DEF 14A 1 k50070def14a.htm DEF 14A def14a
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

  Filed by the Registrant   þ
  Filed by a Party other than the Registrant   o
 
  Check the appropriate box:

  o   Preliminary Proxy Statement
  o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  þ   Definitive Proxy Statement
  o   Definitive Additional Materials
  o   Soliciting Material Pursuant to §240.14a-12

Ford Motor Company


(Name of Registrant as Specified In Its Charter)


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

      Payment of Filing Fee (Check the appropriate box):

  þ   No fee required.
  o   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

        1) Title of each class of securities to which transaction applies:


        2) Aggregate number of securities to which transaction applies:


        3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):


        4) Proposed maximum aggregate value of transaction:


        5) Total fee paid:


        o   Fee paid previously with preliminary materials.


        o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

        1) Amount Previously Paid:


        2) Form, Schedule or Registration Statement No.:


        3) Filing Party:


        4) Date Filed:



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(FORD LOGO)
 
Ford Motor Company
 
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting
to Be Held on May 12, 2011
 
Notice of 2011
Annual Meeting of Shareholders
and Proxy Statement
 


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(FORD LOGO)
 
Ford Motor Company
One American Road
Dearborn, Michigan 48126-2798
 
April 1, 2011
 
 
Dear Shareholders:
 
Our 2011 annual meeting of shareholders will be held at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware, on Thursday, May 12, 2011. The annual meeting will begin promptly at 8:30 a.m., Eastern Time. If you plan to attend the meeting, please see the instructions on page 4.
 
Please read these materials so that you’ll know what we plan to do at the meeting. Also, please either sign and return the accompanying proxy card in the postage-paid envelope or instruct us by telephone or via the Internet as to how you would like your shares voted. This way, your shares will be voted as you direct even if you can’t attend the meeting. Instructions on how to vote your shares by telephone or via the Internet are on the proxy card enclosed with this proxy statement.
 
-s- William Clay Ford, Jr.
 
William Clay Ford, Jr.
Chairman of the Board
 
Whether or not you plan to attend the meeting, please provide your proxy by calling the toll-free telephone number, using the Internet, or filling in, signing, dating, and promptly mailing the accompanying proxy card in the enclosed envelope.


 

 
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(FORD LOGO)
 
 
Notice of Annual Meeting of Shareholders
of Ford Motor Company
 
         
Time:
  8:30 a.m., Eastern Time, Thursday, May 12, 2011
Place:
  Hotel du Pont
11th and Market Streets
Wilmington, Delaware
Proposals:
  1.   The election of directors.
    2.   The ratification of the selection of PricewaterhouseCoopers LLP as Ford’s independent registered public accounting firm for 2011.
    3.   A non-binding shareholder advisory vote to approve the compensation of the Named Executives.
    4.   A non-binding shareholder advisory vote on the frequency of a shareholder vote to approve the compensation of the Named Executives.
    5.   A shareholder proposal related to disclosure of the Company’s political contributions.
    6.   A shareholder proposal related to consideration of a recapitalization plan to provide that all of the Company’s outstanding stock have one vote per share.
    7.   A shareholder proposal requesting the Board to allow holders of 10% of outstanding common stock to call special meetings of shareholders.
Who Can Vote:
  You can vote if you were a shareholder of record at the close of business on March 16, 2011.
Date of
Notification:
  Shareholders are being notified of this proxy statement and the form of proxy beginning April 1, 2011.
 
 -s- Peter J. Sherry, Jr.
Peter J. Sherry, Jr.
Secretary
 
April 1, 2011


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Defined Terms
 
 
“Annual Incentive Compensation Plan” or “Incentive Bonus Plan” means Ford’s Annual Incentive Compensation Plan.
 
“Class B Stock” means Ford’s Class B Stock.
 
“Deferred Compensation Plan” means Ford’s Deferred Compensation Plan.
 
“Dividend Equivalent” means cash or shares of common stock (or common stock units) equal in value to dividends, if any, paid on shares of common stock.
 
“Final Award” means shares of common stock, Restricted Stock Units, and/or cash awarded by the Compensation Committee under a Performance Unit.
 
“Ford” or “we” or “Company” means Ford Motor Company.
 
“Long-Term Incentive Plan” means Ford’s 1998 or 2008 Long-Term Incentive Plan.
 
“Named Executives” means the executives named in the Summary Compensation Table on p. 51.
 
“NYSE” means the New York Stock Exchange, Inc.
 
“Performance Unit” means, under the Long-Term Incentive Plan, an award of the right to earn up to a certain number of shares of common stock, Restricted Stock Units, or cash, or a combination of cash and shares of common stock or Restricted Stock Units, based on performance against specified goals established by the Compensation Committee.
 
“Restricted Stock Unit” means, under the Long-Term Incentive Plan, the right to receive a share of common stock, or cash equivalent to the value of a share of common stock, when the restriction period ends, as determined by the Compensation Committee.
 
“SEC” means the United States Securities and Exchange Commission.
 
“Senior Convertible Notes” means the Ford Motor Company 4.25% Senior Convertible Notes due 2036 and the Ford Motor Company 4.25% Senior Convertible Notes due 2016.
 
“Trust Preferred Securities” means the Ford Motor Company Capital Trust II 6.50% Cumulative Convertible Trust Preferred Securities.
 
“1998 Plan” means Ford’s 1998 Long-Term Incentive Plan.
 
“2008 Plan” means Ford’s 2008 Long-Term Incentive Plan.


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(FORD LOGO)
Ford Motor Company
 
 
Proxy Statement
­ ­
 
The Board of Directors is soliciting proxies to be used at the annual meeting of shareholders to be held on Thursday, May 12, 2011, beginning at 8:30 a.m., Eastern Time, at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware. This proxy statement and the enclosed form of proxy are being made available to shareholders beginning April 1, 2011.
 
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
 
What is a proxy?
 
A proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card.
 
What is a proxy statement?
 
It is a document that SEC regulations require that we make available to you when we ask you to vote your stock at the annual meeting.
 
What is the purpose of the annual meeting?
 
At our annual meeting, shareholders will act upon the matters outlined in the notice of meeting, including the election of directors, ratification of the selection of the Company’s independent registered public accounting firm, a non-binding shareholder advisory vote to approve the compensation of the Named Executives, a non-binding shareholder advisory vote on whether an advisory vote to approve the compensation of the Named Executives should be held every one, two, or three years, and consideration of three shareholder proposals, if presented at the meeting. Also, management will report on the state of the Company and respond to questions from shareholders.
 
What is the record date and what does it mean?
 
The record date for the annual meeting is March 16, 2011. The record date is established by the Board of Directors as required by Delaware law. Holders of common stock and holders of Class B Stock at the close of business on the record date are entitled to receive notice of the meeting and to vote at the meeting and any adjournments or postponements of the meeting.
 
Who is entitled to vote at the annual meeting?
 
Holders of common stock and holders of Class B Stock at the close of business on the record date may vote at the meeting. Holders of Senior Convertible Notes cannot vote at this meeting.
 
On March 16, 2011, 3,725,990,448 shares of common stock and 70,852,076 shares of Class B Stock were outstanding and, thus, are eligible to be voted.


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What are the voting rights of the holders of common stock and Class B Stock?
 
Holders of common stock and holders of Class B Stock will vote together without regard to class on the matters to be voted upon at the meeting. Holders of common stock have 60% of the general voting power. Holders of Class B Stock have the remaining 40% of the general voting power.
 
Each outstanding share of common stock will be entitled to one vote on each matter to be voted upon.
 
The number of votes for each share of Class B Stock is calculated each year in accordance with the Company’s Restated Certificate of Incorporation. At this year’s meeting, each outstanding share of Class B Stock will be entitled to 35.059 votes on each matter to be voted upon.
 
What is the difference between a shareholder of record and a “street name” holder?
 
If your shares are registered directly in your name with Computershare Trust Company, N.A., the Company’s stock transfer agent, you are considered the shareholder of record with respect to those shares.
 
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of these shares, and your shares are held in “street name.”
 
How do I vote my shares?
 
If you are a shareholder of record, you can give a proxy to be voted at the meeting:
 
  •  over the telephone by calling a toll-free number;
 
  •  electronically, using the Internet; or
 
  •  by mailing in a proxy card.
 
The telephone and Internet voting procedures have been set up for your convenience and have been designed to authenticate your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly. If you are a shareholder of record and you would like to vote by telephone or the Internet, please refer to the specific instructions set forth on the enclosed proxy card. If you wish to vote using a paper format and you return your signed proxy to us before the annual meeting, we will vote your shares as you direct.
 
If you are a Company employee or retiree participating in either of the Company’s Savings and Stock Investment Plan for Salaried Employees or Tax-Efficient Savings Plan for Hourly Employees, then you may be receiving this material because of shares held for you in those plans. In that case, you may follow the instructions from the plan trustee on how to vote those shares. The trustee will vote the shares in accordance with your instructions and the terms of the plan. If you hold shares in any of these plans, the trustee may vote the shares held for you even if you do not direct the trustee how to vote. In these cases, the trustee will vote any shares for which the trustee does not receive instructions in the same proportion as the trustee votes the shares for which the trustee does receive instructions.
 
If you hold your shares in “street name,” you must vote your shares in the manner prescribed by your broker or nominee. Your broker or nominee has enclosed, or explained how you can access, a voting instruction card for you to use in directing the broker or nominee how to vote your shares.
 
Are votes confidential? Who counts the votes?
 
The votes of all shareholders will be held in confidence from directors, officers and employees of the Company except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in case of a contested proxy solicitation; (c) if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to management; or (d) to allow the independent inspectors of


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election to certify the results of the vote. We will also continue, as we have for many years, to retain an independent tabulator to receive and tabulate the proxies and independent inspectors of election to certify the results.
 
Can I vote my shares in person at the annual meeting?
 
Yes. If you are a shareholder of record, you may vote your shares at the meeting by completing a ballot at the meeting.
 
However, if you are a “street name” holder, you may vote your shares in person only if you obtain a signed proxy from your broker or nominee giving you the right to vote the shares.
 
If you hold shares in either of the Company’s Savings and Stock Investment Plan for Salaried Employees or Tax-Efficient Savings Plan for Hourly Employees, you cannot vote at the meeting. Your shares will be voted by the trustee of those plans as described on p. 2.
 
Even if you currently plan to attend the meeting, we recommend that you also submit your proxy as described above so that your vote will be counted if you later decide not to attend the meeting.
 
What are my choices when voting?
 
In the election of directors, you may vote for all nominees, or you may vote against one or more nominees. The proposal related to the election of directors is described in this proxy statement beginning at p. 5.
 
For each of the other proposals, you may vote for the proposal, against the proposal, or abstain from voting on the proposal, with the exception of Proposal 4, where you are being asked to vote for “1 year,” “2 years,” “3 years,” or you may abstain. These proposals are described in this proxy statement beginning at p. 71.
 
Proposals 1, 2, 3, and 4 will be presented at the meeting by management, and the rest are expected to be presented by shareholders.
 
What are the Board’s recommendations?
 
The Board of Directors recommends a vote FOR all of the nominees for director (Proposal 1), FOR ratifying the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2011 (Proposal 2), FOR approval of the compensation of the Named Executives (Proposal 3), for “1 YEAR” on the frequency of providing a shareholder advisory vote to approve the compensation of the Named Executives (Proposal 4), and AGAINST the shareholder proposals (Proposals 5 through 7).
 
What if I do not specify how I want my shares voted?
 
If you do not specify on your proxy card (or when giving your proxy by telephone or the Internet) how you want to vote your shares, we will vote them FOR all of the nominees for director (Proposal 1), FOR ratifying the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2011 (Proposal 2), FOR approval of the compensation of the Named Executives (Proposal 3), for “1 YEAR” on the frequency of providing a shareholder advisory vote to approve the compensation of the Named Executives (Proposal 4), and AGAINST the shareholder proposals (Proposals 5 through 7).
 
Can I change my vote?
 
Yes. You can revoke your proxy at any time before it is exercised in any of three ways:
 
  •  by submitting written notice of revocation to the Secretary of the Company;
 
  •  by submitting another proxy by telephone, via the Internet or by mail that is later dated and, if by mail, that is properly signed; or
 
  •  by voting in person at the meeting.


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What percentage of the vote is required for a proposal to be approved?
 
A majority of the votes that could be cast by shareholders who are either present in person or represented by proxy at the meeting is required to elect the nominees for director and to approve each proposal, other than Proposal 4. With respect to Proposal 4, the option of “1 year,” “2 years,” or “3 years,” that receives a majority of all the votes cast by shareholders will indicate to the Board of Directors the preference of the shareholders with respect to the frequency of the advisory vote on the approval of the compensation of the Named Executives. In the absence of a majority of votes cast in support of any one frequency, the option of 1 year, 2 years, or 3 years that receives the greatest number of votes will indicate such preference. The votes are computed for each share as described on p. 2.
 
The total number of votes that could be cast at the meeting is the number of votes actually cast plus the number of abstentions. Abstentions are counted as “shares present” at the meeting for purposes of determining whether a quorum exists and have the effect of a vote “against” any matter as to which they are specified.
 
Proxies submitted by brokers that do not indicate a vote for some or all of the proposals because they don’t have discretionary voting authority and haven’t received instructions as to how to vote on those proposals (so-called “broker non-votes”) are not considered “shares present” and will not affect the outcome of the vote.
 
How can I attend the annual meeting?
 
If you are a shareholder of record and you plan to attend the annual meeting, please let us know by indicating in the appropriate place when you return your proxy. Please tear off the top portion of your proxy card where indicated and bring it with you to the meeting. This portion of the card will serve as your ticket and will admit you and one guest.
 
If you are a “street name” shareholder, tell your broker or nominee that you’re planning to attend the meeting and would like a “legal proxy.” Then simply bring that form to the meeting and we’ll give you a ticket at the door that will admit you and one guest. If you can’t get a legal proxy in time, we can still give you a ticket at the door if you bring a copy of your brokerage account statement showing that you owned Ford stock as of the record date, March 16, 2011.
 
Are there any rules regarding admission?
 
Each shareholder and guest will be asked to present valid government-issued picture identification, such as a driver’s license or passport, before being admitted to the meeting. Cameras, recording devices, and other electronic devices will not be permitted at the meeting and attendees will be subject to security inspections. We encourage you to leave any such items at home. We will not be responsible for any items checked at the door.
 
Are there any other matters to be acted upon at the annual meeting?
 
We do not know of any other matters to be presented or acted upon at the meeting. Under our By-Laws, no business besides that stated in the meeting notice may be transacted at any meeting of shareholders. If any other matter is presented at the meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the person or persons voting those shares.


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Election of Directors
(Proposal 1 on the Proxy Card)
 
Fourteen directors will be elected at this year’s annual meeting. Each director will serve until the next annual meeting or until he or she is succeeded by another qualified director who has been elected.
 
William Clay Ford, who had been a member of the Board of Directors since 1948, retired from the Board effective May 12, 2005. As with previous years, the Board of Directors has again requested that Mr. Ford serve as Director Emeritus so that the Board can continue to avail itself of his wisdom, judgment and experience, and Mr. Ford has agreed to so serve. Mr. Ford is entitled to attend Board and committee meetings and participate in discussion of matters that come before the Board or its committees, although he is not entitled to vote upon any such matters and no longer receives compensation as a non-employee Board member.
 
We will vote your shares as you specify when providing your proxy. If you do not specify how you want your shares voted when you provide your proxy, we will vote them for the election of all of the nominees listed below. If unforeseen circumstances (such as death or disability) make it necessary for the Board of Directors to substitute another person for any of the nominees, we will vote your shares for that other person.
 
Qualifications Considered for Nominees
 
Because Ford is a large and complex company, the Nominating and Governance Committee considers numerous qualifications when considering candidates for the Board. Among the most important qualities directors should possess are the highest personal and professional ethical standards, integrity, and values. They should be committed to representing the long-term interests of all of the shareholders. Directors must also have practical wisdom and mature judgment. Directors must be objective and inquisitive. Ford recognizes the value of diversity and we endeavor to have a diverse Board, with experience in business, government, education and technology, and in areas that are relevant to the Company’s global activities. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time. Directors should also be prepared to offer their resignation in the event of any significant change in their personal circumstances that could affect the discharge of their responsibilities as directors of the Company, including a change in their principal job responsibilities.
 
Each of the nominees for director is now a member of the Board of Directors, which met ten times during 2010. Each of the nominees for director attended at least 75% of the combined Board of Director and committee meetings held during the periods served by such nominee in 2010. The nominees provided the following information about themselves as of February 1, 2011. Additionally, for each director-nominee we have disclosed the particular experience, qualifications, attributes, or skills that led the Board to conclude that the nominee should serve as a director.


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Nominees
     
     
Stephen G. Butler   (STEPHEN G. BUTLER PHOTO)
Age: 63 — Director Since: 2004

Principal Occupation: Retired Chairman and Chief Executive Officer, KPMG, LLP

Recent Business Experience: Mr. Butler served as Chairman and CEO of KPMG, LLP from 1996 until his retirement on June 30, 2002. Mr. Butler held a variety of management positions, both in the United States and internationally, during his 33-year career at KPMG.

Current Directorships: Cooper Industries, PLC; ConAgra Foods, Inc.

Reasons for Nomination: The Board believes Mr. Butler’s extensive experience in the accounting profession, both in the United States and internationally, as well as his executive experience as Chairman and CEO of KPMG for several years, provides Ford with financial expertise that has been instrumental in guiding the Company through its restructuring and that will be equally important as the Company grows. As Chair of the Audit Committee and its designated financial expert, Mr. Butler continues to add significant value to the goal of improving our balance sheet while fulfilling our financial reporting obligations accurately and transparently.
     
Kimberly A. Casiano   (KIMBERLY A. CASIANO PHOTO)
Age: 53 — Director Since: 2003

Principal Occupation: President, Kimberly Casiano & Associates Inc., San Juan,
Puerto Rico

Recent Business Experience: On January 1, 2010, Ms. Casiano established Kimberly Casiano & Associates Inc., where she is President. The firm provides advisory services in marketing, recruiting, communications, advocacy, and diversity to target the U.S. Hispanic market. From 1994 until December 31, 2009, Ms. Casiano was President and Chief Operating Officer of Casiano Communications, a publishing and direct marketing company. From 1987 to 1994, she held a number of management positions within Casiano Communications in the periodicals and magazines and the bilingual direct marketing and call center divisions of the company. Ms. Casiano is a member of the Board of Directors of Mutual of America, the Board of Trustees of the Hispanic College Fund, and the Board of Advisors of the Moffitt Cancer Center.

Current Directorships: Mead Johnson Nutrition Company

Reasons for Nomination: The Board believes that Ms. Casiano’s experience as President and COO of Casiano Communications and her current position as President of Kimberly Casiano & Associates Inc., provides the Company with unique insight into marketing and sales, particularly regarding the Hispanic community. This skill is important to Ford’s attempt to grow our market share profitably.


