U.S.A.:Bill Ford's pay: $14.7 million
Receiving no salary, his 2003 compensation is stock grants, options of 4.6 million shares
By Eric Mayne / The Detroit News
DEARBORN — Ford Motor Co. Chairman and CEO Bill Ford Jr. earned $14.7 million in 2003, mainly in stock options, despite forgoing a salary for a second full year.
In its annual proxy statement, the company disclosed Thursday that Bill Ford was awarded stock grants and options totaling nearly 4.6 million shares plus “other” compensation of $174,361 for items such as tax reimbursements.
His total package includes a bonus in the form of stock equivalents that convert to shares in March 2005.
Bill Ford has said he will give the bonus, which has a current value of $1.5 million, to a tuition assistance program that benefits the children of Ford employees.
Bill Ford has not taken a cash salary since taking over as CEO in October 2001, opting instead to link his compensation with the performance of Ford stock.
After losing $6.4 million in 2001 and 2002, Ford earned $480 million in 2003. The automaker is aiming to earn $7 billion in pre-tax profit by mid-decade.
Ford stock closed Thursday at $13.59, down eight cents, on the New York Stock Exchange.
Among other Ford executives, Vice Chairman Allan Gilmour’s compensation for 2003 was valued at just under $5 million, the proxy showed. Besides his $912,500 salary and a $750,000 bonus, Gilmour was awarded stock valued at $2.3 million.
Lured out of retirement two years ago, he also collected just over $1 million in retirement benefits. But he is not accruing additional benefits, the company said.
Carl Reichardt, who stepped down as vice chairman last year, received compensation valued at $3.4 million. He is followed by executive vice presidents Jim Padilla and David Thursfield, whose packages are valued at $3.3 million and $3.2 million, respectively.
Despite receiving the highest salary — $1 million — president and chief operating officer Nick Scheele’s $3.1 million total package was worth slightly less than his subordinates.
Scheele’s $825,000 bonus was less than Padilla’s $900,000, but greater than Thursfield’s $750,000.
Padilla and Thursfield, however, each received stock awards valued at $968,000 because they were named executive vice presidents during the year. Padilla is also Ford’s president of the Americas while Thursfield is president of international operations and global purchasing.
Dearborn-based Ford’s stock-rich executive compensation formula counters an emerging corporate trend away from using stocks as a performance incentive.
Companies are pulling back from stock options in the wake of corporate scandals such as the ones that rocked Enron and WorldCom, plus changing accounting practices that call for stock options to be logged as expenses.
A study released this week by human resources con******t Towers Perrin showed that eight of 50 “bellwether, blue-chip companies” have dumped stock options from their compensation plans.
While a minority, “it’s kind of the leading edge,” said Doug Friske, managing principal with Towers Perrin.
“Options have led to inappropriate behavior, a la Enron or WorldCom and so forth,” Friske said. “They drive short-term thinking and cause people to manipulate their stock price.”
At its annual meeting Wednesday in Berlin, DaimlerChrysler AG told shareholders it will no longer reward executives with stock options, which give them the opportunity to buy shares at discounted rates.
Ford began expensing stock options in 2003.
As for more radical changes, spokeswoman Becky Bach said none are on the horizon.
General Motors Corp., which will release its proxy later month, is content with its formula.
“We continue to view stock options as an important part of our executive compensation,” said spokesman Jerry Dubrowski. “We don’t expect any change.”
Ford also released its annual report for 2003 Thursday in advance of its shareholders meeting next month. In the report, Bill Ford forecasts improved performance.
“Longer term,” he said, “I believe our outlook is excellent if we continue to focus on operational excellence and concern for our customers and their world.”
2003 compensation for Ford's top managers, including salary, stock awards, bonuses and miscellaneous items:
Bill Ford Jr., Chairman and CEO $14.7M
Nick Scheele, President and COO $3.1M
Allan Gilmour, Vice chairman $5M**
Carl Reichardt, Former vice chairman $3.4M**
Jim Padilla, Exec. vice president $3.3M
David Thursfield, Exec. vice president $3.2M
** Includes retirement benefits from previous Ford employment
Source: Ford Motor Co.
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