Column

Starkman: $26.4 Million Compensation For Ford's Jim Farley is Giant FU to Biden, Whitmer and UAW

March 29, 2024, 7:03 PM

The writer is a Los Angeles freelancer and former Detroit News business reporter. He blogs at StarkmanApproved.com

By Eric Starkman

Let me cut to the chase for those who are numerically challenged: U.S. and Michigan taxpayers should be raging with anger that Ford awarded CEO Jim Farley $26.4 million for his performance last year, given the billions of dollars President Biden and Gov. Gretchen Whitmer have showered on the automaker.

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CEO Jim Farley and UAW's Shawn Fain

For UAW members who swallowed President Shawn Fain’s “Eat the Rich” message during strike talks last year, Farley has gotten even richer while thousands of your former members were thrown to the curb because of the “historic” contract your leader negotiated.

Farley’s total 2023 compensation amounted to 312 times the median annual total compensation of all Ford employees, up from 281 times in 2022.

Eat the Rich? Farley’s 2023 comp screams: Eat the UAW.

Farley’s comp is obscene especially given what CEOs of bigger and better run automotive companies are paid. The CEO of Toyota in 2022 was paid $6.7 million, compared to the $21 million Farley was paid that year. Toyota sells more than five times as many vehicles annually than Ford and is considerably more profitable. One third of Toyota’s sales are hybrids, the hottest selling segment that Toyota foresaw but Farley didn’t.

My head spins at the audacity of Ford’s board to give Farley a 26% raise in a year where he failed so miserably. Yes, the company was “solidly profitable” selling its problem plagued trucks and SUVs the Biden Administration says have contributed to “code red” for environmental harm, but Farley talked up a storm about how he was remaking Ford to become an EV powerhouse poised to take on Tesla.

“If you’re asking about the future, and being specific about the future, on what our mix is going to be, and how it’s going to change, yes our mix is definitely changing to pure battery electric,” Farley boasted to CNBC in 2021. “I’m not going to go into details today. Stay tuned.”

Ford's Lame EV Progress

Spoiler alert: Here’s a rundown of Farley’s EV progress.

The Detroit Free Press reported this week that Ford plans to slash the 2,100-workforce assigned to build its electric F-150 Lightning pickups at the Rouge Electric Vehicle Center in Dearborn. Some 700 workers will be assigned to Ford’s Michigan Assembly Plant in Wayne 24 miles away to build gas powered Bronco and Ranger vehicles. Ford is banking that about 700 employees will just go away and accept a $50,000 retirement package.

Ford had originally planned to build 180,000 or more Ford Lightning vehicles at its Rouge plant, but now plans call for only 55,000 units.

Perhaps some of you have noticed the hundreds, if not thousands, of Ford Lightnings piling up on lots around town. That’s because Ford has been holding the vehicles for a “quality review” since February 9, supposedly because of headlight issues. The Freep reported that Ford won’t begin shipping the Lightnings until April.

Three months to address headlight quality issues?

It’s a sad commentary about the demand for Ford’s electric pickups that dealers still have plenty available for the few who might want them, despite the holdup at the factory.


2023 Ford Mustang

Ford dealers are also having trouble unloading their 2023 electric Mustangs, despite massive price cuts and sweetheart financing offers. They also have a surplus of leftover 2023 Lincolns clogging up their lots.

The trade publication Carscoops reported that Ford is so desperate to cover up the Lincoln surplus that it shortened the amount of time 2023 vehicles must spend in a dealer’s loaner program, from 6 months/3,000 miles to 20 days/500 miles. Carscoops said this allows Ford to artificially inflate Lincoln’s sales numbers because vehicles can be recorded as sold as soon as they’ve completed the loaner requirements.

Clueless Analysts

That’s how they roll at Farley Ford. Clueless stock analysts won’t know the difference.

Farley also promised that Ford’s shoddy manufacturing would improve but that’s not the case. Ford last year issued 56 safety recalls amounting to more than 6.1 million vehicles. The company has already recalled 2 million vehicles in 2024.


President Biden in 2022 State of the Union.

President Biden, who made a cameo appearance on a UAW picket line last year and whose reelection was endorsed by the union, praised Ford in his 2022 State of the Union Address for its EV commitment and building EV plants in America.

"Just look around and you’ll see an amazing story. ... Companies are choosing to build new factories here, when just a few years ago, they would have built them overseas," Biden said. "Ford is investing $11 billion to build electric vehicles, creating 11,000 jobs across the country.”

What Biden didn’t disclose was that U.S. taxpayers would be on the hook for Ford’s EV expansion plans.

The $11 billion investment Biden was referring to was Ford’s ballyhooed plans to build a massive electric vehicle facility in Tennessee to build EV versions of its F-series trucks and two battery plants in Kentucky. What Biden didn’t disclose was that U.S. taxpayers would be on the hook for Ford’s investment.

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Jennifer Granholm

Energy Secretary and former Michigan governor Jennifer Granholm last year awarded Ford a sweetheart $9.2 billion loan to finance its Tennessee and Kentucky EV projects at well below market rates. The money came from a fund earmarked for innovative projects not yet commercially viable.

Ford’s chief lobbyist, a former DOE employee, was appointed an advisor to the fund weeks before Granholm approved the sweetheart loan. Ford’s general counsel also previously worked at the DOE, as well as serving in the Obama Administration.

Ford has already put one of its Kentucky battery plants on hold. Given that it has slashed Lightning production at its Rouge plant, it’s not yet clear if the company will follow through on its promise to employ 6,000 workers at the Tennessee plant slated to build more electric F-series pickups.

Grants and Subsidies

Then there’s the more than $1.7 billion in grants and subsidies Gov. Whitmer spearheaded so Ford could tear up fertile farmland and destroy century old trees in rural Marshall in western Michigan to build a potentially environmentally hazardous lithium battery plant near the banks of the Kalamazoo River.  The Center for Economic Accountability, which opposes government handouts, ranked Whitmer’s $1.7 billion Ford giveaway the biggest taxpayer rip-off of 2023.

Whitmer has been crowing about all the “good paying” manufacturing jobs she claims to have created. According to a Bloomberg report, manufacturing jobs in Michigan have declined nearly four percent since 2019.

Ford spinmeister T.R. Reid emphasized to the Detroit News that most of Farley’s compensation was comprised of stock grants, the future value of which are uncertain. Reid didn’t mention that the grants dilute the holdings of other shareholders, which is why Ford last year repurchased 51 million shares to “offset the dilutive effect of stock-based compensation.”

Moreover, Ford has gamed the system to ensure Farley’s and the Ford family’s stock holdings increase in value. Ford disclosed last month that it would shower investors with more cash, starting with an extra 18 cents-per-share dividend in the first quarter. The promised payouts boosted Ford’s stock price.

One would be wise to be skeptical of anything Ford says. The company on its website and in its PR messaging says it is “All In On America” while it proudly builds its electric Mustang in Mexico, along with its Maverick pickup trucks and its Bronco Sport SUVs. As well, Ford’s Mexico engineering facility is the biggest in Latin America and the company has about 11,000 employees in India.

Ford in 2022 paid $19.2 million to settle multistate allegations that it knowingly lied in its advertising.

U.S. and Michigan taxpayers should be demanding to know why their money is subsidizing Farley’s obscene compensation and Ford’s payouts to its shareholders.

 



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