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Ford execs take salary cuts…

February 26, 2009

Source: The Wall Street Journal

Leaders at Ford Motor Co. will take a sizeable cut to their compensation this year, a move announced one day after the auto maker exacted new concessions from its hourly workers.

In a memo from Ford Executive Chairman William Ford Jr. and Chief Executive Alan Mulally, the top leaders of the company said they agreed to accept a 30% reduction in their salaries over the next two years. Ford’s board of directors will also forgo the cash portion of its members’ compensation this year, according to the memo sent to all Ford employees Tuesday afternoon. Performance bonuses for salaried employees and senior executives for 2009 will be eliminated.

This comes on top of the previously announced elimination of performance bonuses for 2008, and merit pay increases for North American salaried employees in 2009.

The announcement Tuesday afternoon arrived a day after the Dearborn, Mich. auto maker received added flexibility in how it funds a union-run health-care trust fund for retirees. Ford, which faces nearly $10 billion in health costs for retired union workers, now may make up to half its contributions in Ford stock rather than in cash. Its rivals at General Motors Corp. and Chrysler LLC are still negotiating over the issue required by the conditions of their $17.4 billion loan agreements with the government.

“We know these are challenging times and we all are affected by the tough actions we are taking,” Mr Ford and Mulally said in the memo. “However, these are necessary actions to help us emerge as an even stronger, profitably growing Ford Motor Company for the benefit of us all.”

They added that they are not wavering from their strategy to go without the kind of government assistance received by GM and Chrysler. “Importantly, we remain firm in our resolve to operate without needing to access a bridge loan from the U.S. government,” Mr Ford and Mulally wrote.

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