Ford CEO Jim Farley may not be struggling financially, but his 2024 compensation saw a significant drop of over $1.5 million as the automaker failed to meet its sales and performance targets. The shortfall highlights the impact of quality-related challenges that continue to burden the company.
Performance-Based Pay Tied to Company Success
Executive compensation at Ford, like many Fortune 500 companies, is directly linked to corporate performance metrics set by the board. According to Ford’s financial filings, the company’s overall achievement against the targets outlined in its 2024 Annual Performance Bonus Plan resulted in a business performance factor of just 69%. This reduction was largely attributed to persistent quality control issues, leading to increased recall and warranty repair costs.
“The Committee believes the final 2024 payouts for the Named Executives are consistent with the performance-based nature of the Annual Performance Bonus Plan, holding executives accountable for and emphasizing the importance of both their individual performance and the performance of the company,” Ford stated in its filing.
Quality Issues and EV Sales Impact Compensation
One of the primary drivers behind the missed targets was Ford’s struggle with quality metrics. Elevated warranty costs and recalls continued to weigh heavily on the company’s financials, impacting executive bonuses. While Ford’s EV division has also faced profitability concerns, those challenges were likely factored into the company’s overall budget projections.
Wage Gap Narrows, But CEO Pay Still Soars
Despite the compensation cut, Farley’s salary remains an eye-popping 253 times higher than the average Ford worker’s earnings. However, this marks a notable decrease from 312 times in 2023. Meanwhile, the median wage for Ford employees, excluding Farley’s salary, climbed to over $98,000 last year—a $14,000 increase from 2023, reflecting broader wage adjustments within the company.
Ford’s Future Hinges on Quality and Innovation
As Ford continues to navigate a rapidly evolving automotive landscape, addressing quality concerns and enhancing its EV strategy will be critical for restoring financial performance. Investors and employees alike will be watching closely to see if the automaker can turn these challenges into opportunities for growth in 2025 and beyond.
