8-KLeadership ChangesMaterial AgreementsExhibits & Filings

FORD MOTOR CO 8-K Report, Material Agreement (Sep 8, 2006)

Filed September 8, 2006For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company's August 31, 2006, 8-K filing announces a significant leadership change with the appointment of Alan Mulally as President and Chief Executive Officer, effective September 1, 2006. This marks a pivotal moment for the company as it brings in an external leader from Boeing to steer Ford. William Clay Ford Jr. transitions to Executive Chairman, retaining his role on the Board. This executive reshuffling signals a potential strategic shift and the company's efforts to revitalize its operations under new leadership. The filing also details the comprehensive compensation package for Mr. Mulally, including a substantial base salary, hiring bonus, and significant stock options and restricted stock units designed to incentivize performance and align his interests with shareholders. The terms of his employment, including severance provisions and a non-compete clause, are outlined, reflecting the company's commitment to securing top talent during a critical period.

Key Highlights

  • 1Alan Mulally appointed President and CEO, replacing William Clay Ford Jr., effective September 1, 2006.
  • 2William Clay Ford Jr. transitions to Executive Chairman of the Board.
  • 3Mr. Mulally's compensation includes a $2,000,000 annual base salary.
  • 4Significant hiring bonus of $7,500,000 and $11,000,000 for forfeited awards from his previous employer.
  • 5Grant of 3,000,000 nonqualified stock options with tiered vesting based on time.
  • 6Grant of 1,000,000 performance-based stock options tied to stock price thresholds ($15, $20, $25, $30).
  • 7Grant of 600,000 restricted stock units with tiered vesting and cash settlement based on closing price.
  • 8Severance provisions include up to two times annual base salary and target bonus if terminated without cause or in case of a change in control within five years.

Frequently Asked Questions

Alan Mulally, aged 61, was appointed President and CEO of Ford Motor Company. Prior to joining Ford, he served as Executive Vice President of The Boeing Company and President and CEO of Boeing Commercial Airplanes since March 2001. He also held various other executive positions within Boeing.

This change represents a significant shift for Ford as it brings in an external CEO from the aerospace industry. It signals the company's intent to drive a new strategic direction and operational improvements under experienced leadership, moving beyond its long-standing family leadership structure in operational roles.

Mr. Mulally receives a base salary of $2,000,000 annually. He was also granted a $7,500,000 hiring bonus and $11,000,000 as compensation for forfeited awards from his former employer. Additionally, he received substantial grants of stock options and restricted stock units designed to incentivize performance and stock price appreciation.

If Ford terminates Mr. Mulally's employment without cause during the first five years, or if there's a change in control and he terminates for good reason within five years, he is entitled to severance equal to two times his annual base salary and targeted bonus. Vesting requirements on initial stock options and restricted stock units would also be removed. He is subject to a five-year non-compete clause in such scenarios.