Amid Cuts to Thousands of Jobs, Ford Spares Top Executives

Detroit Free Press

Jamie Butters

January 22, 2003

Jan. 22--Ford Motor Co., which is cutting thousands of hourly jobs, did not meet a goal it set in July 2002 to cut at least six of its highest-paid executive positions by the end of 2003.

In fact, it even added one.

The target for winnowing down the 52 officers -- corporate vice presidents and above -- by 12 percent was announced by Chief Operating Officer Nick Scheele in a closed-circuit broadcast to employees.

According to Ford's Web sites, there are 53 now. That number is set to return to 52 on March 1, when two officers retire and another starts work.

But while Ford has carefully followed -- and even accelerated -- its plan to eliminate 35,000 hourly, salaried and contract positions, it has failed to make the executive cuts that Vice Chairman Allan Gilmour said in July 2002 would show "that the fat cats aren't getting any fatter."

The officer-reduction target was "an example, to illustrate a point: That we're going to make the structure in line with the other goals of cost cutting," spokeswoman Anne Marie Gattari said Wednesday. "That is being done, but it's maybe taking longer than we had originally expected."

And as the company moves from the cost-cutting phase of its 5-year revitalization plan to the new-product phase, "talent retention is important," she added.

The failure to trim the officer ranks is more symbolic than a bottom-line matter.

Scheele, the company's No. 2 executive -- behind only Chairman and Chief Executive Officer Bill Ford -- made the officer-reduction announcement during a difficult time. Showing that even the highest-ranking executives were sharing the pain was thought to encourage workers to give their best efforts and refocus the company on its core business of making and selling cars and trucks while it was shedding quick-lube shops, airplanes and junkyards it had acquired under former CEO Jacques Nasser.

But then the company created an officer position, when retired Ford executive Bruce Blythe returned last September as chief strategy officer.

The number of officers is to return to 52 on March 1 when Janet Mullins Grissom, vice president for Washington Affairs, and Martin Zimmerman, group vice president for corporate affairs, retire and Ziad Ojakli, President George W. Bush's liaison to the Senate, takes Zimmerman's job.

A new date has not been set for further slimming the officer ranks, Gattari said.

Whether the company has 53 officers or 45 matters little to investors in the company, which has total sales of about $160 billion.

Corporate vice presidents at global automakers often earn a base salary of about $400,000, plus perks and annual bonuses of up to 200 percent of the base salary, people familiar with the industry said.

Gattari declined to comment on the officers' pay.

Few Ford officers have received performance bonuses in recent years, as the company lost money in 2001 and 2002. (The company will announce 2003 financial results today.) But the vast majority of Ford's officers -- those who signed agreements not to jump to a rival -- got an extra year's pay in restricted stock.

"It's not exactly a Wall Street concern, but it speaks to the way the company does business," an analyst said on the condition that his name not be used.

Technically, the proposed executive cutbacks were not part of the Ford Revitalization Plan announced during the North American International Auto Show in January 2002.

That plan, which included thousands of job cuts already announced in Europe, spelled out 35,000 positions to be eliminated as part of the company's strategy to earn $7 billion before taxes by 2006.

After accelerating white-collar buyouts last year, and with two assembly plant closings and a shift elimination scheduled for North America this year, the company is on track to reach that 35,000 target by the end this year or early next year, Chief Financial Officer Don Leclair said this month.

The UAW did not return a call seeking comment on the matter, but executive largesse has been an ongoing concern of UAW members, who complain that the company has taken more from hourly workers than from others.

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