Ford COO puts his money into the business

Ford Motor COO Jim Farley spent the equivalent of almost his entire 2019 salary to purchase $1m of stock in a show of confidence in the vehicle manufacturer’s recovery prospects.

Farley, 57, earned $1.1m in salary as part of a compensation package that totalled $8.36m last year when he was president of Ford’s new business, technology and strategy. He was promoted to COO on March 1 in a management shake-up.

Farley bought 194,950 shares at an average price of $5.13 on April 30, according to a regulatory filing. The transaction increased his direct share ownership by 31% to 828,922. The stock is down 47% this year.

The vehicle maker has made clear that Farley is heir apparent to CEO Jim Hackett, 65.

Before the coronavirus closed Ford’s factories, Farley pledged to accelerate a turnaround at a company that has seen profits decline for three consecutive years.

“Everyone at Ford knows the situation we’re in,” Farley said on February 26 at a Wolfe Research conference. “I can see it on the faces of my colleagues and it takes me back to about 10 years ago. I’ve seen that look before.”

Farley’s challenges have only grown since. With North American plants shut since mid-March — and no restart dates scheduled — Ford is forecasting a $5bn loss in the second quarter, following a $2bn operating deficit in the first three months of the year. It burnt through $8bn in the first quarter, suspended its dividend, had its credit cut to junk and sold $8bn in junk bonds.

“We’ve gone through many things as a company for over 100 years, but this is unprecedented,” he said.