WILMINGTON, Del. -- Ford Motor Co. Chairman Bill Ford Jr. told shareholders on Thursday he will link all his compensation to performance of the company's core automotive business.
"Auto profitability is one of the most critical measures of our success as we go forward," Bill Ford told the annual shareholders' meeting. "That's why I have asked the compensation committee to tie my future compensation even more directly to the performance of the company's core automotive business," he said.
Bill Ford was granted a compensation package valued at about $22 million for 2004, up 52 percent from a year ago.
But nearly half of that compensation was in stock options that are currently out of the money, meaning the Ford family scion will have to wait until the company's fortunes turn around before he can cash in on the package.
"In the future I will not only continue my practice of accepting no cash compensation but I will also forgo any compensation" until the company has achieved sustained profitability, Bill Ford said.
Bill Ford, whose great-grandfather founded Ford 100 years ago, has foregone a cash salary since the company ousted former CEO Jacques Nasser in 2001.
Ford now expects its automotive operations to, at best, break even before taxes this year, a reversal from earlier estimates of pretax profits from $1.5 billion to $2 billion. Overall, the automaker expects its 2005 profit to be at least lower.
The automaker also gave up on its 2006 profit goal of $7 billion before taxes, due in part to higher raw material, rising U.S. gasoline prices and health-care costs.
Ford continues to lose vital U.S. market share to domestic and Asian rivals. The company's U.S. sales have declined about 3.5 percent so far this year. Moreover, its highly profitable truck sales are slipping because of rising gasoline prices.
Ford and rival General Motors were dealt a severe blow last week when their debt ratings were downgraded to "junk" status by the Standard & Poor's rating agency.
The downgrade could affect their borrowing costs and add to the burden they already shoulder, including generous retiree health and pension benefits.
Ford posted a 38 percent drop in first-quarter earnings, pressured by falling U.S. sales and rising costs. Net earnings fell to $1.21 billion during the quarter from $1.95 billion a year ago.