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Ford CEO wont accept pay unless he gets profits.


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http://www.freep.com/news/statewire/sw115684_20050512.htm

 

 

Ford chief tells shareholders he'll accept no compensation

May 12, 2005, 1:26 PM

 

 

WILMINGTON, Del. (AP) -- Ford Motor Co. chairman and chief executive Bill Ford said Thursday he will forego all compensation until the company is sustaining profitability, a move that brought applause from shareholders but little reward on Wall Street.

 

An hour after the company's 50th annual shareholders meeting ended, Moody's Investors Service downgraded Ford's credit rating to its lowest investment grade level, citing lower profit expectations and sinking market share at the world's second-largest automaker. Last week, Standard & Poor's Ratings Services lowered Ford to "junk" status.

 

Ford told about 50 shareholders that he asked Ford's compensation committee to tie his pay more directly to the company's automotive performance.

 

He didn't give a target for that performance, but said the company would have to be doing better than the break-even performance expected this year.

 

"That's certainly not acceptable to me, and I'm sure it's not acceptable to you either," Ford said.

 

"In the future I will not only continue my practice of accepting no cash compensation, but I will also forego any compensation at all until the compensation committee and I are satisfied that the company has achieved and is sustaining profitability."

 

Ford, the great-grandson of company founder Henry Ford, has not been accepting a cash salary since taking the helm of the company in 2001, but his 2004 compensation package, which included stock options, was worth around $22 million.

 

Last month, the Dearborn, Mich.-based automaker reported it earned $1.2 billion in the first quarter, sharply below last year's results. As in recent quarters, the company's finance unit provided the bulk of the profits. Ford's U.S. sales declined 4.2 percent in the first four months of this year.

 

Ford said he didn't agree with the decision by Standard & Poor's to lower Ford's rating to below investment grade. Standard & Poor's cited declining sport utility vehicle sales, Ford's longtime cash cows, among its reasons for the downgrade.

 

"We believe it discounts our very strong liquidity and access to diverse funding sources as well as the recent success of our new products," such as the hot-selling Mustang, Ford said. "However, we clearly see the competitive realities and the challenges we face."

 

According to Standard & Poor's and Moody's, Ford had $23 billion in cash and $161.3 billion in debt as of March 31.

 

Richard Mills, a Ford retiree from Florida, said shareholders shouldn't re-elect Ford's 15-member board because of the company's dismal performance. He said Ford's market share -- at 19.2 percent the first four months of this year -- is the lowest it's been since the 1920s.

 

"We're not keeping up with our competitors in new model introductions," Mills said.

 

But shareholders re-elected the board by an 86.5 percent margin. Ford noted that his father, William Clay Ford Sr., a board member for 57 years, is stepping down from the board but will continue to advise board members.

 

Shareholders also voted down several proposals from environmentally oriented investors, including one that would have required Ford to disclose how much it spends lobbying against higher fuel economy standards.

 

Beth Williamson of Green Century Capital Management said Ford's U.S. fleet has the lowest average fuel economy of any major automaker.

 

"It should be clear by now that Ford would be in better shape today if it had spent its dollars on increased fuel economy rather than on lobbyists arguing against increased fuel economy," she said.

 

Ford said the company is moving as quickly as it can to put hybrid vehicles on the road and will produce a report later this year detailing its efforts to reduce emissions from its factories and vehicles.

 

Joe Baker, a shareholder from Mississippi, said he would be upset if Ford didn't lobby against what he believes are unrealistic fuel economy standards. Baker said his family has invested in Ford for four generations.

 

"You've responded to the American market and that's what built the Ford empire," he said. "I think we need to stay on track."

 

Ford shares were down 19 cents, or 1.9 percent, to $9.45 in afternoon trading Thursday on the New York Stock Exchange.

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