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Anthony F. Earley, Jr.   (PHOTO OF ANTHONY F. EARLEY, JR.)
Age: 61 — Director Since: 2009

Principal Occupation: Executive Chairman and Chairman of the Board, DTE Energy, Detroit, Michigan

Recent Business Experience: Mr. Earley became Executive Chairman of DTE Energy in October 2010. He had been Chairman and Chief Executive Officer of DTE Energy since 1998. Mr. Earley joined DTE Energy in 1994 as President and Chief Operating Officer. Prior to that time, Mr. Earley served as President and Chief Operating Officer of the Long Island Lighting Company, an electric and gas utility in New York. Mr. Earley is a director of the Nuclear Energy Institute and the Edison Electric Institute. Mr. Earley also serves as a director for several charitable organizations including Cornerstone Schools, Detroit Zoological Society, Business Leaders for Michigan, and United Way for Southeastern Michigan. Mr. Earley has sat on advisory boards of the New York Stock Exchange and the University of Notre Dame. Mr. Earley also served as an officer in the United States Navy nuclear submarine program where he was qualified as a chief engineer officer. Within the past five years, Mr. Earley served on the board of Comerica, Inc.

Current Directorships: DTE Energy; Masco Corporation

Reasons for Nomination: The Board believes that, as Ford continues to develop hybrid and electric vehicles, Mr. Earley’s experience as Chairman and CEO of DTE Energy, his leadership positions in the electric and nuclear industries, and his qualifications as a U.S. Navy officer, provide Ford with a uniquely qualified individual who can assist in the development of vehicles our customers want and value. In addition, Mr. Earley is able to provide valuable advice regarding the development of the electrical infrastructure needed to assist in the widespread acceptance of electric vehicles. As the current Executive Chairman and former CEO of DTE Energy, Mr. Earley also possesses significant leadership and general management expertise.
     
Edsel B. Ford II   (PHOTO OF EDSEL B. FORD II)
Age: 62 — Director Since: 1988

Principal Occupation: Director and Consultant, Ford Motor Company

Recent Business Experience: Mr. Ford is a retired Vice President of Ford Motor Company and former President and Chief Operating Officer of Ford Motor Credit Company. He presently serves as a consultant to the Company.

Current Directorships: International Speedway Corporation

Reasons for Nomination: The Board believes that Mr. Ford’s experience as President and COO of Ford Motor Credit Company, as well as his role as consultant to the Company, brings a deep knowledge of Ford’s business to Board deliberations. Mr. Ford also adds significant value in various stakeholder relationships, including relationships with dealers, non-government organizations, employees, and the communities in which Ford has a significant presence. Mr. Ford’s life-long affiliation with the Company provides the Board with a unique historical perspective and a focus on the long-term interests of the Company.


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William Clay Ford, Jr.   (PHOTO OF WILLIAM CLAY FORD, JR.)
Age: 53 — Director Since: 1988

Principal Occupation: Executive Chairman and Chairman of the Board of Directors, Ford Motor Company

Recent Business Experience: Mr. Ford has held a number of management positions within Ford, including Vice President — Commercial Truck Vehicle Center. From 1995 until October 30, 2001, Mr. Ford was Chair of the Finance Committee. Effective January 1, 1999, he was elected Chairman of the Board of Directors and effective October 30, 2001, he was elected Chief Executive Officer of the Company. Mr. Ford became Executive Chairman of the Company on September 1, 2006 and is the current Chair of the Finance Committee. Mr. Ford also is Vice Chairman of The Detroit Lions, Inc., Chairman of the Detroit Economic Club, and Trustee of The Henry Ford. He also is a Vice Chairman of Business Leaders for Michigan.

Current Directorships: eBay Inc.

Reasons for Nomination: The Board believes that Mr. Ford’s extensive experience in various executive positions, service as CEO, and present service as Executive Chairman, provide the Board with unique insight regarding Company-wide issues. This experience, as well as in his role as Chairman of the Board, assist the Board in developing its long-term strategy, while his life-long affiliation with the Company reinforces the long-term interests of Ford and its shareholders. Mr. Ford’s knowledge and experience also add significant value to the Company’s relationship with its various stakeholders.
     
     
Richard A. Gephardt   (PHOTO OF RICHARD A. GEPHARDT)
Age: 70 — Director Since: 2009

Principal Occupation: President and Chief Executive Officer, Gephardt Group, Atlanta, Georgia

Recent Business Experience: Mr. Gephardt has been President and Chief Executive Officer since 2005 of Gephardt Group, LLC, a multi-disciplined consulting firm. He also serves as Strategic Advisor since June 2005 for the Government Affairs practice group of DLA Piper, one of the world’s largest legal services providers, and as a consultant to Goldman, Sachs & Co. since January 2005. Mr. Gephardt is the former Majority Leader of the U.S. House of Representatives and served 14 terms in Congress from 1976 until January 2005. He is also a member of the Professional Advisory Board of St. Jude Children’s Research Hospital. Within the past five years, Mr. Gephardt served on the board of Dana Holding Corporation.

Current Directorships: Centene Corporation; CenturyLink; Spirit Aerosystems Holding, Incorporated; United States Steel Corporation

Reasons for Nomination: The Board believes that Mr. Gephardt’s distinguished career in public service provides the Board with important insight into the many government relations and international issues affecting Ford. Additionally, Mr. Gephardt’s experience in business consulting provides Ford with unique knowledge of business challenges across a broad spectrum of industries.


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James H. Hance, Jr.   (PHOTO OF JAMES H. HANCE, JR.)
Age: 66 — Director Since: July 2010

Principal Occupation: Senior Advisor to the Carlyle Group, New York, New York

Recent Business Experience: Mr. Hance is the former chief financial officer and former vice chairman of Bank of America, where he retired in 2005 after 18 years with the company. A certified public accountant, Mr. Hance spent 17 years with Price Waterhouse (now PricewaterhouseCoopers) in Philadelphia and Charlotte. From August 1985 until December 1986, he was chairman and co-owner of Consolidated Coin Caterers Corp. In March 1987, Mr. Hance joined NCNB, a predecessor to Bank of America. Mr. Hance also is a trustee of Washington University in St. Louis and Johnson & Wales University, based in Providence, R.I. Mr. Hance is the non-Executive Chairman of the Board of Sprint Nextel Corp. and a senior advisor to the Carlyle Group. Within the past five years, Mr. Hance served on the boards of Rayonier, Inc. and EnPro Industries, Inc.

Current Directorships: Sprint Nextel Corp.; Cousins Properties Inc.; Morgan Stanley Corp.; and Duke Energy Corp.

Reasons for Nomination: The Board believes that Mr. Hance’s extensive experience in the banking industry brings financial expertise to deliberations regarding the Company’s balance sheet and liquidity. In addition, Mr. Hance’s CPA background, his experience as a Chief Financial Officer, and his tenure as vice chairman of Bank of America, provide the Board with another experienced point of view in accounting, Audit Committee, and general operational matters.
     
Irvine O. Hockaday, Jr.   (PHOTO OF IRVINE O. HOCKADAY)
Age: 74 — Director Since: 1987

Principal Occupation: Retired President and Chief Executive Officer, Hallmark Cards, Inc., Kansas City, Missouri

Recent Business Experience: Mr. Hockaday was President and CEO of Hallmark Cards, Inc. since January 1, 1986, and a director since 1978. He retired in December 2001. Within the past five years, Mr. Hockaday served on the Boards of Aquila, Inc.; Dow Jones & Company; and Sprint Nextel Corp.
Current Directorships: Crown Media Holdings, Inc.; The Estee Lauder Companies, Inc.

Reasons for Nomination: The Board believes that Mr. Hockaday’s experience as President and CEO of Hallmark Cards provides Ford with marketing and general management expertise. Mr. Hockaday’s management of the Hallmark brand provides the Board with expertise in effective marketing strategies as Ford continues to implement its objective of growing market share profitably.


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Richard A. Manoogian   (PHOTO OF RICHARD A. MANOOGIAN)
Age: 74 — Director Since: 2001

Principal Occupation: Chairman of the Board, Masco Corporation, Taylor, Michigan

Recent Business Experience: Mr. Manoogian has been with Masco since 1958, became Vice President and a member of the Board in 1964, President in 1968 and Chairman in 1985. Mr. Manoogian served as Chief Executive Officer of Masco from 1985 until he transitioned to Executive Chairman in July 2007. Effective June 30, 2009, Mr. Manoogian retired from the position of Executive Chairman of Masco. Mr. Manoogian is a member of the Board of Business Leaders for Michigan, The Henry Ford, and the Detroit Economic Club. Within the past five years, Mr. Manoogian served on the Board of JPMorgan Chase & Co.

Current Directorships: Masco Corporation

Reasons for Nomination: The Board believes that Mr. Manoogian’s experience as Chairman and CEO of Masco provides the Board with overall general management expertise as well as experience in the successful development of multiple brands. Additionally, as an experienced CEO of a S&P 500 company, Mr. Manoogian brings a wealth of knowledge on executive compensation matters to his position as Chair of the Compensation Committee.
     
Ellen R. Marram   (PHOTO OF ELLEN R. MARRAM)
Age: 63 — Director Since: 1988

Principal Occupation: President, The Barnegat Group, LLC

Recent Business Experience: Ms. Marram is President of the Barnegat Group, LLC, a business advisory firm. From September 2000 through December 2005, Ms. Marram was Managing Director of North Castle Partners, LLC, a private equity firm. Ms. Marram previously served as President and CEO of Tropicana Beverage Group from September 1997 until November 1998, and had previously served as President of the Group, as well as Executive Vice President of The Seagram Company Ltd. and Joseph E. Seagram & Sons, Inc. Before joining Seagram in 1993, she served as President and CEO of Nabisco Biscuit Company and Senior Vice President of the Nabisco Foods Group from June 1988 until April 1993. Ms. Marram also is a member of the North American Advisory Board of Deutsche Bank. She is a trustee of Wellesley College and serves on a number of non-profit boards, including Institute for the Future, New York Presbyterian Hospital, and the Lincoln Center Theater. Within the past five years, Ms. Marram served on the board of Cadbury Schweppes plc.

Current Directorships: The New York Times Company; Eli Lilly and Company

Reasons for Nomination: The Board believes that Ms. Marram’s general management and marketing experience in managing well-known consumer brands adds significant expertise to Ford’s focus on strengthening our core brands. Additionally, Ms. Marram’s experience in advising companies provides her with multiple perspectives on successful strategies across a variety of businesses. Ms. Marram also brings a keen understanding of corporate governance matters to her position as Chair of the Nominating and Governance Committee.


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Alan Mulally   (PHOTO OF ALAN MULALLY)
Age: 65 — Director Since: 2006

Principal Occupation: President and Chief Executive Officer, Ford Motor Company

Recent Business Experience: Mr. Mulally was elected President and Chief Executive Officer of Ford effective September 1, 2006. Since March 2001, Mr. Mulally had been Executive Vice President of the Boeing Company and President and Chief Executive Officer of Boeing Commercial Airplanes. He also was a member of the Boeing Executive Council. Prior to that time, Mr. Mulally served as President and Chief Executive Officer of Boeing’s space and defense businesses. Mr. Mulally has served as co-chair of the Washington Competitive Council, and has sat on the advisory boards of NASA, the University of Washington, the University of Kansas, the Massachusetts Institute of Technology, and the U.S. Air Force Scientific Advisory Board. He is a member of the U.S. National Academy of Engineering and a fellow of England’s Royal Academy of Engineering.

Reasons for Nomination: As Ford’s President and CEO, the Board believes that Mr. Mulally continues to provide the strategic and management leadership necessary to create an exciting viable Ford delivering profitable growth for all. Mr. Mulally’s experience at Boeing after September 11, 2001, evidenced his expertise in managing a company in the midst of a crisis by focusing its management on important business priorities, leading to a period of sustained growth. Mr. Mulally continues to use these skills to lead Ford in executing our ONE Ford Plan.
     
Homer A. Neal   (PHOTO OF HOMER A. NEAL)
Age: 68 — Director Since: 1997

Principal Occupation: Director, ATLAS Project, Professor of Physics, Interim President Emeritus, and Vice President for Research Emeritus, University of Michigan, Ann Arbor, Michigan

Recent Business Experience: Dr. Neal is director, University of Michigan ATLAS Project, Samuel A. Goudsmit Distinguished Professor of Physics, Interim President Emeritus and Vice President for Research Emeritus at the University of Michigan. He joined the University as Chairman of its Physics Department in 1987 and in 1993 was named Vice President of Research. Dr. Neal served as Interim President of the University of Michigan from July 1, 1996 to February 1, 1997. He has served as a member of the U.S. National Science Board, the Advisory Board of the Oak Ridge National Laboratory, as a Trustee of the Center for Strategic and International Studies and as a member of the Board of Regents of the Smithsonian Institution. Dr. Neal currently is a member of the Board of Trustees of the Richard Lounsbery Foundation and a member of the Advisory Board for the Lawrence Berkeley National Laboratory. He is also a member of the Board of Physics and Astronomy of the National Academy of Sciences and a member of the Council of the Smithsonian National Museum of African American History and Culture.

Reasons for Nomination: The Board believes that Dr. Neal’s vast experience and knowledge in the field of science brings a unique skill to the Board. Dr. Neal’s expertise has assisted our intellectual property management process through his presence on the Ford Board of Directors and on the board of managers of Ford Global Technologies, LLC. Additionally, as Chair of the Sustainability Committee, he continues to apply his unique scientific knowledge to the development and implementation of Ford’s long-term sustainability strategy.


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Gerald L. Shaheen   (PHOTO OF GERALD L. SHAHEEN)
Age: 66 — Director Since: 2007

Principal Occupation: Retired Group President, Caterpillar, Inc., Peoria, Illinois

Recent Business Experience: Mr. Shaheen was appointed Group President of Caterpillar in November 1998 and had responsibility for the design, development and production of the company’s large construction and mining equipment, as well as marketing and sales operations in North America, Caterpillar’s components business, and its research and development division. Mr. Shaheen joined Caterpillar in 1967 and held a variety of management positions. Mr. Shaheen retired from Caterpillar effective February 1, 2008. Mr. Shaheen is a board member and past chairman of the U.S. Chamber of Commerce, a board member of the MS Society of Greater Illinois, Chairman of the Illinois Neurological Institute, and Chairman of the Board of Trustees of Bradley University. Within the past five years, Mr. Shaheen served on the board of National City Corporation.

Current Directorships: AGCO Corporation

Reasons for Nomination: The Board believes that Mr. Shaheen’s extensive experience as a Group President at Caterpillar adds a depth of manufacturing and general management knowledge that is beneficial for an automobile manufacturer. His knowledge of marketing and sales, as well as experience in research and development, related to the manufacture and sale of products in a capital and labor intensive industry, provides valuable insight into Ford’s efforts to build products our customers want and value.
     
John L. Thornton   (PHOTO OF JOHN L. THORNTON)
Age: 57 — Director Since: 1996

Principal Occupation: Professor and Director, Global Leadership Program, Tsinghua University, Beijing, China

Recent Business Experience: Mr. Thornton retired as President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc., on June 30, 2003. Mr. Thornton was appointed to that post in 1999 and formerly served as Chairman of Goldman Sachs — Asia from 1996 to 1998. He was previously Co-Chief Executive of Goldman Sachs International, the firm’s business in Europe, the Middle East, and Africa. Mr. Thornton was elected non-executive chairman of HSBC North America Holdings, Inc. in December 2008. He also is the Chairman of the Board of Trustees of the Brookings Institution. Within the past five years, Mr. Thornton served on the Boards of China Netcom Group Corp.; Intel, Inc.; and Industrial Commercial Bank of China Limited.

Current Directorships: News Corporation; China Unicom Limited; HSBC Holdings, plc

Reasons for Nomination: The Board believes that Mr. Thornton’s extensive experience in corporate finance matters is critical to achieving the ONE Ford goal of financing our plan, improving our balance sheet, and creating profitable growth for all. Also, Mr. Thornton’s extensive knowledge of China brings to the Board valuable insight into what has become one of the world’s most important automotive growth markets.


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Committees of the Board of Directors
 
     
Audit Committee
     
Number of Members: 5
Members:
  Stephen G. Butler (Chair)
  Kimberly A. Casiano
  James H. Hance, Jr.
  Irvine O. Hockaday, Jr.
  Gerald L. Shaheen

Number of Meetings in 2010: 11
 
Functions:
Selects the independent registered public accounting firm to audit Ford’s books and records, subject to shareholder ratification, and determines the compensation of the independent registered public accounting firm.

At least annually, reviews a report by the independent registered public accounting firm describing: internal quality control procedures, any issues raised by an internal or peer quality control review, any issues raised by a governmental or professional authority investigation in the past five years and any steps taken to deal with such issues, and (to assess the independence of the independent registered public accounting firm) all relationships between the independent registered public accounting firm and the Company.
    Consults with the independent registered public accounting firm, reviews and approves the scope of their audit, and reviews their independence and performance. Also, annually approves of categories of services to be performed by the independent registered public accounting firm and reviews and, if appropriate, approves in advance any new proposed engagement greater than $250,000.
    Reviews internal controls, accounting practices, and financial reporting, including the results of the annual audit and the review of the interim financial statements with management and the independent registered public accounting firm.
    Reviews activities, organization structure, and qualifications of the General Auditor’s Office, and participates in the appointment, dismissal, evaluation, and the determination of the compensation of the General Auditor.
    Discusses earnings releases and guidance provided to the public and rating agencies.
    Reviews, with the Office of the General Counsel, any legal or regulatory matter that could have a significant impact on the financial statements.
    As appropriate, obtains advice and assistance from outside legal, accounting or other advisors.
    Prepares an annual report of the Audit Committee to be included in the Company’s proxy statement.
    Assesses annually the adequacy of the Audit Committee Charter.
    Reports to the Board of Directors about these matters.


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Compensation Committee
     
Number of Members: 4
Members:
  Richard A. Manoogian (Chair)
  Anthony F. Earley, Jr.
  Ellen R. Marram
  John L. Thornton

Number of Meetings in 2010: 8
 
Functions:
Establishes and reviews the overall executive compensation philosophy and strategy of the Company.

Reviews and approves Company goals and objectives related to the Executive Chairman and the President and CEO and other executive officer compensation, including annual performance objectives.

Evaluates the performance of the Executive Chairman and the President and CEO and other executive officers in light of established goals and objectives and, based on such evaluation, reviews and approves the annual salary, bonus, stock options, other incentive awards and other benefits, direct and indirect, of the Executive Chairman and the President and CEO and other executive officers.

Conducts a risk assessment of the Company’s compensation policies and practices.

Considers and makes recommendations on Ford’s executive compensation plans and programs. Reviews the Compensation Discussion and Analysis to be included in the Company’s proxy statement.

Prepares an annual report of the Compensation Committee to be included in the Company’s proxy statement.

Assesses annually the adequacy of the Compensation Committee Charter.

Reports to the Board of Directors about these matters.
 
Finance Committee
     
Number of Members: 6
Members:
  William Clay Ford, Jr. (Chair)
  Edsel B. Ford II
  James H. Hance, Jr.
  Alan Mulally
  Homer A. Neal
  John L. Thornton

Number of Meetings in 2010: 2
 
Functions:
Reviews all aspects of the Company’s policies and practices that relate to the management of the Company’s financial affairs, not inconsistent, however, with law or with specific instructions given by the Board of Directors relating to such matters.

