Ford CEO Emphasizes Quality and Cost Reduction

By Nora Eckert

DETROIT (Reuters) – Ford Motor (NYSE:F) CEO Jim Farley has informed employees that the automaker needs to accelerate efforts to improve quality and reduce costs. Manager bonuses, tied to these metrics, will be reduced to 65% of their total, according to three people familiar with the matter.

Farley introduced a new performance system that links bonuses to progress on key goals, aiming to transform the culture of the 121-year-old automaker and enhance accountability among employees. He announced the lowered bonuses during a town hall meeting on Wednesday.

> "I’m proud of the progress but we're not satisfied at all," Farley remarked during a third-quarter earnings presentation on Monday.

Ford executives stated that the company would meet only the lower end of its annual guidance, leading to a more than 10% drop in shares on Tuesday.

"When we meet or exceed our targets for those factors – and we achieve the ambitious goals of Ford+ – the team is rewarded," a Ford spokesman said on Thursday. "We are focused on lowering our costs, improving our quality and making Ford a higher growth, higher-margin, more capital-efficient, and more resilient business."

Bonuses may vary depending on the company's fourth-quarter performance, he added.