Ford Motor Co. chairman and chief executive Bill Ford said Thursday he will forgo all compensation until the company, whose credit rating was downgraded to “junk” last week, is sustaining profitability.
At the company’s 50th annual shareholders meeting, Ford told about 50 shareholders that he has asked Ford’s compensation committee to tie his pay more directly to the company’s automotive performance.
He didn’t give a target for that performance, but said the company would have to be doing better than the break-even performance expected this year.
Ford, the great-grandson of company founder Henry Ford, has not been accepting a cash salary since taking the helm of the company in 2001, but his 2004 compensation package, which included stock options, was worth around $22 million.
Last month, the Dearborn, Mich.-based automaker reported it earned $1.2 billion in the first quarter, sharply below last year’s results. As in recent quarters, the company’s finance unit provided the bulk of the profits.
Ford said he didn’t agree with the decision by Standard & Poor’s Ratings Services to lower Ford’s rating to below investment grade. Standard & Poor’s cited declining sport utility vehicle sales, Ford’s longtime cash cows, among its reasons for the downgrade.
“We believe it discounts our very strong liquidity and access to diverse funding sources as well as the recent success of our new products,” such as the hot-selling Mustang, Ford said. “However, we clearly see the competitive realities and the challenges we face.”
Thursday, another credit rating agency, Moody’s Investors Service, cut Ford’s long-term debt rating to its lowest investment grade level – one notch above “junk” status.
Speculation about a possible downgrade began after Ford suspended its commercial paper program earlier Thursday.
Moody’s said the downgrade “recognizes that the company will fall significantly short of the benchmarks identified by Moody’s during October 2004” for its financial performance.