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Ford is scaling back stock bonuses for middle managers, with about half of eligible employees set to lose out on the incentive.
The move is part of CEO Jim Farley’s broader cost-cutting strategy aimed at improving efficiency and streamlining operations. Senior managers will now determine which of their middle management staff will receive stock grants this year.
Stock awards, traditionally distributed in March, are a key component of Ford’s performance-based compensation system. While the company says the change is meant to reward top performers, it aligns with Farley’s ongoing efforts to reduce costs and drive profitability amid financial pressures.
Ford performance dip
Despite reporting a $5.9 billion net income for 2024 - a 37% increase year-over-year - Ford anticipates a decline of up to 31% in adjusted operating profit for 2025.
The company has struggled with inefficiencies across its electric and traditional vehicle divisions, lagging behind competitors in cost-cutting and profitability. Ford’s stock price has dropped about 23% over the past year, while rival General Motors has gained 23%, thanks to more aggressive financial discipline.
Reduced bonus payouts
Employees were informed of the stock award reductions during an internal briefing last week. Ford framed the change as a step toward fostering a high-performance culture. Stock grants, which vest over three years, have traditionally been used to attract and retain talent - an approach Farley has emphasized as critical to Ford’s competitiveness.
Beyond stock grants, Ford’s overall bonus structure depends on company-wide performance metrics, including vehicle quality, earnings, and electric vehicle sales. In 2024, those factors made up 69% of total bonus potential, but lower-than-expected results led to reduced payouts.
As Ford accelerates its transformation into a leaner, more competitive company, it faces increasing pressure from General Motors, Chinese automakers, and Tesla. Farley continues to stress the need for a cultural shift, focusing on talent retention and operational efficiency.
This latest cost-cutting measure follows Ford’s announcement of an additional $1billion in planned expense reductions for 2025. While the company insists that changes to stock grants are separate from its broader cost-cutting initiative, they signal a tightening approach to employee incentives and financial management.
