F Ford Motor Company

By John D. Stoll 

Ford Motor Co.'s board is looking to steer the boss's attention beyond the company's main cash cows, handing the executive a $2.5 million "strategic incentive" grant awarded for hastening the 114-year-old auto giant's transformation.

The equity grant, vesting in 2018, lifted Chief Executive Mark Fields' awarded compensation to $18.9 million last year, a $1.5 million annual increase compared with 2015. The compensation boost came in a period when Ford posted a modest profit decline and the company's share price continued to languish.

One-time awards aren't new for Ford's brass. Former CEO Alan Mulally once earned a considerable amount of stock for simplifying the company's product portfolio.

The details behind this new incentive grant reflect a board eager to change the profit equation at the Dearborn, Mich., auto maker.

In March of 2016, Mr. Fields struck a deal with the board, according to Ford's proxy statement published Friday morning. Management would heighten focus on a list of growth opportunities that included supercharging the company's China and Lincoln brands; cultivating a new unit focused on future moonshot ideas, such as car sharing; and "developing a lean mindset."

The proposed award had a payout range of between zero dollars and $3.75 million. He earned two-thirds of the maximum, and the resulting $2.5 million payout helped offset the reduced performance bonus Mr. Fields earned last year. The wider company underperformed on certain metrics, such as revenue and quality.

Ford's share price has slumped during Mr. Fields tenure, falling from about $17 when he took over in 2014 to $11.62 on Friday afternoon.

The darling of automotive stocks while Mr. Mulally was in charge, it now trades well behind General Motors Co. Ford's $46.1 billion market capitalization is virtually equal to the value assigned to Tesla Inc., a 13-year-old electric car company that is unprofitable and selling a fraction of the volume delivered by major players.

Mr. Fields' strategic incentive award comes as Ford's reliance on the North American light-truck market and its Ford Credit arm remains substantial. While Ford's China operation is growing and the company's iconic Lincoln brand is showing signs of rebirth, both units are far behind many rivals. Meanwhile, development of electric cars, self-driving vehicles and mobility experiments doesn't contribute to the bottom line.

The auto maker has delivered a sharp improvement in Europe, a cutthroat market that GM is abandoning after being unprofitable there for nearly two decades. Jim Farley, Ford's Europe chief, was awarded a top-performer bonus in 2016 after the unit earned $1.2 billion.

Still, nearly 90% of Ford's $10.4 billion profit comes from North American operations. This means Ford hasn't really changed its business model since the days Ford executives were chastised for the company's over-dependence on trucks, sport utilities and auto-loan business.

Bill Ford, now chairman, was chief executive during the prior decade when those criticisms began to emerge. Mr. Ford responded by turning over company leadership to Mr. Mullaly in 2006, ushering in an era of heightened focus on fuel-efficient small cars.

Now Mr. Ford is pushing Mr. Fields to pivot.

In the proxy, Ford cited several initiatives Mr. Fields' oversaw that led to the $2.5 million payout. Establishing a new subsidiary, Ford Smart Mobility LLC, is one of the more recognizable moves.

The unit is responsible for identifying and developing new mobility business opportunities. Ford Smart Mobility, for instance, recently acquired a ride-sharing firm. Ford is also investing in companies that develop technology needed to program and pilot autonomous vehicles.

Lincoln, once a dominant luxury brand, is putting the building blocks in place for a comeback. Central to that push is the introduction of the brand in China, helping increase global sales of the brand 24% last year.

Write to John D. Stoll at john.stoll@wsj.com

(END) Dow Jones Newswires

March 31, 2017 12:40 ET (16:40 GMT)

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