In addition, unlike previous rounds of layoffs in recent years, employees won't be offered voluntary buyout packages with financial or early retirement incentives.
This latest layoff comes as no surprise, for Ford announced last Thursday that it was cutting North American production for the rest of this year and no longer expects to return to profitability by 2009 due to the rapidly deteriorating U.S. market.
Investors ought not be dumbfounded to learn that management's revised guidance comes after CEO Alan R. Mulally, CFO Donat R. Leclair Jr, President-Americas Mark Fields, and Ford Motor Credit CEO Michael E. Bannister received their cash payments of $6.9 million, $2.1 million, $2.9 million, and $2.8 million, respectively, for their "significant progress during 2007 [by the Named Executive Officers] towards the objective of achieving automotive profitability by 2009."
The 10Q Detective asks Ford’s large shareholders—including billionaire investor Kirk Kerkorian, Brandes Investment Partners, Columbia Management Advisors, and Wellington Management Company—to demand NEOs return every dollar received under this pretense called a turnaround plan.
Do not expect the Board of its own accord to seek recompense on behalf of shareholders. Not when they are provided with the use of up to two Company vehicles free of charge, annual compensation in excess of $100,000, 'consulting' contracts worth hundreds of thousands, and la crème de la crème—birthday and Holiday gifts each year.
Given the Ford family’s Class B voting rights and a tough market for the 2009 F-150 launch, management is in no mood for shareholder activism. Sadly, we predict more tunnel vision from leadership—reminds us of the Edsel debut in September 1957.
"They were throwing eggs at the car, not me." Vice-President Richard Nixon (May 1958)
Can we say something nice about the Board? Sure. One cannot argue with their decision to pay up to $7,500 annually for the home security systems of certain NEOs.
Thousands upon thousands of Ford workers have lost their jobs in recent years. We doubt, however, that even one of them received from the Board $200,000 of life insurance and $500,000 of accidental death coverage—which is what a Director who has served at least five years ends up with from the auto maker upon retirement (in addition to a supplemental pension plan).
Editor David J. Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.