackett said Ford should have earned roughly double the profit it posted for 2018 and told employees to “bury the year in a deep grave.” The company slashed the CEO’s bonus for the year by 28 percent after falling short of targets for revenue, earnings margins and operating cash flow.

Ford shares have recovered some lost ground this year, gaining about 10 percent through Thursday. Hackett has been praised for the alliance talks the company is conducting with Volkswagen AG, which have yielded an agreement to jointly produce commercial vehicles. The cooperation could expand to include a partnership to develop electric and self-driving vehicles, with Executive Chairman Bill Ford the two companies “fit together well.”

Hackett has given a tempered outlook for this year, saying there’s potential for Ford to improve but refraining from issuing detailed forecasts. Ford is rolling out redesigns of profitable trucks and sport utility vehicles, including the Ranger pickup and Explorer and Escape SUVs. It also must negotiate a new contract with the United Auto Workers for its 56,000 U.S. hourly employees, whose health-care costs are said to be on track to exceed $1 billion next year.

Ford reported in its proxy filing that Hackett’s annualized pay was 276 times the $64,000 earned by the company’s median worker.

Top executives earned about 38 percent of performance shares granted in 2016 that were tied to three-year goals set by Ford’s board, according to the proxy. They fell short of targets for automotive revenue, and operating margin and cash flow, while meeting expectations for pretax profit from the lending unit Ford Credit.

Bill Ford received total compensation of $13.8 million for his work as executive chairman last year, compared with $15.6 billion in 2017.

Ford scheduled its annual meeting for May 9, and it will be conducted online for the third year in a row. Shareholders for the 15th consecutive year will consider a proposal to strip the Ford family of its 40 percent voting control of the automaker and move to one vote per share. The measure is opposed by the company’s board, which includes two family members, Bill Ford and his cousin Edsel Ford II.

--With assistance from Anders Melin.

To contact the reporters on this story: Chester Dawson in Southfield at cdawson54@bloomberg.net;Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, David Welch

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