'We are focused on driving a high-performance culture,' says spokesperson
Ford Motor Company is eliminating stock bonuses for roughly half of its middle managers as it looks to improve performance and cut costs, according to a report.
The stock awards, typically issued in March, will now be distributed selectively, with senior managers tasked with deciding which employees will receive them, reported Reuters.
The company has about 3,300 middle managers globally.
"We are focused on driving a high-performance culture that recognizes and rewards employees for their business contributions," a Ford spokesperson said in the report.
Understanding the legal landscape surrounding bonuses is crucial for both employers and employees to ensure fair practice and compliance with the law, according to Richard B. Johnson, partner and co-founder at Ascent Employment Law in Vancouver.
Ford informed employees of the change in bonuses last week, with leadership citing financial and operational performance as key factors in the decision, sources told Reuters.
The car maker’s stock grants are one element of a larger performance-based pay structure, which also includes cash bonuses. In addition, the company sets a company-wide bonus tied to key business metrics, such as vehicle quality, total earnings, and EV sales. According to three sources, Ford paid out 69% of the total potential company-wide bonus in 2024.
However, over the past year, Ford’s stock has fallen by roughly 23%, while General Motors’ shares have risen by a similar margin, bolstered by cost reductions and increased profitability, according to Reuters.
The revised bonus structure aligns with Ford’s broader strategy to tie compensation more closely to performance. In October, Reuters reported that Ford will be cutting bonuses based on lackluster company performance.
Previously, TD Bank adjusted executive compensation to reflect the seriousness of the U.S. anti-money laundering (AML) failures, associated costs to the bank, and the limitations imposed on the U.S. retail business, according to the employer.
Meanwhile, one expert claimed that cutting the bonuses could be Ford’s way of showing workers the door.
"With continued profit underperformance versus GM, [Ford CEO Jim] 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 the report.
"This could be a way to get some people to quit given the focus is on middle managers," Whiston added.
One in five (20%) Canadian employers have had new talent slip through their fingers in the previous six months because they “can’t compete on salary and benefits”, according to a report released in November 2023.
According benefits and engagement platform provider Happl, better bonus strategies are expected in 2025, “driven by the movement toward pay transparency and clearer performance criteria”.
“Companies should look to diversify their compensation packages with benefit options to reduce employee dependence on monetary rewards, ultimately helping with business planning whilst maintaining much wider spread employee satisfaction year-round,” the company said via LinkedIn.
“Total reward statements allow for pay transparency and understanding of how employee benefits contribute towards compensation packages.”
