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A day after a “frustrating” earnings report, Ford CEO Jim Farley told employees in a letter that he is cutting the percentage used to calculate bonuses for senior leaders including himself.
The letter, co-signed by CFO John Lawler and obtained by Automotive News, explained that for 2022, the company’s salaried work force is scheduled to earn 148 percent of their bonus targets, largely due to strong operating cash flow and improvements related to service warranties. Top executives’ bonuses are being cut to 90 percent, he said.
“This decision was not made lightly, but accountability starts at the top,” Farley said in the note. “Our senior leaders have a significant impact on driving the business results and must live up to the high standards we need to create a vibrant, profitably growing Ford.”
He said he would provide additional details about the annual incentive compensation plan for 2023 later this month.
Ford said Thursday that it lost $2 billion in 2022. Its full-year adjusted earnings of $10.4 billion were more than $1 billion lower than what it forecast as recently as October. Farley blamed poor execution and higher-than-expected costs.
“The reality is we still have a lot of work to improve execution and strengthen our business, as demonstrated by our earnings results,” Farley said in the Friday letter. “We are committed to fostering a culture of excellence, and taking accountability when our overall performance doesn’t meet expectations — our own and those of our stakeholders.”