Ford’s CE salary increases by 19%

FORD Motor chief executive Mark Fields’s compensation jumped 19 percent last year as heavy spending to develop self-driving cars and electric vehicles weighs on profits.

Fields received $18.8 million (R251.9m) in salary, bonus and stock, Dearborn, Michigan-based Ford said on Friday in a regulatory filing. Including the value of his pension and other compensation, the total was $22.1m, compared with $18.6m in 2015.

The 56-year-old chief executive is leading an overhaul of Ford’s business model so the company can take on self-driving cars from the likes of Alphabet’s Waymo and Uber Technologies. Fields has warned the cost of investing in new technologies would reduce profits last year and this year before rebounding in 2018. The hefty spending as the US auto market plateaus contributed to Ford shares slumping 14 percent last year.

Drag on earnings “All these investments in electrification and mobility are going to be a drag on earnings for quite a while and that is holding the stock back,” said David Whiston, a Morningstar analyst. “But as a shareholder, you have to understand you’re paying Mark for the future. You’re paying him to get the mobility business up and running.”

Top executives got 76 percent of the targets set for them by the Ford’s board, according to the proxy. While management exceeded goals for automotive operating margin and cash flow, they achieved just 8 percent of their target for automotive revenue and also fell short on Ford Credit pretax profit and quality.

Since Fields became chief executive on July 1, 2014, Ford shares have fallen 32 percent to Thursday’s close, as the Standard & Poor’s 500 Index rose 20 percent. The stock slipped 0.5 percent to $11.62 as of 11.34am on Friday in New York trading.

Thanks to strong sales of sport utility vehicles and pickups, Ford posted pretax earnings of $10.4 billion last year. That was the second-best result in company history, though down $400m from 2015.

Ford said last week that pretax earnings will fall 13 percent this year to $9bn, due in part to $295m in recall costs during the first quarter.

“They have good numbers, a good balance sheet and a good cash position,” said Whiston, who rates Ford shares a hold. “But I tell investors there’s not a lot of reason to get overly excited this year for a meaningful rise” in the stock price.

Fields was among the first car executives to warn last year that US sales had peaked. –Bloomberg