Ford paying bonuses to all employees

Workers to get $300 to $800 despite record $12.7 billion 2006 loss as troubled automaker tries to fix morale.

By Chris Isidore, senior writer

NEW YORK ( -- Embattled Ford Motor Co. will give bonuses to most of its workers despite posting a record $12.7 billion loss last year as it tries to improve morale in the middle of a downsizing.

The bonuses will to be paid to all eligible employees in the United States and Canada, according to an e-mail that Ford CEO Alan Mulally sent to employees Thursday. The bonuses will be paid March 15.

Ford CEO Alan Mulally announced a widespread bonus plan for most Ford employees despite the company's losses.
Ford CEO Alan Mulally announced a widespread bonus plan for most Ford employees despite the company's losses.
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Most salaried workers and supervisors will get $300 to $800, depending on their location and rank in the company. Most union members will receive about $500. Higher ranking executives will receive what the e-mail described as "higher, but still modest, awards."

The average hourly pay at Ford is $32.38, according to its filings with the Securities and Exchange Commission, which works out to about $67,350 a year, not including overtime.

The bonuses will go to about 125,000 employees, including 38,000 Ford hourly employees who have accepted buyout and retirement packages from Ford recently and have left or will be leaving the company.

Ford (Charts) did not reveal the cost of the cash bonuses going to all the employees, but given the size of the awards and the number receiving the payments, it will cost the company more than $62 million.

Ford lost $12.7 billion last year, its biggest net loss ever, and one that was far larger than the losses at Detroit rivals General Motors (Charts) and DaimlerChrysler's (Charts) Chrysler Group. Its executives have warned that its core North American auto operations will not make money until 2009.

In response, Ford announced plans in September to close nine plants by 2008 and another seven plants after that, and more than half of its U.S. hourly employees recently agreed to take one of the various packages to leave the company in the coming months. Its new sales goals suggest it will give up its long-held spot as the nation's No. 2 automaker to Toyota Motor (Charts) at some point this year.

But Mulally's e-mail to employees said the company and its employees made "significant improvements in quality and cost savings.

"We're recognizing these accomplishments with modest awards to encourage our continued focus on performance against objectives," the e-mail said. "Senior management believes pay that recognizes performance is a key to maintaining a skilled and motivated workforce."

There has been some grumbling about pay and benefits to top executives at Ford.

Executive Vice President Mark Fields, the head of its operations in the Americas, was using a corporate jet to fly to and from a home in Florida every weekend at a cost of hundreds of thousands of dollars a year until the practice was revealed in a news report late last year. He agreed in January to fly commercial flights.

Mulally, who was hired away from the head of the commercial aircraft unit of Boeing (Charts) to be Ford CEO in September, saw the value of his stock bonuses increase to $6 million from the originally agreed to $5 million, according to a note buried on page 228 of the company's 10-K filing Feb. 28.

The filing said the increase in Mulally's options was made by compensation committee of Ford's board of directors "after reviewing the company's 2006 performance results and Mr. Mulally's leadership role in progressing his key priorities."

In addition, there are severe doubts within the company about its prospects for a turnaround.

The Detroit News reported in February that an internal Ford memo revealed that an employee survey at the automaker showed that only 47 percent of Ford workers have confidence in the company's long-term success. Fewer than 45 percent said they believe Ford's proposed turnaround plan is working, according to the newspaper story. And only 38 percent believe Ford has "the right products to move the company forward," according to the newspaper.

Ford is not the only money-losing company to announce bonuses this week in an effort to improve employee morale. Delta Air Lines (Charts) notified its 55,700 employees they could expect bonuses, stock, profit sharing and modest pay raises as the company emerges from bankruptcy court protections later this spring. The air carrier did not give any dollar targets.

The decision to offer widespread bonuses was praised in a statement from the United Auto Workers union, which had about 75,000 members at Ford before the buyouts.

"With today's announcement of bonuses for all Ford workers, the company has recognized the hard work and dedication of UAW-represented hourly and salaried workers," said the statement from UAW President Ron Gettelfinger.

"Ford and the UAW are working together to turn this company around, and to preserve good-paying manufacturing jobs in the United States," said UAW Vice President Bob King, who handles the union's negotiations with Ford.

Mulally's e-mail to employees said the bonuses are important to make sure everyone is working together to improve results at Ford.

"One of my priorities is to bring us together as a team," he wrote. "Only as one team will we achieve what we all desire most - a new, more competitive and more viable Ford Motor Company that works for everyone."

(Correction: An earlier version of this story misstated the stock option bonus for Ford CEO Alan Mulally. regrets the error).

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