Reviews with management, at least annually, the Annual Report from the Treasurer of the Company’s cash and funding plans and other Treasury matters, and the Company’s policies with respect to financial risk assessment and financial risk management.

Reviews the strategy and performance of the Company’s pension and other retirement and savings plans. Performs such other functions and exercises such other powers as may be delegated to it by the Board of Directors from time to time.

Assesses annually the adequacy of the Finance Committee Charter.

Reports to the Board of Directors about these matters.
     


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Nominating and Governance Committee
     
Number of Members: 11
Members:
  Ellen R. Marram (Chair)
  Stephen G. Butler
  Kimberly A. Casiano
  Anthony F. Earley, Jr.
  Richard A. Gephardt
  James H. Hance, Jr.
  Irvine O. Hockaday, Jr.
  Richard A. Manoogian
  Homer A. Neal
  Gerald L. Shaheen
  John L. Thornton

Number of Meetings in 2010: 7
  Functions:
Makes recommendations on:
•  the nominations or elections of directors; and
•  the size, composition, and compensation of the Board.

Establishes criteria for selecting new directors and the evaluation of the Board. Develops and recommends to the Board corporate governance principles and guidelines. Reviews the charter and composition of each committee of the Board and makes recommendations to the Board for the adoption of or revisions to the committee charters, the creation of additional committees, or the elimination of committees.

Considers the adequacy of the By-Laws and the Restated Certificate of Incorporation of the Company and recommends to the Board, as appropriate, that the Board: (i) adopt amendments to the By-Laws, and (ii) propose, for consideration by the shareholders, amendments to the Restated Certificate of Incorporation.

Considers shareholder suggestions for nominees for director (other than self-nominations). See Corporate Governance on p. 18.

Assesses annually the adequacy of the Nominating and Governance Committee Charter.

Reports to the Board of Directors about these matters.
 
Sustainability Committee
     
Number of Members: 7
Members:
  Homer A. Neal (Chair)
  Kimberly A. Casiano
  Anthony F. Earley, Jr.
  Edsel B. Ford II
  William Clay Ford, Jr.
  Richard A. Gephardt
  Ellen R. Marram

Number of Meetings in 2010: 4
 
Functions:
Reviews environmental, public policy, and corporate citizenship issues facing the Company around the world.

Reviews annually with management the Company’s performance for the immediately preceding year regarding stakeholder relationships, product performance, sustainability, and public policy.

Reviews with management the Company’s annual Sustainability Report.

Assesses annually the adequacy of the Sustainability Committee Charter.

Reports to the Board of Directors about these matters.


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Audit Committee Report
 
The Audit Committee is composed of five directors, all of whom meet the independence standards contained in the NYSE Listed Company rules, SEC rules and Ford’s Corporate Governance Principles, and operates under a written charter adopted by the Board of Directors. A copy of the Audit Committee Charter may be found on the Company’s website, www.ford.com. The Audit Committee selects, subject to shareholder ratification, the Company’s independent registered public accounting firm.
 
Ford management is responsible for the Company’s internal controls and the financial reporting process. The independent registered public accounting firm, PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”), is responsible for performing independent audits of the Company’s consolidated financial statements and internal control over financial reporting and issuing an opinion on the conformity of those audited financial statements with United States generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee monitors the Company’s financial reporting process and reports to the Board of Directors on its findings.
 
Audit Fees
 
The Company paid PricewaterhouseCoopers $35.9 million and $42.7 million for audit services for the years ended December 31, 2010 and 2009, respectively. Audit services consisted of the audit of the financial statements included in the Company’s Annual Report on Form 10-K, reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, attestation of the effectiveness of the Company’s internal controls over financial reporting, preparation of statutory audit reports, and providing comfort letters in connection with Ford and Ford Motor Credit Company funding transactions.
 
Audit-Related Fees
 
The Company paid PricewaterhouseCoopers $5.4 million and $4.4 million for audit-related services for the years ended December 31, 2010 and 2009, respectively. Audit-related services included support of funding transactions, due diligence for mergers, acquisitions and divestitures, employee benefit plan audits, attestation services, internal control reviews, and assistance with interpretation of accounting standards.
 
Tax Fees
 
The Company paid PricewaterhouseCoopers $3.6 million and $4.1 million for tax services for the years ended December 31, 2010 and 2009, respectively. The types of tax services provided included assistance with tax compliance and the preparation of tax returns, tax consultation, planning and implementation services, assistance in connection with tax audits, and tax advice related to mergers, acquisitions and divestitures. Of the fees paid for tax services, the Company paid 72% and 59% for tax compliance and the preparation of Company tax returns in 2010 and 2009, respectively.
 
All Other Fees
 
The Company did not engage PricewaterhouseCoopers for any other services for the years ended December 31, 2010 and 2009.
 
Total Fees
 
The Company paid PricewaterhouseCoopers a total of $44.9 and $51.2 million in fees for the years ended December 31, 2010 and 2009, respectively.


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Auditor Independence
 
During the last year, the Audit Committee met and held discussions with management and PricewaterhouseCoopers. The Audit Committee reviewed and discussed with Ford management and PricewaterhouseCoopers the audited financial statements and the assessment of the effectiveness of internal controls over financial reporting contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. The Audit Committee also discussed with PricewaterhouseCoopers the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, as well as by SEC regulations.
 
PricewaterhouseCoopers submitted to the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence. The Audit Committee discussed with PricewaterhouseCoopers such firm’s independence.
 
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC.
 
The Audit Committee also considered whether the provision of other non-audit services by PricewaterhouseCoopers to the Company is compatible with maintaining the independence of PricewaterhouseCoopers and concluded that the independence of PricewaterhouseCoopers is not compromised by the provision of such services.
 
Annually, the Audit Committee pre-approves categories of services to be performed (rather than individual engagements) by PricewaterhouseCoopers. As part of this approval, an amount is established for each category of services (Audit, Audit-Related, and Tax Services). In the event the pre-approved amounts prove to be insufficient, a request for incremental funding will be submitted to the Audit Committee for approval during the next regularly scheduled meeting. In addition, all new engagements greater than $250,000 will be presented in advance to the Audit Committee for approval. A regular report is prepared for each regular Audit Committee meeting outlining actual fees and expenses paid or committed against approved fees.
 
Audit Committee
 
Stephen G. Butler (Chair)
Kimberly A. Casiano
James H. Hance, Jr.
Irvine O. Hockaday, Jr.
Gerald L. Shaheen


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Corporate Governance
 
Ford has operated under sound corporate governance practices for many years. We believe it is important to disclose to you a summary of our major corporate governance practices. Some of these practices have been in place for many years. Others have been adopted in response to regulatory and legislative changes. We will continue to assess and refine our corporate governance practices and share them with you.
 
Nominating and Governance Committee
 
The Nominating and Governance Committee is composed of eleven directors, all of whom are considered independent under the NYSE Listed Company rules and Ford’s Corporate Governance Principles. The Committee operates under a written charter adopted by the Board of Directors. A copy of the charter may be found on Ford’s website at www.ford.com.
 
Composition of Board of Directors/Nominees
 
The Nominating and Governance Committee recommends the nominees for all directorships. The Committee also reviews and makes recommendations to the Board on matters such as the size and composition of the Board in order to ensure the Board has the requisite expertise and its membership consists of persons with sufficiently diverse and independent backgrounds. Between annual shareholder meetings, the Board may elect directors to vacant Board positions to serve until the next annual meeting.
 
The Board proposes to you a slate of nominees for election to the Board at the annual meeting. You may propose nominees (other than self-nominations) for consideration by the Committee by submitting the names, qualifications and other supporting information to: Secretary, Ford Motor Company, One American Road, Dearborn, MI 48126. Properly submitted recommendations must be received no later than December 2, 2011 to be considered by the Committee for inclusion in the following year’s nominations for election to the Board. Your properly submitted candidates are evaluated in the same manner as those candidates recommended by other sources. All candidates are considered in light of the needs of the Board with due consideration given to the qualifications described on p. 5 under Election of Directors.
 
Identification of Directors
 
The Charter of the Nominating and Governance Committee provides that the Committee conducts all necessary and appropriate inquiries into the backgrounds and qualifications of possible candidates as directors. It has the sole authority to retain and terminate any search firm to be used to assist it in identifying and evaluating candidates to serve as directors of the Company. The Company on behalf of the Committee has paid fees to third-party firms to assist the Committee in the identification and evaluation of potential Board members.
 
The Committee identifies candidates through a variety of means, including search firms, recommendations from members of the Committee and the Board, including the Executive Chairman and the President and CEO, and suggestions from Company management. Our newest director, James H. Hance, Jr., was first proposed to the Committee by an independent director and was selected from among several names submitted by directors following a review by a search firm. Mr. Hance was interviewed prior to his election by the Chair of the Committee, the Chairman, and the President and CEO, and certain other Board members. Upon recommendation of the Committee, Mr. Hance was elected to the Board of Directors on July 8, 2010.
 
Director Independence
 
A majority of the directors must be independent directors under the NYSE Listed Company rules. The NYSE rules provide that no director can qualify as independent unless the Board affirmatively determines that the director has no material relationship with the listed company. The Board has adopted the following standards in determining whether


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or not a director has a material relationship with the Company and these standards are contained in Ford’s Corporate Governance Principles and may be found at the Company’s website, www.ford.com.
 
•  No director who is an employee or a former employee of the Company can be independent until three years after termination of such employment.
 
•  No director who is, or in the past three years has been, affiliated with or employed by the Company’s present or former independent auditor can be independent until three years after the end of the affiliation, employment or auditing relationship.
 
•  No director can be independent if he or she is, or in the past three years has been, part of an interlocking directorship in which an executive officer of the Company serves on the compensation committee of another company that employs the director.
 
•  No director can be independent if he or she is receiving, or in the last three years has received, more than $100,000 during any 12-month period in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).
 
•  Directors with immediate family members in the foregoing categories are subject to the same three-year restriction.
 
•  The following commercial, charitable and educational relationships will not be considered to be material relationships that would impair a director’s independence:
 
  (i)  if within the preceding three years a Ford director was an executive officer or employee of another company (or an immediate family member of the director was an executive officer of such company) that did business with Ford and either: (a) the annual sales to Ford were less than the greater of $1 million or two percent of the total annual revenues of such company, or (b) the annual purchases from Ford were less than the greater of $1 million or two percent of the total annual revenues of Ford, in each case for any of the three most recently completed fiscal years;
 
  (ii)  if within the preceding three years a Ford director was an executive officer of another company which was indebted to Ford, or to which Ford was indebted, and either: (a) the total amount of such other company’s indebtedness to Ford was less than two percent of the total consolidated assets of Ford, or (b) the total amount of Ford’s indebtedness to such other company was less than two percent of the total consolidated assets of such other company, in each case for any of the three most recently completed fiscal years; and
 
  (iii)  if within the preceding three years a Ford director served as an executive officer, director or trustee of a charitable or educational organization, and Ford’s discretionary contributions to the organization were less than the greater of $1 million or two percent of that organization’s total annual discretionary receipts for any of the three most recently completed fiscal years. (Any matching of charitable contributions will not be included in the amount of Ford’s contributions for this purpose.)
 
Based on these independence standards and all of the relevant facts and circumstances, the Board determined that none of the following directors had any material relationship with the Company and, thus, are independent: Stephen G. Butler, Kimberly A. Casiano, Anthony F. Earley, Jr., Richard A. Gephardt, James H. Hance, Jr., Irvine O. Hockaday, Jr., Richard A. Manoogian, Ellen R. Marram, Homer A. Neal, Gerald L. Shaheen, and John L. Thornton.
 
Disclosure of Relevant Facts and Circumstances
 
With respect to the independent directors listed above, the Board considered the following relevant facts and circumstances in making the independence determinations:
 
From time to time during the past three years, Ford purchased goods and services from, or financing arrangements were provided by, various companies with which certain directors were or are affiliated either as members of such


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companies’ boards of directors or, in the case of Ms. Casiano and Mr. Earley, as officers. In addition to Ms. Casiano and Mr. Earley, these directors included Mr. Gephardt, Mr. Hance, Mr. Hockaday, Mr. Manoogian, Ms. Marram, Dr. Neal, and Mr. Thornton. The Company also made donations to certain institutions with which certain directors are affiliated. These included Ms. Casiano, Mr. Earley, Mr. Gephardt, Mr. Manoogian, and Dr. Neal. Additionally, companies with which Mr. Manoogian and Mr. Earley are affiliated purchased products from Ford. None of the relationships described above were material under the independence standards contained in our Corporate Governance Principles.
 
In addition, Richard A. Manoogian is a member of the Board of Trustees of The Henry Ford, Mr. Earley is a member of the board of United Way for Southeastern Michigan, and both Messrs. Manoogian and Earley are members of the Board of Directors of Business Leaders for Michigan, formerly known as Detroit Renaissance. The Company and its affiliates contributed to The Henry Ford and the United Way for Southeastern Michigan amounts that exceeded the greater of $1 million or two percent of those entities’ total annual discretionary receipts during its three most recently completed fiscal years. It was further noted that in February 2008, Ford, with the approval of the Board, decided to invest up to $10 million over the next two to four years in the Business Leaders for Michigan’s Venture Capital Fund I. Other large companies in Southeastern Michigan have also made monetary commitments to the fund in order to support local venture capital firms in Southeast Michigan. Pursuant to the Company’s Corporate Governance Principles, the independent directors listed above (excluding Mr. Earley and Mr. Manoogian), considering all of the relevant facts and circumstances, determined that the Company’s contributions to The Henry Ford, the United Way for Southeastern Michigan, and Business Leaders for Michigan, and the presence of Mr. Earley and Mr. Manoogian on those Boards, did not constitute a material relationship between Ford and Messrs. Earley and Manoogian. Consequently, these independent directors determined Messrs. Earley and Manoogian to be independent. With respect to The Henry Ford, the directors gave due consideration to the composition of the Board of Trustees of The Henry Ford, which includes Edsel B. Ford II, William Clay Ford and William Clay Ford, Jr., and the Company’s history of support for The Henry Ford, which predated Mr. Manoogian’s service. Likewise, with respect to the United Way for Southeastern Michigan and Business Leaders for Michigan, the directors gave due consideration to the composition of the Board of Directors of Business Leaders for Michigan, which includes William Clay Ford, Jr., and James Vella, President of the Ford Fund, as well as those entities’ mission to promote the welfare and economic development of Michigan, and the Company’s history of contributions to those organizations and to the development of Michigan. In each case, the directors determined that the Company was not unduly influenced to make contributions to The Henry Ford, the United Way for Southeastern Michigan, or Business Leaders for Michigan because of Mr. Earley’s or Mr. Manoogian’s presence on those boards, nor was Mr. Earley or Mr. Manoogian unduly influenced by the contributions made by the Company to those organizations.
 
Corporate Governance Principles
 
The Nominating and Governance Committee developed and recommended to the Board a set of corporate governance principles, which the Board adopted. Ford’s Corporate Governance Principles may be found on its website at www.ford.com. These principles include: a limitation on the number of boards on which a director may serve, qualifications for directors (including a director retirement age and a requirement that directors be prepared to resign from the Board in the event of any significant change in their personal circumstances that could affect the discharge of their responsibilities), director orientation, continuing education and a requirement that the Board and each of its Committees perform an annual self-evaluation. Although Messrs. Hockaday and Manoogian have reached the normal retirement age of 72 years, the Board has waived the retirement age for them as permitted under our Corporate Governance Principles. Shareholders may obtain a printed copy of the Company’s Corporate Governance Principles by writing to our Shareholder Relations Department, Ford Motor Company, One American Road, Suite 1026, Dearborn, Michigan 48126-2798.


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Leadership Structure
 
The Board of Directors has chosen to separate the roles of CEO and Chairman of the Board of Directors. Alan Mulally is our President and CEO and William Clay Ford, Jr., is Chairman of the Board of Directors as well as our Executive Chairman. We believe this structure is optimal for Ford because it allows Mr. Mulally to focus on the day-to-day operation of the business, in particular the implementation of our ONE Ford Plan, while allowing Mr. Ford to focus on leadership of the Board of Directors in addition to providing the Company with direction on Company-wide issues such as sustainability and stakeholder relationships. Furthermore, the Board has appointed Irvine O. Hockaday, Jr., as our Presiding Independent Director. We believe this to be an important governance practice given that the Chairman of the Board, Mr. Ford, is not an independent director under our Corporate Governance Principles. Mr. Hockaday chairs the executive sessions of our independent directors and works with Mr. Ford and Mr. Mulally to ensure management is adequately addressing the matters identified by the Board. This structure optimizes the roles of CEO, Chairman, and Presiding Independent Director and provides Ford with sound corporate governance practices in the management of its business.
 
Board’s Role in Risk Management
 
The Board of Directors of the Company has overall responsibility for the oversight of risk management at Ford. Day-to-day risk management is the responsibility of management, which has implemented Enterprise Risk Management processes to identify, manage and monitor risks that face the Company.
 
The oversight responsibility of the Board and its Committees is supported by Company management and the risk management processes that are currently in place. Ford has extensive and effective risk management processes, relating specifically to compliance, reporting, operating and strategic risks. Compliance risk encompasses matters such as legal and regulatory compliance (e.g., Foreign Corrupt Practices Act, environmental, OSHA/safety, etc.). Reporting risk covers Sarbanes-Oxley compliance, disclosure controls and procedures, and accounting compliance. Operating risk addresses the myriad of matters related to the operation of a complex company such as Ford (e.g., quality, supply chain, sales and service, financing and liquidity, product development and engineering, labor, etc.). Strategic risk encompasses somewhat broader and longer-term matters, including, but not limited to, technology development, sustainability, capital allocation, management development, retention and compensation, competitive developments and geopolitical developments.
 
We believe that key success factors in the risk management at Ford include strong Board and senior management commitment, effective top-down and bottom-up communication (including communication between management and the Board and Committees), and active cross-functional participation among the Business Groups and Functional Skill Teams. More specifically, our Chief Executive Officer, Alan Mulally, has institutionalized a Business Plan Review and Special Attention Review process where, on a weekly basis (and more often where circumstances dictate), the senior leadership of the Company from each of the Business Groups and the Functional Skill Teams, reviews the status of the business, the risks presented to the business, (once again in the areas of compliance, reporting, operating and strategic risks), and develops specific plans to address those risks.
 
As noted above, the full Board of Directors has overall responsibility for the oversight of risk management at Ford and oversees operating risk management, with reviews at each of its regular Board meetings. The Board of Directors has delegated responsibility for the oversight of specific areas of risk management to certain Committees of the Board, with each Board Committee reporting to the full Board following each Committee meeting. The Audit Committee assists the Board of Directors in overseeing compliance and reporting risk. The Board, the Sustainability Committee, the Compensation Committee, and the Finance Committee all play a role in overseeing strategic risk management.


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Risk Assessment Regarding Compensation Policies and Practices
 
We conducted an assessment of our compensation policies and practices, including our executive compensation programs, to evaluate the potential risks associated with these policies and practices. We reviewed and discussed the findings of the assessment with the Compensation Committee and concluded that our compensation programs are designed with an appropriate balance of risk and reward in relation to our ONE Ford Plan and do not encourage excessive or unnecessary risk-taking behavior. As a result, we do not believe that risks relating to our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the Company.
 
