Ford slashes manager stock bonuses to cut costs, boost performance

(This Feb. 18 story has been corrected to fix the date of new tariffs on Canada and Mexico to March 4, not March 1, in paragraph 9)

By Nora Eckert

DETROIT (Reuters) - Some middle managers at Ford Motor will not get stock bonuses this year in what is seen internally as CEO Jim Farley's latest attempt to cut the automaker's bloated costs, according to six people familiar with the matter.

Around 1,650 middle managers out of 3,300 globally will not get stock bonuses, according to a person familiar with the discussions.

The stock awards are usually paid in March, but senior managers have been told to select which half of their middle management staff will receive them, four of the sources said. 

Ford said the change was meant to incentivize an improvement in employee performance. 

"We are focused on driving a high-performance culture that recognizes and rewards employees for their business contributions," a Ford spokesperson said.

The Dearborn, Michigan, automaker has struggled with inefficient operations, within both its cash-burning electric vehicle division and its fuel-powered vehicle business. 

Farley has for years told employees and Wall Street that Ford is undergoing a fundamental transformation to become leaner and more competitive, as it races against U.S. rivals as well as Chinese automakers and EV producer Tesla. 

Ford's stock slipped about 23% over the past year, while Detroit rival General Motors' shares rose around 23% on the strength of lower costs and higher profits.

The automaker and its competitors are also navigating the uncertainty of U.S. President Donald Trump's trade policies, which Farley said have added "a lot of cost and a lot of chaos." Ford's rivals are more exposed to tariffs on Mexico and Canada, which are scheduled to begin March 4, but the company could still be hit by 25% duties on vehicles shipped from Mexico, including its Mustang Mach-E, Bronco Sport, and Maverick pickup.

'THE BEST TALENT'

Employees were informed of the stock award changes in a company briefing last week and told the rationale for slashing bonuses was performance-based, the six sources said. 

Some Ford workers viewed the move as a way for the automaker to slim its ranks, and said they were looking for job openings at other companies.

"With continued profit underperformance versus GM, Farley probably does not want to say the status quo of continued stock awards for all managers is acceptable," David Whiston, analyst for Morningstar, said in an email.

"This could be a way to get some people to quit given the focus is on middle managers," Whiston added.

Stock grant bonuses have typically been regarded as a way to retain talent at the automaker, which Farley recently said was key to its competitiveness. The awards vest over three years.

"The most important for me is the best talent and the best culture," Farley told analysts on an earnings call this month, saying the company could not improve its results without recruiting and keeping the right people. 

The stock awards are part of a larger performance-based compensation system, which also includes cash awards. The bonuses are granted to salaried employees companywide, most of them managers. 

Separately, Ford sets a companywide bonus based on metrics including vehicle quality, total earnings and EV sales, which amounted to 69% in 2024 of the total potential bonus, three of the sources said. Reuters reported in October that those bonuses would be cut based on lackluster company performance.

(Reporting by Nora Eckert in Detroit; Editing by Nia Williams)