Ford to Reinstate Managers' Bonuses After 3 Year Hiatius

Chicago April 21, 2004; Elizabeth Rigby writing for the Financial Times reported that Ford Motor Company plans to reinstate bonuses for middle and senior managers this year and will start contributing again to a key US employee retirement scheme, suggesting that the automaker's financial health is improving after a period of heavy losses.

This will be the first time in three years that Ford's 6,200 middle and upper management will receive bonuses. Payments were suspended in 2002 when Ford launched a $9bn cost-cutting programme aimed at delivering $7bn in pre-tax profits by mid-decade.

As part of the belt-tightening exercise, the company made several thousand job cuts, cancelled partial matching contributions to about 45,000 employees' pension funds and scrapped various bonus schemes.

After a tough run, Ford appeared back on track in January as it reported its first full-year net profit in three years and said it expected to earn pre-tax profits of $900m-$1.1bn in the coming year, delivering earnings per share of $1.20-$1.30.

The company plans to cut a further $500m of costs this year, having shaved $3.2bn from its cost base in 2003. Ford said yesterday that the move on bonuses and pension contributions would not affect cost-saving targets.

The reinstatement of bonuses comes just ahead of Ford's annual filing to the Securities and Exchange Commission, the deadline for which is March 15.

Employees will find out how much their bonuses will be tomorrow, while the pension contributions will begin again in July. Ford will also still pay bonuses for up to 33,000 lower level managers and other staff in US and Canada. The automaker declined to comment on how much it had earmarked for the bonus pool.