Ford Resumes Bonuses, 401(k) Contributions

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Ford Resumes Bonuses, 401(k) Contributions

By John Porretto, Associated Press

March 12, 2004

Ford Motor Co., coming off its first profitable year since 2000, will pay bonuses to middle and upper-level managers worldwide for 2003 and reinstate partial contributions to U.S. salaried workers' 401(k) accounts, the automaker said Thursday.

About 6,200 members of middle and upper management, including corporate officers, are eligible for what the company called "modest" bonuses. The payments are expected to be made Friday.

That portion of Ford's work force did not receive bonuses the past two years. Ford made $495 million in 2003 after losing $980 million in 2002 and more than $5 billion in 2001.

"Two years ago we began a long-term effort to renew the competitiveness and profitability of our company," chairman and chief executive Bill Ford Jr. told salaried workers in an e-mail. "Thanks to your efforts we made solid progress and began moving in the right direction in 2002. That progress continued last year."

The company, in the midst of an aggressive turnaround bid, also said it will resume 401(k) matching contributions July 1. They'll amount to 60 cents on the dollar for up to 5 percent of U.S. employees' base salaries.
When Ford discontinued the payments in 2002, the company was paying 60 cents on the dollar for up to 10 percent of the base salary.

Among the other domestic automakers, DaimlerChrysler AG's Chrysler Group announced late last year it also will reinstate company-paid contributions to employee 401(k) plans. At Chrysler, which halted the matches in 2002, enrolled employees will receive matching contributions of 50 cents on the dollar for up to 6 percent of their base salary beginning April 1. About 15,000 employees are eligible.

General Motors Corp. has maintained its matching 401(k) contributions. About 40,000 employees are eligible for 50 cents on the dollar on up to 6 percent of their base salary.

Business conditions permitting, Ford may grant merit pay increases to salaried workers in the United States and Canada. The company will make that decision this summer.

The automaker, however, has frozen the salaries of Bill Ford Jr. and other top officers.

On Wednesday, Ford made profit-sharing payments to roughly 98,000 U.S. hourly workers represented by the United Auto Workers. The average payment was $195.

Ford executives have said they expect a wave of new products and continued cost savings to increase profits in 2004. The world's second-largest automaker says it anticipates 2004 earnings per share of $1.20 to $1.30, excluding special items. That equates to a pretax profit of $3.5 billion to $3.8 billion.

In trading Thursday on the New York Stock Exchange, Ford shares fell 17 cents to close at $13.02.