CHICAGO -- Next time you have to dip into your pocket or purse because your new Ford Motor Co. vehicle has a problem, you can smile.
When you spend money to repair that car, it will cost Ford executives.
In an 8-K form filed with the Securities and Exchange Commission, Ford detailed a significant change in how it determines the amount of stock bonuses to award its top executives.
Oh, it will weigh the usual stuff: stock performance, spending and cost-cutting, the number of new vehicles introduced and market share.
But there will be a change. One of the factors that went into the bonus was "high time in service improvement," which, when translated from legalese, meant things gone wrong and repairs needed with the vehicles after three years in customers' hands.
Now it will be things gone wrong after only three months.
The better the quality, the better the bonus, the worse the quality . . . well, you get the idea.
Ford said the change was made because the three-month period "is a more useful measure of quality and aligns management's performance more closely to the company's customer satisfaction goals."
Ford also reported quality-related costs increased by $500 million in the first nine months of 2005 from the 2004 period, the latest figures available.
Cost-cutting is one of the primary goals of Ford's "Way Ford" program, its blueprint to return to profitability in North America.
And the higher the quality, the lower the cost to realize a profit.
Ironically, one executive won't be affected by the change: Chairman Bill Ford, who refuses to take any compensation until the automaker is profitable in North American again.
Despite his gesture to put company profit before personal gain, the board's compensation committee awarded Ford a performance bonus for last year. Officials wouldn't disclose the amount but noted that Ford directed the check be sent to charity.
Perhaps to GM?
Nah.
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