Ford CEO Jim Farley experienced a decrease in his total compensation for the year 2024 compared to the previous year due to Ford Motor Co. falling short of its performance targets, particularly in quality improvement. The company’s failure to meet these objectives, which include pretax adjusted earnings, electric vehicle sales volumes, and revenue growth, led to a 69% overall achievement against the set targets for the Annual Performance Bonus Plan. Farley’s total executive compensation for 2024 amounted to $24,861,866, a decline from $26,470,033 in 2023.
The ratio of Farley’s total compensation to the median total compensation of all Ford employees was 253-to-1, down from 312-to-1 in the previous year. The median annual total compensation for all Ford employees, excluding the CEO, increased to $98,273 from $84,829. As of December 31, 2023, Ford employed 182,698 individuals, with approximately half of them based in the United States.
In an effort to align executive bonuses with yearly performance, Ford shifted its compensation structure, making bonus payments contingent on annual achievements rather than long-term goals. Farley, despite being the highest-earning executive at Ford, experienced a decline in total compensation as a significant portion of his earnings is tied to company performance. The company commended Farley for his contributions to financial results, talent recruitment, and product strategy diversification but noted shortcomings in quality improvement and cost-cutting targets.
Ford detailed nearly $71 million in executive compensation for its top five executives in 2024, with a substantial portion allocated to stock awards dependent on future company performance. Other top executives, including Chief Financial Officer John Lawler, Board Executive Chair Bill Ford, Chief Electric Vehicle, Digital and Design Officer Doug Field, and President of Integrated Services Peter Stern, also saw fluctuations in their total compensations based on individual performance and company achievements.
Comparatively, Stellantis and General Motors have also made adjustments to executive compensations in response to performance outcomes. Stellantis reduced former CEO Carlos Tavares’ total compensation by nearly 37% in 2024, while GM’s CEO and Chair Mary Barra experienced a 4% drop in compensation in 2023 due to unmet shareholder value targets.
Additionally, Ford announced a decrease in full-year adjusted earnings compared to the previous year, affecting profit-sharing checks for UAW hourly workers. Despite the decline in profits, around 57,000 UAW workers are set to receive profit-sharing checks of up to $10,208 for 2024. Similarly, Stellantis and GM have adjusted their profit-sharing structures for UAW members based on company performance.
As the automotive industry navigates challenges in meeting performance targets and adapting to market dynamics, executive compensations and profit-sharing schemes continue to reflect the broader financial landscape within these companies.
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