Ford Facing Executive Meltdown

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If you were an up-and-coming corporate manager, how much longer would you keep working for an American car maker? What if they had pretty much stopped paying bonuses due to low profitability? Increasingly, according to a report in the Wall Street Journal, executives at Ford seem to be answering: not very long.
Ford didn’t paid out year-end bonuses for last year, and doesn’t expect bonuses this year. In fact, its executives have received bonuses in only two of the last five years. Meanwhile, they get to read about their friends from business school cashing in huge tech options packages and raking in impressive bonuses.
But the problems go beyond just short-term economics. After too many years in the auto industry an executive may be tainted, seen as an old dog unable to learn the tricks of the new economy. So the incentive is to get out earlier and start racking up experience in a broader range of industries.
High executive pay packages and bonuses get a lot of attention but very little of the commentary points out that executive retention is getting tougher for a lot of industries. Particularly in manufacturing, where US companies face stiff competition abroad, companies may find they need to pay out higher salaries and bigger bonuses in order to retain executives who might otherwise be lured away into higher-tech, growth industries.
This puts companies like Ford in a tight spot. Either they pump up executive compensation even while recording losses or low profits, thereby angering shareholders, or they keep a lid on compensation and risk losing some of their best corporate managers. There's a technical term for this situation--downward spiral.

Managers See Leaving Ford As a Better Idea
[Wall Street Journal]

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