NEW YORK (CNNMoney.com) -- Ford said Thursday it would slash its dividend in half and reduce the amount that directors are paid to serve on the board - news that sent its stock tumbling.

Ford (Charts) stock sank 4.6 percent on the day.

The new quarterly dividend of 5 cents a share, to be paid in September, is down from 10 cents that Ford paid in the second quarter of 2006.

"Our directors are well aware of the difficulties and sacrifices involved in turning around our company," said Bill Ford, chairman and chief executive officer, in a statement. "They have underscored this by voting to reduce their own compensation."

He said that the company had been hard hit by gas prices, and was trying its utmost to adapt.

"The head winds we faced at the beginning of 2006 have only become stronger, as consistently higher gasoline prices in the U.S. have caused consumer purchase preferences to shift away from SUVs and large trucks to smaller cars and crossover vehicles," he said.

Ford also said it was adding two years to the powertrain warranty of its vehicles, adding more standard safety equipment and taking other steps to shore up the resale value of its cars and trucks.

The company is struggling in North America, its largest market, where it lost $1.6 billion in 2005 and another $457 million in the first quarter. It has announced plans to shutter 14 plants and cut 30,000 jobs.

Ford, which has about 1.8 billion common shares outstanding, paid $738 million in dividends last year. Board members received a $200,000 annual fee -- $80,000 and $120,000 in deferred stock units.

-- from staff and wire reports

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