$20.5m Compensation For Ford Chief Takes Home

Ford Motor Co chairman and chief executive officer Alex Trotman, rivalling Lee Iacoccas best year in the car business, took home $20.5 million in cash compensation and restricted stock awards last year, Ford disclosed on Tuesday.

Trotmans record compensation, which accompanied record Ford profits in 1997, matches the $20.5 million in cash and stock that Iacocca reaped from Chrysler Corp as chairman in 1986.

Trotmans 1997 base salary of $2 million was mostly unchanged from the $1.9 million he earned in 1996. His bonus jumped to $7 million a company record from $2.5 million, reflecting Fords $6.9 billion in 1997 earnings.

 

However, Trotman got a big boost from $9.8 million in restricted stock he received last year for company financial, product, quality and other performance in 1996, Ford said in its 1997 proxy statement released on Tuesday.

Ford discloses the long-term incentive plan award payouts the year after they are set. The 1997 awards will not be determined until the middle of this year and will be disclosed in next years proxy statement.

Excluding the restricted stock and future option values, Trotmans 1997 compensation was $10.7 million, the highest ever for a Ford CEO. His equivalent compensation for 1996 was $5.7 million.

Other compensation Trotman received last year included: $940,135 for cash dividend equivalents paid on restricted stock and contingent stock rights; $630,754 in other dividend equivalents on restricted stock; and $119,996 in matching contributions under Fords employee savings plan.

Ford awarded Trotman 10-year options on 300,000 shares of common stock that have an exercise price of $31.9375. Ford valued the options at $1.7 million.

Trotman did not exercise any options in 1997.

Other senior executives also fared well at Ford, which had a 57 per cent increase in its stock value in 1997, including dividends. Automotive operations president Jacques Nasser earned $3.7 million in salary and bonus. Included in that was a $3 million bonus, up from $950,000 for 1996.

Vice-chairman Wayne Booker, who overseas international operations, vice chairman Edward Hagenlocker, who is in charge of Fords auto parts and other units and Kenneth Whipple, the head of the Financial Services Group, all had bonuses last year ranging from $2.3 million to $2.6 million.

David Cole, director of the University of Michigans Office for the study of Automotive Transportation, said Trotmans earnings reflect the changes he has pushed through with Ford 2000, a broad reorganisation of how the automaker develops car and truck products.

That reward is on the basis of performance, and the numbers really have indicated performance in the last year, he said.Also included in Fords proxy on Tuesday are proposals for changing the companys bonus and stock option plans aimed at connecting pay more closely to shareholder value and other quality targets. It is the first substantial revision to the bonus plan since 1955.

Under the new plan, 5,000 salaried employees will have their bonus compensation tied to a variety of specific goals, including after-tax return on sales, cost reductions and internal customer satisfaction indexes.

The total bonus pool could rise by as much as 50 per cent if employees reach the top end of the scales.

Vehicle quality and customer satisfaction alone could increase or cut the pool as much as 33 per cent. Ford paid out $404 million in bonuses in 1997, the proxy said.

Ford is also proposing a new long-term incentive plan that would expand the number of people eligible for stock options to 5,200, up from 1,500 to 2,000 now.

The plan would also extend a stock award program to the top 350 executives, up from the 60 to 70 executives who are eligible now.

Chrysler is expected to release its proxy statement on Friday. General Motors Corp is scheduled to release its proxy next week.