DETROIT - Penny pinching in Ford Motor Co.'s automotive operations boosted 1997 profits and helped produce a payday bonanza for two of the company's top executives.
Ford Chairman Alex Trotman and automotive operations President Jac Nasser received sizable bonuses in 1997.
Trotman's $7.0 million bonus was the highest ever awarded a Ford executive, the company said. Nasser's bonus vaulted to $3.0 million last year, up from $950,000 in 1996. He was group vice president of product development until Nov. 1, 1996.
Trotman delivered record profits of $6.9 billion in 1997, triggering the record bonus payout, Ford said.
Cost cuts in every automotive operation and every vehicle line worldwide helped produce 1997 profits that Ford calls the highest ever for an automotive company.
Improvements in profits, cost cutting, vehicle quality and automotive return-on-sales determined the 1997 executive compensation, said Peter Sherry, Ford Motor Co. assistant secretary.
BONUS CHANGES SOUGHT
In its 1997 proxy statement released last week, Ford also said it will ask shareholders to approve two executive compensation proposals at the company's annual meeting May 14 in Cincinnati.
Ford wants annual and long-term compensation to be linked more closely to improvements in quality, customer satisfaction and shareholder value, not merely profits. The overhaul is the most far-reaching executive compensation change since 1955, Ford said.
Ford wants about 5,000 salaried employees to be eligible for stock option grants in 1998. Previously, option grants have been made annually to about 2,000 employees. The minimum 1998 grant is 500 shares, Ford said.
The change would extend option grants down to Grade 11 employees with a salary range of $80,000 to $100,000.
Ford also wants its top 350 executives - instead of the current top 65 - to be eligible for special stock awards. If approved, the awards would be based on the performance of Ford stock relative to the Standard & Poor's 500 index.
In addition, annual bonuses to 5,000 salaried employees would be based on a new formula that includes quality and customer satisfaction improvements and after-tax return on sales in automotive operations.
Nasser's compensation was the second-highest at Ford in 1997, reflecting a significant upturn in the fortunes of Ford auto operations.
Under Nasser's command, Ford's worldwide automotive return on sales rose from 1.4 percent in 1996 to 3.9 percent last year, Ford's best return since 1989.
Bonuses and salaries increased for all of Ford's top five executives in 1997.