In conducting this review, we considered the following attributes of our programs:
 
•  Mix of base salary, annual bonus opportunities, and long-term equity compensation, with performance-based equity compensation opportunities for officers;
 
•  Alignment of annual and long-term incentives to ensure that the awards encourage consistent behaviors and achievable performance results;
 
•  Inclusion of non-financial metrics, such as quality and market share metrics, and other quantitative and qualitative performance factors in determining actual compensation payouts;
 
•  Capped payout levels for both annual bonuses and performance-based stock awards for Named Executives — the Committee has negative discretion over incentive program payouts;
 
•  Use of 10-year stock options and equity awards that vest over time;
 
•  Generally providing senior executives with long-term equity-based compensation on an annual basis. We believe that accumulating equity over a period of time encourages executives to take actions that promote the long-term sustainability of our business; and
 
•  Stock ownership guidelines that are reasonable and align the interests of the executive officers with those of our shareholders. This discourages executive officers from focusing on short-term results without regard for longer-term consequences.
 
Our Compensation Committee considered compensation risk implications during its deliberations on the design of our 2011 executive compensation programs with the goal of appropriately balancing short-term incentives and long-term performance. In addition to the above, the Committee formally adopted a policy of recoupment of compensation in certain circumstances. The purpose of this policy is to help ensure executives act in the best interests of the Company. The policy requires any Company officer to repay or return cash bonuses and/or equity awards in the event: (i) the Company issues a material restatement of its financial statements and where the restatement was caused by such officer’s intentional misconduct; (ii) such officer was found to be in violation of non-compete provisions of any plan or agreement; or (iii) such officer has committed ethical or criminal violations. The Committee will consider all relevant factors and exercise business judgment in determining any appropriate amounts to recoup up to 100% of any awards. The policy applied to awards for the 2010 Incentive Bonus Plan performance period and to equity awards beginning with grants made in 2011.
 
Policy and Procedure for Review and Approval of Related Party Transactions
 
Business transactions between Ford and its officers or directors, including companies in which a director or officer (or an immediate family member) has a substantial ownership interest or a company where such director or officer (or an immediate family member) serves as an executive officer (“related party transactions”), are not prohibited. In fact, certain related party transactions can be beneficial to the Company and its shareholders.


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It is important, however, to ensure that any related party transactions are beneficial to the Company. Accordingly, any related party transaction, regardless of amount, is submitted to the Nominating and Governance Committee in advance for review and approval. All existing related party transactions are reviewed at least annually by the Nominating and Governance Committee. The Office of the General Counsel reviews all such related party transactions, existing or proposed, prior to submission to the Nominating and Governance Committee, and our General Counsel opines on the appropriateness of each related party transaction. The Nominating and Governance Committee may, at its discretion, consult with outside legal counsel.
 
Any director or officer with an interest in a related party transaction is expected to recuse himself or herself from any consideration of the matter.
 
The Nominating and Governance Committee’s approval of a related party transaction may encompass a series of subsequent transactions contemplated by the original approval, i.e., transactions contemplated by an ongoing business relationship occurring over a period of time. Examples include transactions in the normal course between the Company and a dealership owned by a director or an executive officer (or an immediate family member thereof), transactions in the normal course between the Company and financial institutions with which a director or officer may be associated, and the ongoing issuances of purchase orders or releases against a blanket purchase order made in the normal course by the Company to a business with which a director or officer may be associated. In such instances, any such approval shall require that the Company make all decisions with respect to such ongoing business relationship in accordance with existing policies and procedures applicable to non-related party transactions (e.g., Company purchasing policies governing awards of business to suppliers, etc.).
 
In all cases, a director or officer with an interest in a related party transaction may not attempt to influence Company personnel in making any decision with respect to the transaction.
 
Committee Charters/Codes of Ethics
 
The Company has published on its website (www.ford.com) the charter of each of the Audit, Compensation, Finance, Nominating and Governance, and Sustainability Committees of the Board, as well as its Code of Conduct Handbook, which applies to all officers and employees, a code of ethics for directors, and a code of ethics for the Company’s chief executive officer as well as senior financial and accounting personnel. Any waiver of, or amendments to, the codes of ethics for directors or executive officers, including the chief executive officer, the chief financial officer and the principal accounting officer, may be approved only by the Nominating and Governance Committee and any such waivers or amendments will be disclosed promptly by the Company by posting such waivers or amendments to its website. The Nominating and Governance Committee also reviews management’s monitoring of compliance with the Company’s Code of Conduct. Printed copies of each of the committee charters and the codes of ethics referred to above are also available by writing to our Shareholder Relations Department, Ford Motor Company, One American Road, Suite 1026, Dearborn, Michigan 48126-2798.
 
Executive Sessions of Non-Employee Directors
 
Non-employee directors ordinarily meet in executive session without management present at regularly scheduled Board meetings and may meet at other times at the discretion of the Presiding Independent Director or at the request of any non-employee director. Currently, Irvine O. Hockaday, Jr., is the Presiding Independent Director for the executive sessions of non-management directors. Additionally, all of the independent directors meet periodically (but not less than annually) without management or non-independent directors present.
 
Audit Committee
 
The Charter of the Audit Committee provides that a member of the Audit Committee generally may not serve on the audit committee of more than two other public companies. The Board has designated Stephen G. Butler as an Audit Committee financial expert. Mr. Butler meets the independence standards for audit committee members under the


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NYSE Listed Company and SEC rules. The lead partner of the Company’s independent registered public accounting firm is rotated at least every five years.
 
Compensation Committee Operations
 
The Compensation Committee establishes and reviews our executive compensation philosophy and strategy and oversees our various executive compensation programs. The Committee is responsible for evaluating the performance of and determining the compensation for our Executive Chairman, the President and CEO, and other executive officers, and approving the compensation structure for senior management, including officers. The Committee is composed of four directors who are considered independent under the NYSE Listed Company rules and our Corporate Governance Principles. The Committee’s membership is determined by our Board of Directors. The Committee operates under a written charter adopted by our Board of Directors. The Committee annually reviews the charter. A copy of the charter may be found on our website at www.ford.com.
 
The Committee makes decisions regarding the compensation of our officers that are Vice Presidents and above, including the Named Executives. The Committee has delegated authority, within prescribed share limits, to a Long-Term Incentive Compensation Award Committee (comprised of William Clay Ford, Jr., Alan Mulally, and L. W. K. Booth) to approve grants of options, Performance Units, Restricted Stock Units and other stock-based awards, and to the Annual Incentive Compensation Award Committee to determine bonuses, for other employees.
 
The Board of Directors makes decisions relating to non-employee director compensation. Any proposed changes are reviewed in advance and recommended to the Board by the Nominating and Governance Committee.
 
The Compensation Committee considers recommendations from Mr. Ford, Mr. Mulally, and the Group Vice President — Human Resources and Corporate Services, in developing compensation plans and evaluating performance of other executive officers. The Committee’s consultant also provides advice and analysis on the structure and level of executive compensation. Final decisions on any major element of compensation, however, as well as total compensation for executive officers, are made by the Compensation Committee.
 
As in prior years, in 2010, the Committee engaged Semler Brossy Consulting Group, LLC, an independent compensation consulting firm, to advise the Committee on executive compensation and benefits matters. Semler Brossy is retained directly by the Committee and it has the sole authority to review and approve the budget of the independent consultant. Semler Brossy does not advise our management and receives no other compensation from us. The same Semler Brossy principal attended all eight of the Committee meetings in 2010. In addition, the Committee relied on survey data provided by the Towers Watson Executive Compensation Database. See “How We Determine Compensation — C. Competitive Survey” in the “Compensation Discussion and Analysis” on pp. 35-36. Towers Watson does not assist the Compensation Committee in determining or recommending compensation of executive officers. Towers Watson is retained by Ford management, not the Committee.
 
Committee meetings typically occur prior to the meetings of the full Board of Directors. Bonus target grants, bonus awards, stock option grants, Performance Unit grants, final stock awards, and Final Awards of Restricted Stock Units typically are decided at the February or March Committee meeting (see “Compensation Discussion and Analysis — Equity-Based Compensation — C. Timing of Awards” on pp. 45-46). Officer salaries are reviewed in March each year.
 
See the “Compensation Discussion and Analysis” on pp. 32-49 for more detail on the factors considered by the Committee in making executive compensation decisions.
 
The Committee reviews our talent and executive development program with senior management. These reviews are conducted periodically and focus on executive development and succession planning throughout the organization, at the Vice President level and above.


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Our policy, approved by the Compensation Committee, to limit outside board participation by our officers, is shown below:
 
•  No more than 15% of the officers should be on for-profit boards at any given point in time.
 
•  No officer should be a member of more than one for-profit board.
 
Board Committees
 
Only independent directors serve on the Audit, Compensation, and Nominating and Governance Committees, in accordance with the independence standards of the NYSE Listed Company rules and the Company’s Corporate Governance Principles. The Board, and each committee of the Board, has the authority to engage independent consultants and advisors at the Company’s expense.
 
Communications with the Board/Annual Meeting Attendance
 
The Board has established a process by which you may send communications to the Board. You may send communications to our Directors, including any concerns regarding Ford’s accounting, internal controls, auditing, or other matters, to the following address: Board of Directors, Ford Motor Company, P.O. Box 685, Dearborn, MI 48126-0685 U.S.A. You may submit your concern anonymously or confidentially. You may also indicate whether you are a shareholder, customer, supplier, or other interested party. Communications relating to the Company’s accounting, internal controls, or auditing matters will be relayed to the Audit Committee. A summary of the other communications will be relayed to the Nominating and Governance Committee. Communications will be referred to other areas of the Company for handling as appropriate under the facts and circumstances outlined in the communications. Ford will acknowledge receipt of all communications sent to the address above that disclose a return address. You may also find a description of the manner in which you can send communications to the Board on the Company’s website (www.ford.com).
 
All members of the Board are expected to attend the annual meeting, unless unusual circumstances would prevent such attendance. Last year, eleven of the thirteen nominated directors attended the annual meeting.
 
Management Stock Ownership
 
Pursuant to SEC filings, the Company was notified that as of December 31, 2010, the entities included in the table below had more than a 5% ownership interest of Ford common stock, or owned securities convertible into more than 5% ownership of Ford common stock, or owned a combination of Ford common stock and securities convertible into Ford common stock that could result in more than 5% ownership of Ford common stock.
 
                               
                    Percent of
     
                    Outstanding
     
            Ford
      Ford
     
Name of Beneficial Owner     Address of Beneficial Owner     Common Stock       Common Stock      
Black Rock, Inc. and certain of its affiliates
    40 East 52nd Street
New York, New York 10022
      195,190,045         5.28%      
                               
State Street Corporation and certain of its affiliates*
    State Street Financial Center
One Lincoln Street
Boston, MA 02111
      398,090,370         11.1%      
                               
Evercore Trust Company, N.A.
    55 East 52nd Street, 36th Floor
New York, NY 10055
      271,017,955         7.97%      
                               
* State Street Bank and Trust Company is the trustee for Ford common stock in the Ford defined contribution plans master trust, which beneficially owns 7.6% of the common stock of Ford. In this capacity, State Street Bank and Trust Company has voting power over the shares in certain circumstances.


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The following table shows how much Ford stock each director, nominee, and Named Executive beneficially owned as of February 1, 2011. No director, nominee or executive officer, including Named Executives, beneficially owned more than 0.47% of Ford’s total outstanding common stock nor did any such person beneficially own more than 0.01% of Ford common stock units as of February 1, 2011. These persons held options exercisable on or within 60 days after February 1, 2011 to buy, and/or beneficially owned as of February 1, 2011, Trust Preferred Securities convertible into, 34,258,838 shares of Ford common stock.
 
                                     
                            Percent of
   
              Ford
            Outstanding
   
      Ford
      Common
      Ford
    Ford
   
      Common
      Stock
      Class B
    Class B
   
Name     Stock(1)(2)       Units(3)       Stock     Stock    
L. W. K. Booth
      2,675,328         43,006       0     0    
                                     
Stephen G. Butler*
      6,000         74,642       0     0    
                                     
Kimberly A. Casiano*
      6,927         74,976       0     0    
                                     
Anthony F. Earley, Jr.*
      11,000         15,558       0     0    
                                     
Mark Fields
      3,241,121         2,731       0     0    
                                     
John Fleming
      1,318,398         1,029       0     0    
                                     
Edsel B. Ford II*
      3,766,731         85,098       4,842,391     6.83    
                                     
William Clay Ford, Jr.*
      14,730,275         2,568       4,859,007     6.86    
                                     
Richard A. Gephardt*
      0         15,558       0     0    
                                     
James H. Hance, Jr.*
      50,000         4,226       0     0    
                                     
Irvine O. Hockaday, Jr.*
      21,877         145,340       0     0    
                                     
Richard A. Manoogian*
      159,994         83,280       0     0    
                                     
Ellen R. Marram*
      20,296         141,812       0     0    
                                     
Alan Mulally*
      17,517,342         0       0     0    
                                     
Homer A. Neal*
      10,588         86,430       0     0    
                                     
Gerald L. Shaheen*
      0         50,430       0     0    
                                     
John L. Thornton*
      33,820         168,338       0     0    
                                     
All Directors and Executive Officers as a group (including Named Executives) (31 persons) beneficially owned 1.54% of Ford common stock or securities convertible into Ford common stock as of February 1, 2011
      57,082,536         1,009,812       9,701,398     13.69%    
                                     
* Indicates Directors
 
Notes
 
(1)For executive officers, included in the amounts for “All Directors and Executive Officers as a group” are Restricted Stock Units issued under the 1998 Plan and the 2008 Plan as long-term incentive grants in 2010 and prior years for retention and other incentive purposes.
 
Also, amounts shown include restricted shares of common stock issued under the 2008 Plan as follows: 22,344 restricted shares for Edsel B. Ford II as payment for his services pursuant to a consulting agreement with the Company (see pp. 28-30). In addition, amounts shown include Restricted Stock Units issued under the 1998 Plan and the 2008 Plan as follows: 4,958,708 units for Mr. Mulally; 651,786 units for L. W. K. Booth; 1,786,074 units for William Clay Ford, Jr.; 760,637 units for Mr. Fields; and 725,468 units for Mr. Fleming.
 
(2)Included in the stock ownership shown in the table above: Edsel B. Ford II has disclaimed beneficial ownership of 61,401 shares of common stock and 32,508 shares of Class B Stock that are either held directly by his immediate family, by charitable funds which he controls or by members of his immediate family in custodial or conservatorship accounts for the benefit of other members of his immediate family. William Clay Ford, Jr., has disclaimed beneficial


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ownership of 24,822 shares of common stock and 115,986 shares of Class B Stock that are either held directly by members of his immediate family or by members of his immediate family in custodial accounts for the benefit of other members of his immediate family. Present directors and executive officers as a group have disclaimed beneficial ownership of a total of 86,223 shares of common stock and 148,494 shares of Class B Stock.
 
Also, on February 1, 2011 (or within 60 days after that date), the Named Executives and directors listed below have rights to acquire shares of common stock through the exercise of stock options under Ford’s stock option plans and/or through conversion of Trust Preferred Securities, as follows:
 
         
          Person  
Number of Shares
 
 
L. W. K. Booth
    1,753,141  
Mark Fields
    2,233,086  
John Fleming
    469,889  
William Clay Ford, Jr. 
    9,968,317  
Richard A. Manoogian
    56,498  
Alan Mulally
    12,135,218  
 
The amounts of common stock shown above for Mr. Manoogian are a result of his ownership of Trust Preferred Securities, which were convertible into Ford common stock until March 15, 2011, at which time the Trust Preferred Securities, including those deemed owned by Mr. Manoogian, were redeemed for cash. In Mr. Manoogian’s case, he was deemed to be the beneficial owner of Trust Preferred Securities as a result of his being a trustee of a charitable foundation that owned the Trust Preferred Securities. Additionally, Mr. Manoogian pledged as security 100,000 shares of common stock held in a trust of which he is a trustee. William Clay Ford, Jr., has pledged 469,097 shares of common stock.
 
(3)In general, these are common stock units credited under a deferred compensation plan and payable in cash.
 
As of February 1, 2011, the persons included in the table below beneficially owned more than 5% of the outstanding Class B Stock.
 
                               
                    Percent of
     
                    Outstanding Ford
     
Name     Address     Ford Class B Stock       Class B Stock      
Lynn F. Alandt
    Ford Estates, 2000 Brush, Detroit, MI 48226       7,435,679         10.49      
                               
Benson Ford, Jr.
    Ford Estates, 2000 Brush, Detroit, MI 48226       4,197,354         5.92      
                               
Eleanor F. Sullivan
    Ford Estates, 2000 Brush, Detroit, MI 48226       3,638,173         5.13      
                               
Josephine F. Ingle
    Ford Estates, 2000 Brush, Detroit, MI 48226       4,395,686         6.20      
                               
Alfred B. Ford
    Ford Estates, 2000 Brush, Detroit, MI 48226       3,631,193         5.13      
                               
William Clay Ford
    Ford Estates, 2000 Brush, Detroit, MI 48226       6,732,025         9.50      
                               
David M. Hempstead, as Trustee of various trusts*
    Ford Estates, 2000 Brush, Detroit, MI 48226       7,258,872         10.25      
                               
Voting Trust**
    Ford Estates, 2000 Brush, Detroit, MI 48226       52,730,799         74.42      
                               
 * Mr. Hempstead disclaims beneficial ownership of these shares.
 
** These Class B Stock shares are held in a voting trust of which Edsel B. Ford II, William Clay Ford, William Clay Ford, Jr., Benson Ford, Jr., and Alfred B. Ford are the trustees. The trust is of perpetual duration until terminated by the vote of shares representing over 50% of the participants and requires the trustees to vote the shares as directed by a plurality of the shares in the trust.


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Section 16(a)
Beneficial Ownership Reporting Compliance
 
Based on Company records and other information, Ford believes that all SEC filing requirements applicable to its directors and executive officers were complied with for 2010 and prior years, except that, due to oversight by the Company, there were 31 late reports disclosing 32 transactions with respect to a Trust, consisting primarily of 29 purchases of common shares pursuant to a dividend reinvestment policy, of which Edsel B. Ford II is the Trustee but not a beneficiary.
 
Director Compensation(1)
 
                                         
(a)     (b)       (c)       (d)       (e)  
      Fees Earned or
              All Other
         
      Paid in Cash(1)
      Stock Awards(2)
      Compensation(3)
      Total
 
Name     ($)       ($)       ($)       ($)  
Stephen G. Butler
      205,000         0         32,510         237,510  
                                         
Kimberly A. Casiano
      200,000         0         28,254         228,254  
                                         
Anthony F. Earley, Jr. 
      200,000         0         13,810         213,810  
                                         
Edsel B. Ford II
      200,000         249,998         263,967         713,965  
                                         
Richard A. Gephardt
      200,000         0         18,129         218,129  
                                         
James H. Hance, Jr. 
      100,000         0         6,435         106,435  
                                         
Irvine O. Hockaday, Jr. 
      210,000         0         25,578         235,578  
                                         
Richard A. Manoogian
      205,000         0         33,683         238,683  
                                         
Ellen R. Marram
      205,000         0         30,269         235,269  
                                         
Homer A. Neal
      205,000         0         38,373         243,373  
                                         
Gerald L. Shaheen
      200,000         0         26,997         226,997  
                                         
John L. Thornton
      200,000         0         49,381         249,381  
                                         
 
(1)Standard Compensation Arrangements
 
Fees.  On July 13, 2006, the Board of Directors voluntarily reduced Board fees payable to non-employee directors by half resulting in the following fee structure:
 
         
Annual Board membership fee
  $ 100,000  
Annual Committee chair fee
  $ 2,500  
Annual Presiding Director fee
  $ 5,000  
 
For 2009, the Board voluntarily agreed to forgo the cash portion of the annual fees. Consequently, $60,000 (60% of the Annual Board membership fee) was credited to the directors’ accounts under the Deferred Compensation Plan for Non-Employee Directors (see below). Directors did not receive any other cash payments relative to board fees during 2009.
 
