According to Reuters, Ford CEO Jim Farley has informed employees that the company needs to accelerate its efforts to improve quality and reduce costs. As a result, executive bonuses linked to these metrics will be significantly reduced to 65% of the total bonus pool.
On October 31, a Ford spokesperson stated, "The team will be rewarded when we meet or exceed these metrics and achieve the ambitious goals of Ford+. We are focused on reducing costs and improving quality to make Ford a faster-growing, more profitable, capital-efficient, and resilient company."
The spokesperson added that bonuses may vary depending on Ford's fourth-quarter performance and individual contributions.
Jim Farley recently introduced a new performance system designed to transform Ford's 121-year-old corporate culture by fostering more accountability among employees. Under this system, bonuses are directly tied to the progress made on key goals.
In February, Farley described the new performance system in a company earnings call, saying, "This is a fundamental change in how we operate the company. We're now truly differentiating and rewarding top performers within the company. It's a massive cultural shift."
During Ford's Q3 financial report, Farley expressed pride in the company's progress but noted that "we are far from satisfied." Ford executives indicated that the company would likely achieve only the lower end of its full-year financial targets. After the Q3 report, Ford's stock fell over 10%, and it declined another 1.3% to $10.34 on the afternoon of October 31.
Earlier this year, Ford's competitor General Motors also adjusted its compensation plans to stay competitive with companies like Tesla that include stock in employee compensation. GM now offers its top-performing 5% of employees 150% bonuses, a significant increase over its previous policy. Meanwhile, the bottom 5% of employees face "appropriate measures," including potential termination.
