This excerpt taken from the F DEF 14A filed Apr 3, 2009.
James D. Farley
In October 2007, we entered into an agreement with Mr. Farley relating to his joining Ford as Group Vice President, Chief Marketing and Communications Officer. Among other provisions, the agreement provided for Mr. Farleys annual salary (see column (c) of the Summary Compensation Table on p. 47), guaranteed bonuses based on his Incentive Bonus targets paid in 2008 and 2009 (see column (d) of the Summary Compensation Table on p. 47), relocation assistance (see column (i) of the Summary Compensation Table on p. 47), certain retirement benefits, and a severance arrangement (see Potential Payments Upon Termination or Change of Control James D. Farley on p. 64).
The severance provision provides that in the event Mr. Farleys employment is terminated for any reason other than for cause during the first two years of his employment, he is entitled to two years base salary plus the equivalent of two years of his Incentive Bonus target. Mr. Farley would be prohibited from working for a competitor of Ford for two years after his employment is terminated.
Under the terms of the employment agreement, Mr. Farley participates in the Ford Retirement Plan and, in consideration of the retirement benefits Mr. Farley forfeited with his prior employer, we agreed to provide him a
series of lump-sum payments designed to make-up the forfeited amounts. The lump-sum amounts will be determined as follows, less any retirement benefit otherwise payable from his prior employer or from Ford:
The Committee approved the compensation arrangements in order to persuade Mr. Farley to join Ford from his previous position at Toyota. The Committee believes these compensation terms, which provided upfront cash and equity incentives, as well as recognition of Mr. Farley foregoing certain retirement benefits, were reasonable given Mr. Farleys experience and success at his prior employer. The severance terms are reasonable in amounts and duration and appropriately protect Mr. Farleys interests in joining a company in the midst of a turnaround and our interests in protecting the Company should we terminate his employment.