We disclosed in our 2010 Proxy Statement that in light of our significant progress during 2009, our positive financial projections for 2010 and, following an analysis of director compensation being paid by peer group companies, including the payment of director compensation at General Motors following its bankruptcy, the Board of Directors determined that it was appropriate that compensation paid to non-employee directors of the Company return to


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2006 levels. Accordingly, effective as of January 1, 2010, the Board of Directors agreed that the following compensation will be paid to non-employee directors of the Company:
 
         
Annual Board membership fee
  $ 200,000  
Annual Committee chair fee
  $ 5,000  
Annual Presiding Director fee
  $ 10,000  
 
The Board of Directors also considered that restoring compensation to prior levels would help the Company attract new directors in an environment where it is increasingly difficult to attract qualified directors.
 
Deferred Compensation Plan.  Under this plan, 60% of a director’s annual Board membership fee must be deferred in common stock units. Directors also can choose to have the payment of all or some of the remainder of their fees deferred in the form of cash and/or common stock units. Each common stock unit is equal in value to a share of common stock and is ultimately paid in cash. These common stock units generate Dividend Equivalents in the form of additional common stock units (if dividends are paid on common stock). These units are credited to the directors’ accounts on the date common stock cash dividends are paid. Any fees deferred in cash are held in the general funds of the Company. Interest on fees deferred in cash is credited semi-annually to the directors’ accounts at the then-current U.S. Treasury Bill rate plus 0.75%. In general, deferred amounts are not paid until after the director retires from the Board. The amounts are paid, at the director’s option, either in a lump sum or in annual installments over a period of up to ten years. In light of the requirement that 60% of annual director fees are deferred into common stock units, and that directors do not realize the cash value of such units until after they leave the Board, there is no minimum share ownership requirement for members of the Board.
 
Insurance.  Ford provides non-employee directors with $200,000 of life insurance. Effective December 31, 2008, the Board amended this plan so that life insurance coverage ends for all currently retired directors and directors who retire in the future, except for those currently retired directors who had previously elected a reduction in life insurance and the $15,000 annuity discussed below, in which case only the annuity would continue. A director who retired from the Board after age 70 or, after age 55 with Board approval, and who had served for at least five years, may have elected to have the life insurance reduced to $100,000 and receive $15,000 a year for life. Edsel B. Ford II does not participate in this plan because, as a former employee, he is entitled to $25,000 of Company-provided life insurance. The life insurance premiums paid by the Company for each director are reflected in the All Other Compensation in 2010 table below.
 
Evaluation Vehicle Program.  We provide non-employee directors with the use of up to two Company vehicles free of charge. Directors are expected to provide evaluations of the vehicles to the Company.
 
(2)The amount shown for Edsel B. Ford II reflects the FASB ASC Topic 718 grant date fair value resulting from grants of restricted shares of common stock awarded under the 2008 Plan pursuant to a January 1999 consulting agreement between the Company and Mr. Ford. Under the agreement, the consulting fee is $125,000 per calendar quarter, payable in restricted shares of common stock. The assumptions used for the 2010 calculations can be found at footnote 21 to our audited financial statements in Ford’s Annual Report on Form 10-K for the year ended December 31, 2010. The restrictions on the shares lapse one year from the date of grant and are subject to the conditions of the 2008 Plan. Beginning in the third quarter 2010, Mr. Ford began receiving the consulting fee in cash. Mr. Ford is available for consultation, representation, and other duties under the agreement. Additionally, the Company provides facilities (including office space), an administrative assistant, and security arrangements. This agreement will continue until either party ends it with 30 days’ notice.


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(3)The following table summarizes the amounts shown in column (d).
 
All Other Compensation in 2010
 
                                                   
              Perquisites/
              Life
         
              Evaluation
      Tax
      Insurance
         
      Fees(i)
      Vehicles(ii)
      Reimbursement
      Premiums
      Total
 
Name     ($)       ($)       ($)       ($)       ($)  
Stephen G. Butler
                15,428         16,871         211         32,510  
Kimberly A. Casiano
                13,809         14,234         211         28,254  
Anthony F. Earley, Jr. 
                7,640         6,012         158         13,810  
Edsel B. Ford II
      250,000         13,740         0         227         263,967  
Richard A. Gephardt
                9,901         8,070         158         18,129  
James H. Hance, Jr. 
                3,671         2,658         106         6,435  
Irvine O. Hockaday, Jr. 
                13,127         12,240         211         25,578  
Richard A. Manoogian
                18,651         14,821         211         33,683  
Ellen R. Marram
                17,540         12,518         211         30,269  
Homer A. Neal
      12,000         14,451         11,711         211         38,373  
Gerald L. Shaheen
                12,595         14,191         211         26,997  
John L. Thornton
                28,293         20,877         211         49,381  
                                                   
 
(i)As noted above, Edsel B. Ford II began receiving his consultancy fee in cash effective with the third quarter 2010. The amount shown for Dr. Neal reflects fees paid as a member of the board of managers of Ford Global Technologies, LLC, a wholly-owned entity that manages the Company’s intellectual property. As a non-employee director of such board, Dr. Neal receives the customary fees paid to non-employee directors. Currently, the fees are: Annual Fee: $10,000, Attendance Fee: $1,000 per meeting. Dr. Neal attended both meetings of the board of managers of Ford Global Technologies, LLC, during 2010.
 
(ii)All amounts shown in this column reflect the cost of evaluation vehicles provided to Directors (see footnote (1) above) and the actual cost incurred for holiday gifts. We calculate the aggregate incremental costs of providing the evaluation vehicles by estimating the lease fee of a comparable vehicle under our Management Lease Program. The lease fee under that program takes into account the cost of using the vehicle, maintenance, license, title and registration fees, and insurance. For Mr. Thornton, the cost of evaluation vehicles was $27,320.


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Certain Relationships and Related Transactions
 
Since January 1993, Ford has had a consulting agreement with William Clay Ford. Under this agreement, Mr. Ford is available for consultation, representation, and other duties. For these services, Ford pays him $100,000 per year and provides facilities (including office space), an administrative assistant, and security arrangements. This agreement will continue until either party ends it with 30 days’ notice.
 
In February 2002, Ford entered into a Stadium Naming and License Agreement with The Detroit Lions, Inc., pursuant to which we acquired for $50 million, paid by us in 2002, the naming rights to a new domed stadium located in downtown Detroit at which the Lions began playing their home games during the 2002 National Football League season. We named the stadium “Ford Field.” The term of the naming rights agreement is 25 years, which commenced with the 2002 National Football League season. Benefits to Ford under the naming rights agreement include exclusive exterior entrance signage and predominant interior promotional signage. In June 2005, the naming rights agreement was amended to provide for expanded Ford exposure on and around the exterior of the stadium, including the rooftop, in exchange for approximately $6.65 million to be paid in varying installments over the next ten years, of which $564,933 was paid during 2010. Beginning in 2005, the Company also agreed to provide to the Lions, at no cost, eight new model year Ford, Lincoln or Mercury brand vehicles manufactured by Ford in North America for use by the management and staff of Ford Field and the Lions and to replace such vehicles in each second successive year, for the remainder of the naming rights agreement. No cost was incurred during 2010 since this expense was incurred in 2009 for providing the vehicles for the 2009-2011 period. William Clay Ford is the majority owner of the Lions. In addition, William Clay Ford, Jr., is one of five minority owners and is a director and officer of the Lions.
 
Paul Alandt, Lynn F. Alandt’s husband, owns a Ford-franchised dealership and a Lincoln-Mercury-franchised dealership. In 2010, the dealerships paid Ford about $105.1 million for products and services in the ordinary course of business. In turn, Ford paid the dealerships about $20.0 million for services in the ordinary course of business. Also in 2010, Ford Motor Credit Company LLC, a wholly-owned entity of Ford, provided about $148.5 million of financing to the dealerships and paid $653,574 to them in the ordinary course of business. The dealerships paid Ford Credit about $144.5 million in the ordinary course of business. Additionally, in 2010 Ford Credit purchased retail installment sales contracts and Red Carpet Leases from the dealerships in amounts of about $18.3 million and $48.4 million, respectively.
 
Mr. Alandt also owns a Volvo franchised dealership. Volvo Cars was a wholly-owned entity of Ford during 2010 prior to completion of the sale of Volvo in the third quarter of 2010. During the period in 2010 while Volvo was still a wholly-owned entity of Ford, the dealership paid Volvo Cars about $3.4 million for products and services in the ordinary course of business. In turn, Volvo Cars paid the dealership about $770,000 for services in the ordinary course of business. Also in 2010, Ford Credit provided about $12.4 million of financing to the dealership. The dealership paid Ford Credit about $11.2 million in the ordinary course of business.
 
In March 2001, Marketing Associates, LLC, an entity in which Edsel B. Ford II has a majority interest, acquired all of the assets of the Marketing Associates Division of Lason Systems, Inc. Before the acquisition, the Marketing Associates Division of Lason Systems, Inc. provided various marketing and related services to the Company and this continued following the acquisition. In 2010, the Company paid Marketing Associates, LLC approximately $23.6 million for marketing and related services provided in the ordinary course of business.
 
Pursuant to SEC filings, the Company was notified that as of December 31, 2010, State Street Corporation, and its affiliate State Street Bank and Trust Company, State Street Financial Center, One Lincoln Street, Boston, MA 02111, owned 11.1% of our common stock. During 2010, the Company paid State Street Corporation and its affiliates approximately $6.2 million in the ordinary course of business.
 
Pursuant to SEC filings, the Company was notified that as of December 31, 2010, Black Rock, Inc., 40 East 52nd Street, New York, New York 10022, through certain of its affiliates, owned 5.28% of our common stock. During 2010, the Company paid Black Rock approximately $27.3 million in the ordinary course of business.
 
Pursuant to SEC filings, the Company was notified that as of December 31, 2010, Evercore Trust Company, N.A., 55 East 52nd Street, 36th Floor, New York, NY 10055, owned approximately 7.97% of the Company’s common stock. During 2010, the Company paid Evercore Trust Company, N.A. approximately $1.6 million in the ordinary course of business.


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Compensation Discussion and Analysis (CD&A)
Executive Summary
 
In our 2010 CD&A, we shared with you the steps we took during 2009 to cut costs and conserve cash in our compensation programs. These included:
 
  •  Thirty-percent reduction in the salaries of Mr. Ford and Mr. Mulally for 2009 and 2010.
 
  •  No annual salary merit increases for salaried employees, including the Named Executives, for 2009.
 
  •  No payout in 2009 and 2010 under the Incentive Bonus Plan for 2008 or 2009 performance, even though payouts had been earned under the Plan.
 
  •  Suspension of Company matching contributions for employees who contribute to our 401(k) savings plans for 2009.
 
  •  Elimination of the cash portion of Board of Director annual fees in 2009, which fees had already been reduced by 50% since July 2006.
 
Additionally, we emphasized equity-based compensation in order to accelerate our transformation to a growth company, to incentivize stock price appreciation, and to further align our executives’ interests with yours. By the end of 2009, our financial results began to reflect the benefits of our ONE Ford Plan, with a full-year net income of $2.7 billion and reduction of our Automotive operating-related cash burn by $18.8 billion from 2008 to 2009. As a result of this progress, we disclosed in the 2010 CD&A that we would pay salary merit increases in 2010, institute Company matching of 401(k) plan employee contributions, and continue to emphasize equity-based compensation to further align our executives’ interests with yours.
 
In 2010, we accelerated performance of our ONE Ford Plan and reported:
 
  •  $6.6 billion in net income, our highest reported net income in more than ten years;
 
  •  positive Automotive operating-related cash flow of $4.4 billion (which is a metric that we emphasized in our 2010 incentive plans);
 
  •  reduction of our debt by $14.5 billion; from $33.6 billion at year-end 2009 to $19.1 billion at year-end 2010 and we became net cash positive at year-end;
 
  •  continued improvement in quality, which is now considered among best-in-class by independent third-parties, including J.D. Power & Associates; and
 
  •  for the first time since 1993, increased market share in the United States for the second consecutive year.
 
It is important to note that each of the above accomplishments is directly related to the metrics used in our incentive compensation plans. Likewise, each supports the elements of our ONE Ford Plan, which are:
 
1. Aggressively restructure our business to operate profitably at current demand and changing model mix.
 
2. Accelerate the development of new products our customers want and value.
 
3. Finance our plan and improve our balance sheet.
 
4. Work together effectively as one team.
 
Investors also recognized our accomplishments and progress, with our common stock price appreciating 67.9% in 2010, which ranks in the 96th percentile of S&P 500 companies. Because of our superior operational performance against plan metrics during 2010 (see below), the Compensation Committee approved payouts under our Incentive Bonus Plan and Final Awards for 2010 Performance Units grants. This is the first payout under the Incentive Bonus Plan in three years, even though performance-to-metrics would have generated payouts for both 2008 and 2009. We believe the performance metrics used in our incentive plans properly focused management’s behavior to accomplish


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key objectives and, in accomplishing these objectives, we made significant progress on our ONE Ford goal of an exciting, viable Ford delivering profitable growth for all. Approval of payouts for 2010 performance under both the Incentive Bonus Plan and the 2010 Performance Units grants reinforces our performance oriented culture.
 
While we acknowledge our exceptional performance in 2009 and 2010, we also recognize that the economic recovery is fragile and that we must continue to conserve cash while maintaining a compensation program that is competitive. Consequently, we decided not to award annual salary merit increases for salaried employees in North America in 2011, including the Named Executives, because survey results show that our base salary levels are competitive. Additionally, the Compensation Committee eliminated tax gross-ups for executive perquisites beginning in 2011 (see “Compensation Programs for 2011” on p. 46). We believe these actions are consistent with our Guiding Principles discussed below. Furthermore, not awarding salary merit increases in 2011 reinforces our goal of competitive positioning of our compensation programs.
 
Named Executive Officers
 
The Named Executives are:
 
  •  Alan Mulally — President and Chief Executive Officer
 
  •  L. W. K. Booth — Executive Vice President and Chief Financial Officer
 
  •  William Clay Ford, Jr. — Executive Chairman
 
  •  Mark Fields — Executive Vice President and President — The Americas
 
  •  John Fleming — Executive Vice President — Global Manufacturing & Labor Affairs
 
How We Determine Compensation
 
The following discussion of our compensation philosophy, strategy, and guiding principles provides you with the framework within which compensation programs are developed at Ford. Additionally, the discussion of the Company’s compensation objectives and business strategy identifies for you those areas that are important in executing our ONE Ford Plan.
 
A.  Compensation Philosophy, Strategy, and Guiding Principles
 
Our Compensation Committee adopted the following Philosophy Statement with respect to all salaried employees:
 
“Compensation and benefits programs are an important part of the Company’s employment relationship, which also includes challenging and rewarding work, growth and career development opportunities, and being part of a leading company with a diverse workforce and great products. Ford is a global company with consistent compensation and benefits practices that are affordable to the business.
 
Pay for performance is fundamental to our compensation philosophy. We reward individuals for performance and contributions to business success. Our compensation and benefits package in total will be competitive with leading companies in each country.”
 
In addition, the Committee has approved the following Strategy Statement:
 
“Compensation will be used to attract, retain, and motivate employees and to reward the achievement of business results through the delivery of competitive pay and incentive programs. Benefits provide employees with income security and protection from catastrophic loss. The Company will develop benefit programs that meet these objectives while minimizing its long-term liabilities.”


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The following Guiding Principles ensure our Philosophy and Strategy statements are applied consistently across the business for our salaried employees. They work together — no one principle is more important than any other and business judgment is used to balance them in changing business conditions.
 
       
Principle     Overall Objective
Performance Orientation
    Compensation programs should support and reinforce a pay-for-performance culture. They should motivate and reward employees for achieving desired business results. Benefit programs should provide income security and support/protect for catastrophic loss.
       
Competitive Positioning
    Competitive compensation and benefit programs are critical to attracting, motivating and retaining a high performing workforce. We target the average competitive level of automotive and other leading companies within the national market, including large automotive, leading multinational and other selected companies, as appropriate. Competitiveness will be measured based on program value to employees relative to the comparator group. When business conditions are such that our incentive programs do not provide competitive compensation on a longer-term basis, we will utilize short- and long-term retention programs to ensure the Company retains key employees who enable the Company to respond successfully to financial and operational challenges.
       
Affordability
    Compensation and benefits must be affordable to the Company over the medium- to long-term. To the extent possible, compensation and benefit programs will not fluctuate significantly based on short-term business conditions.
       
Desired Behaviors
    Compensation and benefit programs should support the Company’s business performance objectives and promote desired behaviors.
       
Flexibility
    Compensation, benefit, and other related programs should take into account workforce diversity and provide meaningful individual choice where appropriate.
       
Consistency and Stability
    It is a Company objective to provide consistent and stable programs globally (subject to legal, competitive and cultural constraints), particularly for higher level positions. Compensation and benefit programs should have a high degree of consistency within countries (i.e., among various pay levels and employee groups) and should not fluctuate significantly year-over-year. Programs may vary when competitively driven.
       
Delivery Efficiency
    Compensation, benefit, and other related programs should be understandable and easy to administer while leveraging economies of scale and technology. They should be implemented in a consistent, equitable, and efficient manner. Programs will be delivered in a manner that is tax-effective to the Company and employees as far as practicable.
       
Delivery Effectiveness
    Clearly defined metrics should be developed for compensation, benefit, and other related programs that are aligned with corporate business performance metrics. Metrics are designed and utilized to measure and continually improve business results.
       
 
The Philosophy and Strategy statements and Guiding Principles are reviewed by the Committee on a regular basis. There were no material changes to the Philosophy and Strategy statements and Guiding Principles in 2010.
 
In keeping with the above, our total direct compensation for Named Executives consisting of base salary, annual cash incentive, and long-term equity, is heavily weighted towards performance. Base salary represents less than 20% of each Named Executive’s target opportunity, and a majority is contingent on meeting incentive plan metrics.
 
B.  ONE Ford
 
As noted above, one of the primary objectives of our compensation program is to drive executive behavior to accomplish key strategic goals. Our President and Chief Executive Officer, Alan Mulally, further developed the


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Company’s strategic priorities under the strategy of ONE Ford. ONE Ford provides a single definition of not only what we need to accomplish but how we need to deliver those accomplishments to achieve success globally. ONE Ford aligns our efforts toward a common definition of success, which includes One Team executing One Plan to deliver One Goal — an exciting, viable Ford delivering profitable growth for all.
 
Given these priorities, the Committee decided to emphasize global and business unit profitability, total Automotive operating-related cash flow, and cost performance metrics in our incentive plans for 2010. Additionally, the Committee emphasized quality and market share metrics in our incentive programs. As noted in the “Executive Summary” on p. 32, these metrics support the pillars of the ONE Ford Plan.
 
As discussed in greater detail below, performance in these critical areas drove the compensation decisions related to our Incentive Bonus Plan and Performance Units for Named Executives for 2010. For more detail on these metrics and how they were used in our incentive programs, refer to “Annual Compensation — B. Incentive Bonuses” on pp. 39-42 and “Equity-Based Compensation — A. Annual Performance Unit and Stock Option Grants” on pp. 43-45. This compensation structure is consistent with our compensation Philosophy, Strategy, and Guiding Principles of performance orientation, flexibility, competitive positioning, affordability, and reinforcing desired behaviors.
 
C.  Competitive Survey
 
In December 2010, the Committee reviewed a report on Ford’s compensation programs for executives. The Company utilized the Towers Watson Executive Compensation Database as the data source for the Company’s analysis of executive compensation. The survey group compensation data was collected during the second quarter of 2010 and, therefore, reflected any bonuses paid in early 2010 for 2009 performance, as well as equity grants for 2010. The report discussed how our executive compensation program compared with those of peer companies on base salary, bonus, long-term incentives, and total direct compensation.
 
In consultation with the Committee’s independent consultant, the following criteria were established in 2009 and used in the selection of the recommended peer group companies:
 
  •  Member of the Fortune 100.
 
  •  Similar primary business to Ford and/or similar business model (e.g., engineering, manufacturing, sales, financial services, job matches).
 
  •  Particular line of business will comprise no more than 20% of the total peer group.
 
  •  Must participate in the Towers Watson survey process.
 
The above criteria ensure that the chosen executive compensation peer group will be representative of Ford’s market for talent. Changes to the comparator group are typically minimized in order to support data stability and reliability.
 
The compensation of executives of General Motors and Chrysler has been regulated due to those companies’ participation in TARP. We continue to believe, however, it is appropriate to include them in our comparator survey group because they are our closest domestic competitors. Our non-U.S. based competitors, such as Nissan, Toyota, and Honda, do not participate in the Towers Watson survey process. In addition to General Motors and Chrysler, our peer group also included 21 leading companies in other industries:
 
             
3M   ConocoPhillips   General Electric   Lockheed Martin
Alcoa   Dow Chemical   Hewlett-Packard   PepsiCo
Boeing   DuPont   Honeywell   Pfizer
Caterpillar   ExxonMobil   IBM   Procter & Gamble*
Chevron   General Dynamics   Johnson & Johnson   United Technologies Valero


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*Procter & Gamble is typically included in our survey group; however, it did not participate in the Towers Watson survey this year.
 
While the Committee uses the survey as a reference point, it is not, and was not in 2010, the sole determining factor in executive compensation decisions. The survey group data is used primarily to ensure that our executive compensation program as a whole is competitive when the Company achieves targeted performance levels. We generally seek to provide total compensation opportunities, which include salary, annual bonus and long-term incentives, at or around the survey group’s median total compensation. We do not establish rigid targets for total compensation, or any individual element of compensation, relative to the survey group. Rather, consistent with our compensation Guiding Principles discussed above, we incorporate flexibility into our compensation programs and in the executive assessment process to respond to, and adjust for, changes in the business/economic environment and individual accomplishments, performance and circumstances.
 
Although we discuss how the total direct compensation of our Named Executives compares to that of the survey group, Messrs. Ford and Fleming did not have comparable positions within the survey group and, consequently, their compensation was excluded from our analysis. The 2010 survey results indicated that the actual total direct compensation for our other Named Executives as a group was below the median, except for Mr. Mulally whose compensation was above the median. In general, 2010 actual cash compensation for the Named Executives was below the median of the survey group, and equity-based compensation was significantly below the median on average, except for Mr. Mulally, whose equity-based compensation was significantly above the median (see “Equity-Based Compensation” on pp. 43-46 for a discussion of how equity compensation affected the compensation of the Named Executives).
 
An analysis of how each element of compensation listed below compared to the survey data for 2010, as well as how the factors described above, including the competitive survey data review, affected Named Executive compensation decisions during 2010, is included in the discussion of each element.
 
D.  Internal Pay Equity and Equity-Value Accumulation Analyses
 
Each year, the Committee reviews the amount of all components of compensation, both recent historical and prospective, of our executive officers, including the Named Executives. This review includes data on salary, annual bonuses, and equity-based awards, as well as qualitative data on perquisites, and is prepared by the Company’s Human Resources department. The Committee also takes into account relative pay considerations within the officer group and data covering individual performance. The Committee uses this analysis to assist it in ensuring internal equity among the executive officer group. The Committee did not take any actions related to the Named Executives in 2010 as a result of this analysis.
 
The Committee also considers analyses of the potential value of outstanding equity grants and uses this information as one data-point in evaluating equity compensation grants. For instance, the Committee reviewed the value of equity-based awards at certain price levels of Ford stock. The analysis included the following:
 
  •  “in-the-money” stock options;
 
  •  unvested Restricted Stock Units;
 
  •  2010 Performance Unit grant; and
 
  •  2009 Incentive Grants for Messrs. Mulally and Ford.
 
The Committee uses this analysis to evaluate the accumulated wealth in equity of the Named Executives in light of the Company’s change in market value. In light of our performance in 2009 and 2010, the Committee believes our equity-based incentive programs are appropriate to attract, motivate and retain executives, as well as incentivize executives to accomplish our ONE Ford objectives.


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E.  Management Recommendations
 
The Committee considers recommendations from William Clay Ford, Jr., Mr. Mulally, and the Group Vice President — Human Resources and Corporate Services, in developing compensation plans and evaluating performance of other executive officers. The Committee’s consultant also provides advice and analyses on the structure and level of executive compensation (see Compensation Committee Operations on pp. 24-25). As noted in “How We Determine Compensation — B. ONE Ford” above, Mr. Mulally established the ONE Ford corporate priorities. Our senior leadership team developed the 2010 business plan metrics and targets to support our ONE Ford priorities. Our Human Resources and Finance departments developed the incentive plan performance weightings and metrics in support of the business plan and ONE Ford. Final decisions on the design of our incentive plans and any major element of compensation, however, as well as total compensation for each executive officer, were made by the Compensation Committee.
 
Elements of Compensation
 
The table below lists the on-going elements of our total compensation program and why we provide these elements:
 
       
Elements of Compensation     Why We Provide
•   Salaries
   
•   attract, retain and motivate executives to achieve key business priorities
           and objectives
       
     
•   provide income certainty
       
•   Incentive Bonuses
   
•   attract, retain and motivate executives to achieve key business priorities
           and objectives
     
•   hold executives accountable for performance against near-term business
           objectives
       
•   Annual Performance Unit and Stock
   
•   attract, retain and motivate executives to achieve key business priorities
   Option Grants
         and objectives
     

•   encourage executive stock ownership
       
     
•   hold executives accountable for performance against targets
       
     
•   focus executive behavior on Ford’s long-term success
       
     
•   align executive interests with shareholder interests
       
•   Perquisites and Other Benefits
   
•   attract, retain and motivate executives
       
     
•   enhance executive productivity
       
     
•   support development of our products (evaluation vehicles)
       
•   Retirement Plans
   
•   provide income security for retirement
       
     
•   retain executives
       
 
Each compensation element is supported by the Philosophy, Strategy and Guiding Principles discussed in the “How We Determine Compensation” on pp. 33-34.
 
To achieve our objectives and to support our business strategy, compensation paid to our executives is structured to ensure that there is an appropriate balance among the various forms of compensation. The Committee attempts to strike appropriate balances by analyzing the competitive market for executive talent, our business results and forecasts, and our key strategic goals for the year. The charts below show the various balances we achieved among


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our executive officer group (with and without the 2009 Incentive Grants) compared to the balances achieved by the survey group:
 
     
Ford
 
Comparator Group Median
     
(PIE CHARTS)   (PIE CHARTS)
     
(PIE CHARTS)    
 
As the charts indicate, cash compensation makes up a higher percentage of our executives’ compensation than that of the comparator group’s median whether or not the 2009 Incentive Grants are included (see “Equity-Based Compensation — B. 2009 Incentive Grants” on p. 45).
 
We noted in our 2010 CD&A that based on our stock price in early 2009, we could not grant equity-based compensation at desired levels. This helps explain why our targeted cash compensation made up a larger percentage of our compensation package when compared to the survey group.
 
Annual Compensation
 
Annual compensation for our executives includes salary and cash incentive bonus, if earned, paid in cash.
 
A.  Salaries
 
When considering increases to base salaries, the Compensation Committee takes into account the following factors:
 
  •  the individual’s job duties, performance and achievements;
 
  •  similar positions of responsibility within the Company (internal pay equity);
 
  •  job tenure, time since last salary increase, retention concerns and critical skills; and
 
  •  level of pay compared to comparable positions at companies in the survey group.
 
The Compensation Committee reviews salaries of the Named Executives annually and at the time of a promotion or other major change in responsibilities. As part of our objective to control costs, there were no increases to salaries (annual merit or otherwise) for any of the Named Executives in 2009. As stated in the “Executive Summary” on p. 32, in light of our significant progress in 2009 and projected continuing progress we reinstated salary merit


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increases for 2010. The following Named Executives received merit increases effective April 1, 2010, (percentage increase in parentheses): L. W. K. Booth (4.2%); Mark Fields (3.8%); and John Fleming (4.7%). In granting the percentage increases, the Committee considered competitive salary data, which explains the relative increases for Messrs. Booth and Fleming. Messrs. Ford and Mulally voluntarily reduced their salaries by 30% for 2009 and 2010 and, therefore, did not receive salary merit increases.
 
Throughout 2010, the salaries for the Named Executives were above the median of the survey group, except for Mr. Mulally, whose salary was below the median due to his voluntary 30% salary reduction. We believe that paying base salaries at the high end of the competitive survey is appropriate to retain executives throughout the business cycle because cash compensation and/or total compensation may be much lower than competitive levels at certain times during the business cycle (see “How We Determine Compensation — C. Competitive Survey” on pp. 35-36). The relative salary level is also explained by the fact that Ford is generally larger and more complex than many of the companies in the survey group, with world-wide operations, a capital intensive business involving complex products with long product development timelines, and that certain of the Named Executives have been at the Executive Vice President level for a comparatively long time period. We noted in the “Executive Summary” on p. 33, that the Named Executives will not receive merit increases to salary in 2011 because of our desire to control costs and because our salaries are already competitive.
 
B.  Incentive Bonuses
 
We explained in the “Executive Summary” on p. 32 that, because of economic conditions and our desire to conserve cash, payouts in 2009 and 2010 under the Incentive Bonus Plan were cancelled for the 2008 and 2009 performance years, even though performance-to-metrics would have provided for payouts for each of those years. The Committee decided that our exceptional 2009 performance and improved business conditions supported an Incentive Bonus Plan for 2010 performance. In the 2010 CD&A, we disclosed that the Committee desired to further emphasize the importance of generating and managing our cash. Consequently, for the Incentive Bonus Plan, and the annual Performance Unit Grants (see “Equity-Based Compensation — A. Annual Performance Unit and Stock Option Grants” on pp. 43-45), the Committee increased the historical weighting of the global Automotive operating-related cash flow metric ten percentage points and reduced the global profit-before-tax metric by ten percentage points.
 
In 2010, for Named Executives whose primary responsibilities involved a particular business unit, the Committee set a formula that was based on the following metrics (weighting of each metric in parenthesis):
 
  •  global profits-before-taxes (PBT) (30%);
 
  •  global Automotive operating-related cash flow (30%);*
 
  •  relevant business unit PBT (15%);
 
  •  relevant business unit cost performance (8.33%);
 
  •  relevant business unit market share (8.33%); and
 
  •  relevant business unit quality (8.33%).
 
The Committee determined that this structure best took into account Company as well as individual performance for those Named Executives responsible for specific business units.


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Those Named Executives whose duties are of a global nature were placed in the “Corporate” business unit. For these executives, the performance metrics used for 2010 were the following (weighting of each metric in parenthesis):
 
  •  global PBT (45%);
 
  •  global Automotive operating-related cash flow (30%);*
 
  •  total cost performance (8.33%);
 
  •  a weighted average of all business unit market share performance (8.33%); and
 
  •  a weighted average of all business unit quality performance (8.33%).
 
*We define total Automotive operating-related cash flow as automotive pre-tax profits (excluding special items as detailed in Ford’s Annual Report on Form 10-K for the year ended December 31, 2010) adjusted for the following:
 
  •  less: capital spending (additional cash outflow);
 
  •  add back: depreciation and amortization (non-cash expense);
 
  •  add/deduct: changes in receivables, inventory, and trade payables; and
 
  •  other — primarily expense and timing differences.
 
The following are excluded in the calculation of total Automotive operating-related cash flow:
 
  •  pension plan contributions;
 
  •  employee separation payments; and
 
  •  tax payments from affiliates.
 
The Committee chose these metrics because they supported our ONE Ford Plan (see “Executive Summary” on p. 32). The Named Executives, their respective business unit, and Incentive Bonus targets are as follows:
 
         
Named Executive
 
Business Unit
 
Target as % of Salary
 
Alan Mulally
  Corporate   175%*
L. W. K. Booth
  Corporate   100%*
William Clay Ford, Jr. 
  Corporate   $1 million**
Mark Fields
  The Americas   100%*
John Fleming
  Corporate   100%*
 
In 2006, the Committee established targets for executive officers based on the individual’s level of responsibility, competitive compensation data, pay equity considerations among the executive officers, past target amounts, as well as the need for flexibility to motivate and reward exceptional performance while maximizing the deductibility of compensation by following the shareholder approved terms of the Incentive Bonus Plan. When Mr. Mulally joined Ford in 2006, the Committee agreed that his 2007 Incentive Bonus Plan target would be 175% of his salary of $2 million. For 2010, this target was not adjusted. The Committee believed that not adjusting Mr. Mulally’s Incentive Bonus target encouraged behavior to accomplish our ONE Ford objectives. The Committee has not changed the target levels of the Named Executives as a percent of salary since 2006.
 
** In 2008, the Committee reduced Mr. Ford’s Incentive Bonus target from 175% of salary to $1 million and increased his equity-based compensation target. The Committee believes this arrangement is more appropriate for the position of Executive Chairman and focuses his efforts on long-term objectives.
 
The amount earned under the Incentive Bonus Plan was determined pursuant to a pre-established sliding scale, based on various levels of achievement for each metric. If minimum performance levels had not been met for all metrics, the payout would have been zero. The maximum extent to which a performance metric could be achieved was 200% of the target. The Committee believes that a scale which allows a maximum award of 200% of target incentivizes executive behavior to exceed business objectives.


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For the business units in which Named Executives participated, the following table shows the performance metric, the target, and the performance results for 2010.
 
2010 Incentive Bonus Target and Performance Results
 
                       
            Performance Results
Performance Metric     2010 Target     (% of Target Achieved)
Global PBT* ($ Millions)
    $ 900         200   %
                       
Business Unit PBT*
                     
Corporate
      N/A              
The Americas ($ Millions)
    $ 2,789         200   %
                       
Global Automotive Operating-Related Cash Flow* ($ Millions)
    $ (1,300 )       200   %
                       
Cost Performance*
                     
Corporate ($ Millions)
    $ (2,230 )       200   %
The Americas ($ Millions)
    $ (2,246 )       200   %
                       
Market Share
                     
Corporate
      ****         44   %
The Americas**
      14%**         58   %
                       
Quality***
                     
Corporate
                122   %
Things-Gone-Wrong % YOY Improvement (50)%
      ****              
Warranty Spending % YOY Improvement (50)%
      ****              
The Americas
                111   %
Things-Gone-Wrong % YOY Improvement (50)%
      11.4 %            
Warranty Spending % YOY Improvement (50)%
      (6.25 )%            
                       
 
Excludes special items as detailed in Ford’s Annual Report on Form 10-K for the year ended December 31, 2010.
 
** The Market Share metric for the Americas was comprised of the following targets: U.S. (Retail as a percentage of Retail) 14.2%; Canada (Retail & Fleet) 14.75%; Mexico (Retail & Fleet) 10.97%; and South America (Retail & Fleet) 10.86%. The Committee focused the U.S. Market Share metric on the retail percent of the overall retail market because: (i) it was considered the best measurement of the acceptance of our products by U.S. consumers; and (ii) our decision to de-emphasize fleet sales in the U.S. The weightings for each region within the Americas business unit were based on the industry volumes of the relevant region. The weightings were as follows: U.S. — 65%; Canada — 8%; Mexico — 4%; and South America — 23%.
 
*** The Quality metrics for the relevant business units were developed from our Warranty Spending data and industry survey data that measured Things-Gone-Wrong. To better understand the Quality metrics, we show the targets as the year-over-year improvement to be achieved. The actual targets for the Things-Gone-Wrong metrics were the number of Things-Gone-Wrong for each relevant business unit and, in some cases, sub-business units. The Warranty Spending targets had a similar design. Because showing the actual metrics would be unwieldy and not enhance your understanding of the target to be achieved, we have translated the Things-Gone-Wrong and Warranty Spending targets into year-over-year improvement targets for each relevant business unit.
 
**** The Corporate business unit did not have a formal target for the Market Share and Quality metrics. Instead, performance for the Corporate Market Share and Quality metrics was a weighted average of the other business units’ market share and quality performance. The weightings for Corporate Market Share and Quality metrics were as follows: The Americas — 64%; Ford of Europe — 30%; and Asia Pacific and Africa — 6%. These weightings were based on the planned net revenues of the relevant business units for 2010.


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The table below shows the total performance results for each business unit in which a Named Executive participated. Based on the performance against each metric’s targets within the relevant business unit shown above, the Committee calculated the percent of the total target award earned for that business unit.
 
2010 Incentive Bonus Plan Performance Results
(% of Target Achieved)
 
           
Business
    Total Performance Results
Unit     (Total % of Target Award Achieved)
Corporate
      180%  
The Americas
      181%  
           
 
The Committee decided to pay out the Incentive Bonus Plan awards to the Named Executives according to the formula percentages in the table above (see column (g) of the Summary Compensation Table and footnote 4 on pp. 51-53). The Committee considered our outstanding 2010 performance-to-metrics and our execution of our ONE Ford Plan as the primary reasons for paying out the awards to the full extent that they were earned.
 
C.  Incremental Bonuses
 
Our results relative to the 2010 Incentive Bonus Plan metrics represent significant progress toward our primary ONE Ford objective of becoming an exciting viable Ford delivering profitable growth for all. This progress required extraordinary performance by the Named Executives. In February 2011, the Committee created an individual performance fund which allows the Committee to recognize and reward Named Executives with incremental bonuses beyond the Incentive Bonuses earned in a performance year (see column (d) of the Summary Compensation Table on p. 51).
 
The maximum incremental bonus a Named Executive may be paid is 150% of the person’s Incentive Bonus Award, less the amount of the Incentive Bonus Award. The incremental bonus payout depends on the annual performance ratings for a Named Executive, which depend upon the individual’s performance against his or her personal objectives for the relevant year and his or her demonstration of the ONE Ford behaviors of: functional and technical excellence; working together; role modeling Ford values; and delivering results.
 
Each of the Named Executives who received an incremental bonus played an integral role in the significant improvement in our balance sheet and our profitability during 2010. Mr. Mulally set the strategic direction and accelerated our ONE Ford Plan which significantly increased our Automotive operating-related cash flow and achieved our highest reported net income in more than 10 years. Under Mr. Mulally’s exceptional leadership, the Company also significantly reduced its debt and became net cash positive at year-end. Additionally, he continued to create an environment of teamwork among the Company’s senior leadership.
 
Mr. Ford continued to provide leadership to ensure the Board of Directors sets Ford’s strategic direction. He worked closely with Mr. Mulally to accelerate the restructuring of the business to be profitable at lower volume and mix. Mr. Ford also continued to influence the Company’s on-going work in the development and manufacture of alternative fuel vehicles. He effectively communicated Ford’s priorities with important constituencies, such as the media, dealers, and governmental officials.
 
Mr. Booth provided leadership in strengthening our balance sheet and exceeding our financial goals in 2010. He led Company efforts to control costs and improve cash flow which resulted in a significant reduction of our debt and our becoming cash positive net of debt by year-end 2010. These actions led to positive rating agency upgrades during the year. Mr. Booth also provided strategic direction for our Corporate and Ford Credit capital improvement plans.
 
Mr. Fields led our Americas operations to exceptional results during 2010. He skillfully balanced operating and market factors to significantly exceed profit and cash flow objectives for the year. Market share improved in multiple


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markets and this was the first time since 1993 that U.S. market share increased two consecutive years. Mr. Fields’s leadership in developing products our customers want and value was key in the Company’s 2010 performance.
 
The Committee recognized the above achievements of these Named Executives as supporting the four elements of our ONE Ford plan (see “Executive Summary” on p. 32). The Committee also recognized that the entire Ford team had an exceptional 2010 and deserved recognition for the Company’s accomplishments. In light of the achievements noted above, the Committee determined that the performance of Messrs. Mulally, Ford, Booth, and Fields warranted additional recognition in the form of incremental bonuses. Because the incremental bonuses were paid outside of the Incentive Bonus Plan, those payments are subject to the deduction limits of Code Section 162(m) (see “Tax Considerations — A. Internal Revenue Code §162(m)” on p. 49).
 
Equity-Based Compensation
 
Our equity-based incentive awards are tied to our performance and the future value of our common stock. These awards are intended to focus executive behavior on our longer-term interests, because today’s business decisions affect Ford over a number of years. For 2010, our equity-based compensation consisted of annual grants of Performance Units, stock options, and supplemental grants to certain Named Executives, as explained in more detail below.
 
In granting equity awards, the Committee determines a dollar value of equity awards to grant to each recipient. For officers, this dollar value is translated into a number of stock options based on a Black-Scholes analysis and Performance Units based on the fair market value of Ford common stock on the date of grant. As noted in our 2010 CD&A, because of the level of Ford’s stock price in late 2008 and early 2009, we were not able to grant participants the desired value of equity awards for 2009 annual and incentive stock grants. In light of the Company’s stock price performance during 2009 and in early 2010 (before the March 2010 grant date), the shares available under the 2008 Plan allowed the Committee to grant supplementary stock options and time-based Restricted Stock Units approximately equal in value to the deficiency resulting from the decreased 2009 annual and incentive grants. The Committee believed this was appropriate given our significant progress during 2009, the Committee’s decision not to make payouts under our Incentive Bonus Plan for 2008 and 2009 performance, and the positioning of our equity-based grants compared to the survey group. Messrs. Ford and Mulally did not receive supplementary grants because, as we disclosed in our 2010 CD&A, their 2009 annual equity-based grants were not decreased.
 
As discussed above, the competitive survey indicates that equity-based compensation for the Named Executives is significantly below the median of the comparator group on average even when including the 2009 Incentive Grants (see “Equity-Based Compensation — B. 2009 Incentive Grants” on p. 45). For Mr. Mulally, the survey showed that his total equity-based compensation was significantly above the median of the survey group. Our 2010 equity-based compensation awards reinforces our desire to, in general, pay at or near the median of equity compensation compared to the survey group as well as demonstrates flexibility in our compensation practices to reward superior performance and to respond to changing business and economic conditions. Mr. Mulally’s total equity-based compensation reflects his leadership responsibility for ONE Ford and the global Ford enterprise and the Committee’s desire to incentivize Mr. Mulally to increase shareholder value, thus aligning his interests with those of all shareholders.
 
A.  Annual Performance Unit and Stock Option Grants
 
Consistent with prior practice, the Committee continued the annual equity-based incentive program for the Named Executives by granting two types of equity-based compensation: stock options and Performance Units (see Grants of Plan-Based Awards in 2010 Table and related footnotes on pp. 55-56). The Committee awarded 50% of the value of each executive’s annual equity award in stock options and 50% in Performance Units.


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The stock options vest over three years, have a ten-year term, and function as our longest-term incentive. The Committee believes this focuses executive behavior and decision making on our long-term interests and aligns the interests of our executives with those of our shareholders. The Performance Units are awarded based on a one-year performance period, but are paid out in service-based Restricted Stock Units, which vest over a two-year period. In granting the Performance Units, the Committee chose a one-year performance period in order to focus executive behavior on achieving key short-term business objectives and to incentivize real-time continuous improvement of our performance. The two-year restriction period, however, adds an intermediate element that serves to retain executives and focus their behavior beyond the initial one-year performance period. In addition, because executive decisions regarding such matters as product development, marketing, sales, and the like, can affect our performance over several years, the Committee believes it is important to structure equity-based awards so that executives will focus on the long-term consequences of their decisions. This also further aligns executive interests with your interests as shareholders.
 
In general, the total value of these grants in 2010 was determined based on the following considerations:
 
  •  job responsibilities and expected role in our long-term performance;
 
  •  retention needs;
 
  •  historical share allocations;
 
  •  the value of equity-based grants granted to the executive in the prior year; and
 
  •  the total number of equity-based grants awarded to our employees.
 
As stated above, we did not have enough shares available under our 2008 Plan to provide participants with the full value of the 2009 annual equity grants. Because of our improved performance in 2009, we had sufficient shares to grant the full value of our 2010 annual equity grants and make up the deficiency resulting from our decreased 2009 annual equity grants. Because of our improved outlook for 2010, our desire to incentivize and reward participants, and to start to address the competitiveness of our equity compensation program, the Committee decided in March 2010 to make supplemental grants to participants approximately equal in value to the reduction in grant value of the 2009 equity grants. For officers, the value of these supplementary grants were split 50% in stock options and 50% in time-based Restricted Stock Units. The number of time-based Restricted Stock Units awarded was determined based on the officer’s business unit’s 2009 Performance Unit payout percentage. Consequently, Messrs. Booth, Fields, and Fleming received additional stock options and time-based Restricted Stock Units in addition to 2010 annual equity grants (see Grants of Plan-Based Awards in 2010 Table and related footnotes on pp. 55-56).
 
The target awards for 2010 Performance Unit grants for the Named Executives are shown in column (h) of the Grants of Plan-Based Awards in 2010 Table on p. 55. These amounts represent the maximum award opportunity. Similar to the Incentive Bonus Plan, the Performance Unit formula has a sliding scale based on various levels of achievement for each metric. If minimum performance levels had not been met for all metrics, the payout would have been zero. The Committee may decrease, but not increase, an award for Named Executives.
 
We disclosed in our 2010 CD&A that, in order to further implement our ONE Ford Plan objective of working together effectively as one team, the Committee assigned all officers to the Corporate business unit for purposes of the performance metrics under the 2010 annual Performance Unit grants. The Committee selected metrics, weightings, and targets identical to those under the 2010 Incentive Bonus Plan (see “Annual Compensation — B. Incentive Bonuses” on pp. 39-42), to emphasize the importance of our ONE Ford Plan objectives (see “How We Determine Compensation — B. ONE Ford” on pp. 34-35).


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The table below shows the performance results for each metric for the Corporate business unit and the total performance results against the metrics for 2010. The Committee reviewed Ford’s performance for 2010 against the goals. Based on this performance, the Committee determined the percentage of each of the five performance goals achieved and the percentage of the target award earned for the Corporate business unit (see column (h) of Grants of Plan-Based Awards in 2010 Table and footnote 2 on p. 55).
 
2010 Performance Unit Performance Results
(% of Target Achieved)
 
                                                             
            Total Automotive
                      Performance Results
Business
    Global
    Operating-Related
    Cost
    Market
          (Total % of
Unit     PBT     Cash Flow     Performance     Share     Quality*     Target Achieved)
Corporate
      100%         100%         100%         37%         71%         92%  
                                                             
 
*The Performance Results column for the Quality metric shows the combined percent achieved for the Things-Gone-Wrong target and Warranty Spending target, weighted equally as shown in the 2010 Incentive Bonus Target and Performance Results Table on p. 41. Although the performance results were less than 100%, our market share in the U.S. increased for the second consecutive year for the first time since 1993 and our quality improved year-over-year and, in general, indicates industry-leading quality levels.
 
The Committee decided to payout at the levels earned in recognition of the following: (i) the Named Executives made substantial progress in accelerating our ONE Ford Plan; (ii) Final Awards of Restricted Stock Units do not have an adverse impact on our cash flow in the current period; (iii) the two-year restriction period of the Restricted Stock Units serves as a retention tool; and (iv) the two-year restriction period focuses executive behavior on our longer-term interests.
 
B.  2009 Incentive Grants
 
As noted in our 2010 CD&A, the Committee granted incentive equity awards in March 2009 to certain executives, including Messrs. Mulally, Ford and Fleming. In structuring the grants, the Committee gave due consideration to the reduction of cash compensation with the cancellation of merit increases to salary and the Incentive Bonus Plan for 2009. Messrs. Booth and Fields did not participate in the 2009 Incentive Grants because of their participation in a separate executive retention program that concluded in 2009.
 
In 2009, Mr. Fleming received a time-based Restricted Stock Unit grant that had a two year restriction period. As noted above, the Committee decided to grant supplementary awards to compensate for the reduction in the 2009 incentive grants. Consequently, Mr. Fleming received additional time-based Restricted Stock Units in March 2010 (see column (j) of Grants of Plan-Based Awards in 2010 Table and footnote 3 on pp. 55-56).
 
In 2009, Messrs. Mulally and Ford received incentive grants of Performance Units that had a two year performance period. The performance metric was an acceleration of the ONE Ford Plan to restructure our business as measured by a reduction in global Ford brand platforms in 2009 and 2010 from 25 platforms to 23 platforms. At the conclusion of the two-year performance period, the Committee assessed performance against this metric and determined that the metric had been achieved. The Committee granted 100% of the target award in unrestricted common stock on March 3, 2011 (see column (j) of Outstanding Equity Awards at 2010 Fiscal Year-End Table and related footnote on pp. 57-60).
 
C.  Timing of Awards
 
Annual grants of equity awards are typically determined at a February Compensation Committee meeting. At that time, data for previous performance periods are available to determine the amount of the Final Awards. The Committee also decides the effective date of the annual equity-based grants of options and Performance Units. Due to administrative complexity relating to valuation and notification, the Committee approved the annual 2011


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equity-based Final Awards and grants on February 25, 2011, and the Board approved an effective date of March 3, 2011. A similar practice was also followed in previous years. The release of earnings information for the prior fiscal year is sufficiently in advance of the annual grant date for the public to be aware of the information.
 
The Committee does not time equity grant dates to affect the value of compensation either positively or negatively. Executive officers did not play a role in the selection of the grant dates. Special grants, whether approved by the Compensation Committee for officers or the Long-Term Incentive Compensation Award Committee for non-officers, are effective either on a specified future date (e.g., a date that coincides with a promotion or hiring date, or quarterly grant date), or the date of approval. In the case of an approval by written consent, the grant date cannot be earlier than the date when the Committee member approvals have been obtained. See Corporate Governance — Compensation Committee Operations at pp. 24-25 for more information on the Long-Term Incentive Compensation Award Committee. For exercise prices of the 2010 option grants, see column (l) of the Grants of Plan-Based Awards in 2010 Table on p. 55. Under the 2008 Long-Term Incentive Plan, the terms of which were approved by you at the 2008 Annual Meeting, the exercise price of options will be the closing price on the date of grant.
 
Stock Ownership Goals
 
In 1994, the Compensation Committee created stock ownership goals for executives at or above the Vice President level to further align the interests of the executives with those of shareholders. The following table shows the officer level and respective ownership goal.
 
         
    Ownership Goal
 
Officer Level
  (% of salary)  
 
Vice Presidents
    100%  
Group Vice Presidents
    200%  
Executive Vice Presidents
    300%  
Executive Chairman and President & CEO
    500%  
 
Executives have five years from taking their position to achieve their goal.
 
We review progress toward achievement of the ownership goals periodically. All forms of stock ownership — including directly and indirectly owned shares of common stock, Final Awards of Restricted Stock Units, and units that are based on common stock (excluding stock options) — count toward the goal. As of March 3, 2011, all of the Named Executives comply with the stock ownership goals.
 
Compensation Programs for 2011
 
We noted in the “Executive Summary” on p. 33, that there would be no annual merit increases to salary for salaried employees in the U.S. and Canada for 2011, including each of the Named Executives. We decided this was appropriate because survey results indicate that salaries are competitive with our survey group and our desire to conserve cash and control expenses due to the economy’s fragile recovery. Because Messrs. Ford and Mulally committed to a 30% salary reduction for 2009 and 2010, their salaries returned to $2 million per year effective January 1, 2011. They did not receive any increases to salary beyond the return to the 2008 levels.
 
As noted in the “Executive Summary” on p. 33, the Committee eliminated tax gross-ups for executive perquisites effective January 1, 2011. The Committee believed that this was the appropriate time to eliminate these tax gross-ups in light of competitive practices, improved business conditions, and shareholder interest in this topic. We will maintain tax gross-ups of relocation expenses for all salaried employees who are required to relocate due to job responsibilities. The Committee determined that it would be unduly burdensome for employees to pay the increased taxes associated with imputed income of relocation benefits received when relocating at Ford’s request. Relocation is integral to the development of our future leaders by providing them with experience in our global operations.


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Retirement Plans
 
In general, we believe that the retirement plans described below serve several worthwhile business purposes, including retaining top leadership talent. In addition, they provide income security to long serving executives, and provide flexibility to us in transferring executives among our operations. We believe these programs to be reasonable and appropriate in light of competitive practices and our executives’ total compensation program. For additional information, see the Pension Benefits in 2010 Table on p. 61 and the Nonqualified Deferred Compensation in 2010 Table on p. 63.
 
A.  Pre-2004 Plans
 
Our General Retirement Plan (“GRP”) provides a tax-qualified benefit for each year of non-contributory participation by employees in the United States hired before January 1, 2004, and added benefits for those who make contributions. We also have two other non-qualified retirement plans for certain employees: the Supplemental Executive Retirement Plan (“SERP”) that provides a supplemental monthly benefit calculated on a percentage of final average pay and service, and the Benefit Equalization Plan (“GRP-BEP”). Under the GRP-BEP, eligible employees receive benefits substantially equal to those they could have received under the GRP but were not able to because of Internal Revenue Code limitations. Messrs. Booth, Ford, Fields, and Fleming are eligible for benefits under the GRP, SERP, and GRP-BEP.
 
Certain eligible executives who separate from employment after age 55 (age 52 if retiring under our Select Retirement Plan (“SRP”)) and prior to age 65 may be eligible for monthly benefits under our Executive Separation Allowance Plan (“ESAP”) that provides a percentage of salary, based on age and service, at time of separation until age 65. The SRP is a voluntary retirement program offered from time-to-time for select U.S. management employees. In 2006 the Committee requested that its consultant, Semler Brossy Consulting Group, LLC, and the Company jointly conduct a review of the SRP as a severance vehicle. The review compared present values of the SRP benefit with traditional severance packages, examined potential changes, and considered benefits to the Company and to executives. The Committee reviewed the report and concluded that the SRP should remain in its current form to facilitate the reduction in work force then being undertaken by the Company and to provide flexibility to accommodate any future reductions.
 
Benefits under SERP, SRP, ESAP, and GRP-BEP are not funded. In addition, in accordance with Code Section 409A, benefits that accrued or vested on or after January 1, 2005 under these plans may not be paid to certain key executives until at least six months following their separation from employment. Each of these plans had been amended in order to provide Mr. Ford with benefits using a notional base annual salary during the period he did not receive a cash salary (i.e., November 2001 through July 2010).
 
B.  Post-January 1, 2004 Plan
 
Consistent with our Strategy Statement (see “How We Determine Compensation — A. Compensation Philosophy, Strategy, and Guiding Principles” on pp. 33-34) to develop benefit programs that provide employees with income security and protection from catastrophic loss while minimizing our long-term liabilities, Ford adopted a tax qualified retirement plan, the Ford Retirement Plan (“FRP”), for salaried employees hired or rehired on or after January 1, 2004 in the U.S. The FRP was adopted in order to provide us with more predictable retirement benefit costs and reduced financial statement volatility. These goals are achieved through a stable contribution schedule and the transfer of financial and demographic risks from us to plan participants while still providing employees with the opportunity for adequate income in retirement. Employees who participate in this plan, including Mr. Mulally, are not eligible to participate in the GRP (with respect to future service), GRP-BEP, SERP, or ESAP.


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Perquisites and Other Benefits
 
We provided certain perquisites and other benefits to senior management in 2010, the most significant of which are summarized below. The Committee periodically reviews our policies on perquisites and other benefits. The cost of these perquisites and other benefits, as applicable, are included in column (i) of the Summary Compensation Table on p. 51.
 
Personal Travel:  As part of our efforts to reduce costs and conserve cash, we decided to close our Air Transportation operation in 2008. Company policy does not allow Messrs. Mulally or Ford to fly commercially due to security concerns. Consequently, the Company pays the charter costs of their use of private aircraft for business and personal travel. The families of Messrs. Mulally and Ford are allowed to accompany them on trips when they travel on private aircraft. In addition, the Company will pay the cost of coach-class commercial aircraft flights for Mr. Mulally’s family when their travel is at his request.
 
Requiring Messrs. Mulally and Ford to use private aircraft for all travel provides several benefits to Ford. First, the policy is intended to ensure the personal safety of our President and CEO and our Executive Chairman, both of whom maintain significant public roles for Ford. Second, use of private aircraft ensures their availability and maximizes the time available for Ford business.
 
For retention purposes, the Company continues to pay the costs, including first class commercial airfare, for personal travel for Mr. Fields to and from his home in Florida.
 
Evaluation Vehicle Program:  We maintain a program that provides our officers with the use of two Company vehicles free of charge. This program requires officers to provide written evaluations on a variety of our vehicles, providing important feedback on the design and quality of our products.
 
Other Services:  For certain executive officers, including the Named Executives, we provide a home security evaluation and security system. We also provide an allowance to senior managers for financial counseling services and estate planning. We pay for approximately 75% of the cost of this service up to $7,500. The safety and security (personal and financial) of our executives is critically important. We believe the benefits of providing these programs outweigh the relatively minor costs associated with them.
 
During 2010, the Committee requested an independent security firm to conduct an analysis of the security requirements of Mr. Ford. After receiving the firm’s analysis, the Committee determined that the level of security provided to Mr. Ford is appropriate.
 
Tax Reimbursement:  During 2010 there were only two perquisites for which tax gross-ups were available: (i) personal travel; and (ii) temporary living/relocation expenses. The total amount spent on tax gross-ups for 2010 for Named Executives was approximately $213,527. As noted in “Compensation Programs for 2011” on p. 46, during 2010 the Committee decided to eliminate tax gross-ups for executive perquisites related to personal travel.
 
Alan Mulally
 
Effective September 1, 2006, we entered into an agreement with Mr. Mulally relating to his hiring as President and Chief Executive Officer. That agreement contained a “change in control” provision that provides that if we terminate Mr. Mulally’s employment for reasons other than for cause during the first five years of his employment or if there is a change in control of the Company during the first five years of his employment and he terminates his employment for good reason, he will receive certain payments and benefits (see Potential Payments Upon Termination or Change in Control — Alan Mulally on pp. 64-67). If Mr. Mulally leaves us pursuant to these arrangements, he may not work for a competitor for five years after the date of his termination. Mr. Mulally will not be entitled to any severance payment if he is terminated for cause.


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The Committee believes these termination provisions are reasonable. The sunset provision of five years is an appropriate length of time to compensate Mr. Mulally to leave his prior position at Boeing and assume a leadership role with a company in the midst of a turnaround. The non-compete clause also protects the Company from competitive harm should Mr. Mulally separate from Ford under these conditions. In addition, under a change in control scenario, Mr. Mulally’s employment either must be terminated or he must terminate his employment for “good reason” in order to receive the termination benefits.
 
In September 2008, the Committee decided to continue indefinitely the arrangement of providing housing in Dearborn, Michigan to Mr. Mulally. The Committee believes the arrangement is beneficial to Mr. Mulally and the Company by allowing him to continue to focus on our ONE Ford Plan. The cost of this benefit is included in column (i) of the Summary Compensation Table on p. 51; however, beginning in 2011 we no longer provide tax gross-up for this arrangement. He is eligible for relocation assistance pursuant to our relocation program if he chooses to relocate his household.
 
William Clay Ford, Jr.
 
In the 2010 CD&A we explained that since 2005 Mr. Ford had foregone all compensation (including salary, bonus or other awards) until such time as the Compensation Committee determined that the Company’s global Automotive sector achieved full-year profitability, excluding special items. On August 5, 2010, the Committee determined that the metric had been achieved. For an explanation of the compensation received by Mr. Ford, see the Summary Compensation Table and footnote 1 on pp. 51-52.
 
Tax Considerations
 
Internal Revenue Code § 162(m)
 
Code Section 162(m) generally disallows Federal tax deductions for compensation in excess of $1 million paid to the Chief Executive Officer and the next three highest paid officers (other than the Chief Financial Officer) whose compensation is required to be reported in the Summary Compensation Table of the proxy statement (“Covered Executives”). Certain performance-based compensation is not subject to this deduction limitation. In our case, this exemption applies to certain awards under the Incentive Bonus Plan, the 1998 Plan, and the 2008 Plan. Specifically, Incentive Bonus Plan payments made for 2010 performance, 2010 awards of stock options and Final Awards related to Performance Units were not subject to the deduction limit. However, the amount of the Final Award for Messrs. Ford and Mulally that exceeded the shareholder approved limit of 2.5 million Restricted Stock Units are subject to the deduction limit, as well as the incremental bonuses paid to the Named Executives (see column (j) of the Outstanding Equity Awards at 2010 Fiscal Year-End Table and related footnote on pp. 57-60 and column (d) of the Summary Compensation Table and related footnote on pp. 51-52). Additionally, we cannot deduct that portion of any Covered Executive’s salary that is in excess of $1 million (see Summary Compensation Table on p. 51), or the cost of any perquisites provided to a Covered Executive whose salary exceeds $1 million.
 
Generally, we strive to maximize the tax deductibility of our compensation arrangements. In the highly competitive market for talent, however, we believe the Committee needs flexibility in designing compensation that will attract and retain talented executives and provide special incentives to promote various corporate objectives. The Committee, therefore, retains discretion to award compensation that is not fully tax deductible.


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Compensation Committee Report
 
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (CD&A) with management. Based on this review and discussion, the Committee recommended to the Board of Directors that the CD&A be included in this Proxy Statement and incorporated by reference into our annual report on Form 10-K.
 
Compensation Committee
 
Richard A. Manoogian (Chair)
Anthony F. Earley, Jr.
Ellen R. Marram
John L. Thornton
 
Compensation Committee Interlocks and Insider Participation
 
The Compensation Committee is comprised of Anthony F. Earley, Jr., Richard A. Manoogian, Ellen R. Marram, and John L. Thornton, none of whom is an employee or a current or former officer of the Company.


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Compensation of Executive Officers
 
The table below shows the before-tax compensation for Alan Mulally, who served as President and CEO during 2010, L. W. K. Booth, who served as Executive Vice President and Chief Financial Officer during 2010, and the three most highly compensated executive officers at the end of 2010.
 
SUMMARY COMPENSATION TABLE
 
                                                                                               
(a)     (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)    
                                          Change in
               
                                          Pension
               
                                          Value and
               
                                          Nonqualified
               
                                    Non-Equity
    Deferred
               
Name and
                      Stock
    Option
    Incentive Plan
    Compensation
    All Other
         
Principal
          Salary
    Bonus(2)
    Awards(3)
    Awards(3)
    Compensation(4)
    Earnings(5)
    Compensation(6)
    Total
   
Position     Year     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)    
Alan Mulally
      2010         1,400,000         3,150,000         7,492,493         7,499,993         6,300,000                 678,029         26,520,515      
President and Chief
      2009         1,400,003         0         10,974,782         5,050,000         0                 491,869         17,916,654      
Executive Officer
      2008         2,000,000         0         4,491,462         9,437,376         0                 1,046,390         16,975,228      
                                                                                               
L. W. K. Booth
      2010         1,237,500         750,000         1,226,986         1,239,997         2,250,000         1,402,455         89,883         8,196,821      
Executive Vice President and
      2009         1,200,000         0         345,493         760,000         0         1,382,493         138,201         3,826,187      
Chief Financial Officer
      2008         1,075,000         0         1,386,994         999,999         0         1,700,527         291,880         5,454,400      
                                                                                               
William Clay Ford, Jr.(1)
      2010         4,800,000         900,000         3,496,491         13,035,838         1,800,000         1,225,500         1,203,169         26,460,998      
Executive Chairman
      2009         0         0         9,411,533         5,066,200         0         616,374         1,740,167         16,834,274      
                                                                                               
Mark Fields
      2010         1,337,500         1,156,500         1,231,783         1,239,997         2,443,500         1,243,503         166,109         8,818,892      
Executive Vice President and
      2009         1,300,000         0         609,579         760,000         0         1,217,680         93,994         3,981,253      
President — The Americas
      2008         1,300,000         0         1,649,437         999,999         0         536,070         161,867         4,647,373      
                                                                                               
John Fleming
      2010         776,250         0         1,496,632         929,996         1,400,000         1,116,945         196,438         5,916,261      
Executive Vice President
      2009         750,000         0         1,004,842         570,000         0         1,332,269         195,307         3,852,418      
Global Manufacturing & Labor Affairs
                                                                                             
                                                                                               
 
Notes
 
(1)As noted in the “Compensation Discussion and Analysis — William Clay Ford, Jr.” on p. 49, Mr. Ford had agreed to forego new compensation (including salary, bonus, and other awards) until such time as the Compensation Committee determined that the Company’s global Automotive sector had achieved full-year profitability, excluding special items. It was further agreed that the compensation Mr. Ford would have received beginning in 2008 and for future years, but for the agreement to continue to forego new compensation, would be earned and paid when the Committee determined that the Company’s global Automotive sector had achieved full-year profitability, excluding special items. On August 5, 2010, the Committee determined that the criteria for payment of Mr. Ford’s compensation had been achieved. The Committee determined that the date of grant for Final Awards of Restricted


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Stock Units would be August 5, 2010. The table below summarizes the compensation Mr. Ford received as a result of the Committee’s determination.
 
       
Element     Treatment
Base Salary
   
•   On August 7, 2010, Mr. Ford received $4,216,667 as a single lump sum payment of base salary for 2008, 2009, and payment of 2010 salary up to August 1, 2010. $3,400,000 represents his salary that would have been paid in 2008 ($2 million) and 2009 ($1.4 million) but for his arrangement described above.
     
•   Thereafter, Mr. Ford’s salary has been paid monthly according to usual business/payroll practices.
       
Incentive Bonus
   
•   There were no Incentive Bonus payouts in 2009 or 2010 for 2008 and 2009 performance. The payout in 2011 for 2010 performance is reflected in column (g).
       
Stock Option Grant
   
•   The 2009 and 2010 annual option grants were made in accordance with the Company’s annual option grant process with an exercise price determined as the fair market value on the date of grant as determined by the Committee (see columns (b), (c), and (e) of Outstanding Equity Awards at 2010 Fiscal Year-End Table on p. 57).
     
•   These grants were to vest upon the occurrence of the later of the normal 3 year vesting schedule and the Committee determining that the Company’s global Automotive sector has achieved full-year profitability, excluding special items (see footnote 2 to Outstanding Equity Awards at 2010 Fiscal Year-End Table on p. 58 for vesting schedule). The options have a 10-year term commencing on the grant date.
     
•   The annual 2008 option grant was granted on August 5, 2010. The number of options received was determined based on the number that would have been received on the 2008 annual equity grant date for officers of March 5, 2008. The exercise price reflects the grant date of August 5, 2010. Since the grant date for the 2008 option award was August 5, 2010, the compensation expense is reflected in column (f) above in year 2010. The options have a 10-year term commencing on the grant date (see footnote 2 to Outstanding Equity Awards at 2010 Fiscal Year-End Table on p. 58 for vesting schedule).
       
Performance Units
   
•   Compensation expense for 2009 and 2010 Performance Unit grants is reflected in column (e) above. Compensation expense for the 2008 Performance Unit grant is not reflected in the Summary Compensation Table because Mr. Ford was not a Named Executive in 2008.
     
•   Final Awards were based on the Committee-approved performance metrics used for annual Performance Unit grants in 2008, 2009, and 2010 (see column (g) and footnote 3 of Outstanding Equity Awards at 2010 Fiscal Year-End Table on pp. 57-60).
     
•   The Final Awards are subject to the normal 2-year restriction period from the grant date of August 5, 2010.
       
 
(2)The amounts shown for 2010 reflect discretionary bonus awards paid in 2011 for 2010 performance (see “Compensation Discussion and Analysis — Annual Compensation — C. Incremental Bonuses” on pp. 42-43).
 
(3)The amounts shown in columns (e) and (f) reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for stock-based and option awards for each of the Named Executives for the years ended December 31, 2008, 2009, and 2010 (if required to be included in the Summary Compensation Table). The assumptions used for the 2010 calculations can be found at footnote 21 to our audited financial statements in Ford’s Annual Report on Form 10-K for the year ended December 31, 2010. The assumptions for the 2009 calculations can be found at footnote 21 to our audited financial statements in Ford’s Annual Report on Form 10-K for the year ended December 31, 2009. The assumptions used for the 2008 calculations can be found at footnote 17 to our audited financial statements in Ford’s Annual Report on Form 10-K for the year ended December 31, 2008. Pursuant to SEC rules, we disregarded the estimate of forfeitures related to service-based vesting conditions.


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Included in the amounts shown in column (e) are the grant date values of certain awards that are subject to performance conditions. Pursuant to SEC rules, the grant date values shown above are reported based upon the probable outcome of such conditions as of the date of grant. The table below shows the value of such awards at the grant date assuming that the highest level of performance is achieved.
 
                         
            Stock
   
            Awards
   
Named Executive Officer     Year     ($)    
Alan Mulally
      2010         7,499,993      
        2009         21,511,222      
        2008         5,204,475      
                         
L. W. K. Booth*
      2010         999,997      
        2009         1,393,116      
        2008         1,607,177      
                         
William Clay Ford, Jr. 
      2010         3,499,991      
        2009         13,234,400      
                         
Mark Fields*
      2010         999,997      
        2009         1,539,341      
        2008         1,911,282      
                         
John Fleming*
      2010         749,992      
        2009         802,652      
                         
 
*The amounts shown in column (e) for Messrs. Booth, Fields, and Fleming include awards granted in 2009 and 2010 that do not have performance conditions (see footnote 3 of Grants of Plan-Based Awards in 2010 Table on pp. 55-56 and column (g) and footnote 3 of Outstanding Equity Awards at 2010 Fiscal Year-End on pp. 57-60).
 
(4)The amounts shown in column (g) reflect awards earned by certain Named Executives under the Incentive Bonus Plan (see “Compensation Discussion and Analysis — Annual Compensation — B. Incentive Bonuses” on pp. 39-42).
 
(5)The amounts shown reflect the increase in the actuarial present value of accrued pension benefits under various Company plans. For 2010, the accrued pension benefits are measured from December 31, 2009 to December 31, 2010; for 2009, the accrued pension benefits are measured from December 31, 2008 to December 31, 2009; and for 2008 the accrued pension benefits are measured from December 31, 2007 to December 31, 2008. See the Pension Benefits in 2010 Table and related footnotes on pp. 61-63 for additional information, including the present value assumptions used in these calculations. No Named Executive received preferential or above-market earnings on deferred compensation.


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(6)The following table summarizes the amounts shown in column (i) for 2010.
 
All Other Compensation in 2010
 
                                                             
      Perquisites
                      Company
                 
      and Other
              Life
      Contributions to
                 
      Personal
      Tax
      Insurance
      Retirement and
                 
      Benefits(i)
      Reimbursements(ii)
      Premiums(iii)
      401(k) Plans(iv)
      Other(v)
      Total
 
Name     ($)       ($)       ($)       ($)       ($)       ($)  
Alan Mulally
      400,325         125,817         32,887         20,825         98,175         678,029  
L. W. K. Booth
      35,151         0         17,107         7,350         30,275         89,883  
William Clay Ford, Jr. 
      1,136,158         54,115         5,796         1,225         5,875         1,203,169  
Mark Fields
      92,260         29,606         4,118         7,350         32,775         166,109  
John Fleming
      122,369         3,989         4,455         7,350         58,275         196,438  
                                                             
 
(i)For a description of perquisites relating to personal use of private aircraft, our evaluation vehicle program, and security and other services for Named Executives, see “Compensation Discussion and Analysis — Perquisites and Other Benefits” on p. 48. Other perquisites and personal benefits whose incremental cost is included in the amounts shown (unless indicated) consist of the following: personal use of Company phone cards and cell phones, personal use of car and driver service, personal use of Company season tickets to athletic events,* personal use of Company club memberships,* annual executive health exams, fuel and car washes related to the evaluation vehicles, and temporary housing and relocation expenses.
 
*Indicates no incremental cost to the Company because these benefits are primarily for business use and when the executive uses such benefit for personal use, the executive pays for any costs other than season ticket and/or annual club membership costs.
 
Amounts for the Named Executives include the incremental costs to the Company for providing certain perquisites and other benefits during 2010. For Mr. Mulally, the amount shown includes $167,796 for personal use of private aircraft, $85,425 for security, and $97,271 for housing. For Mr. Ford, the amount shown includes $126,337 for personal use of aircraft and $906,309 for security. For Mr. Fields, the amount shown includes $35,780 as the actual cost of first class commercial airfare for personal travel to and from his home in Florida. For Mr. Fleming, the amount shown includes $90,314 as the actual cost of benefits related to his international service relocation.
 
During 2010, for use of private aircraft, we used the actual costs incurred for leasing private aircraft. We calculated the aggregate incremental cost of security and housing expenses as the actual cost incurred to provide these benefits. We calculated the aggregate incremental cost of providing the evaluation vehicles by estimating the lease fee for a comparable vehicle under our Management Lease Program. The lease fee under that program takes into account the cost of using the vehicle, maintenance, license, title and registration fees, and insurance.
 
(ii)Effective January 1, 2011, we no longer provide tax reimbursement for executive perquisites (see “Compensation Discussion and Analysis — Compensation Programs for 2011” on p. 46).
 
(iii)Amounts shown reflect the dollar value of premiums paid by the Company for life insurance in an amount equal to 3 times an employee’s salary. Employees may purchase additional life insurance and these premiums are payroll deducted with no additional Company contributions or cost.
 
(iv)The amount shown for Mr. Mulally reflects contributions made to his Ford Retirement Plan account (see “Compensation Discussion and Analysis — Retirement Plans” on p. 47). The amounts for the other Named Executives reflect Company matching contributions to employee 401(k) accounts (see “Compensation Discussion and Analysis — Executive Summary” on p. 32).
 
(v)The amount shown for Mr. Mulally primarily reflects Company contributions to a nonqualified benefit equalization plan related to the Ford Retirement Plan. The amounts shown for Messrs. Booth, Ford, Fields, and Fleming reflect


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contributions made to a nonqualified benefit equalization plan related to the Company’s 401(k) plan (see Nonqualified Deferred Compensation in 2010 Table and footnotes 1 and 2 on pp. 63-64). Furthermore, the amount for Mr. Fleming includes various payments related to his international service assignment, such as cost-of-living adjustments and income tax return preparation. These benefits are generally available to any level of employee who is on an international assignment.
 
Grants of Plan-Based Awards in 2010
 
                                                                                                                             
                      Estimated Future Payouts Under
      Estimated Future Payouts Under
                                     
                      Non-Equity Incentive Plan Awards(1)       Equity Incentive Plan Awards(2)                                      
(a)     (b)       (c)       (d)       (e)       (f)       (g)       (h)       (i)       (j)       (k)       (l)       (m)      
                                                                      All
      All
                     
                                                                      Other
      Other
                     
                                                                      Stock
      Option
              Grant
     
                                                                      Awards:
      Awards:
      Exercise
      Date Fair
     
                                                                      Number
      Number of
      or Base
      Value of
     
                                                                      of Shares
      Securities
      Price of
      Stock and
     
                                                                      of Stock
      Underlying
      Option
      Option
     
      Grant
      Approval
      Threshold
      Target
      Maximum
      Threshold
      Target
      Maximum
      or Units
      Options
      Awards
      Awards
     
Name     Date       Date       ($)       ($)       ($)       (#)       (#)       (#)       #(3)       (#)(4)       ($/Sh)(5)       ($)(6)      
Alan Mulally
      3/3/2010         2/25/2010                                                 591,016                                                 7,492,493      
        3/3/2010         2/25/2010                                                                               1,040,221         12.69         7,499,993      
        3/29/2010         3/10/2010                 3,500,000         7,000,000                                                                            
                                                                                                                             
L. W. K. Booth
      3/3/2010         2/25/2010                                                 78,802                                                 998,997      
        3/3/2010         2/25/2010                                                                     17,966                             227,989      
        3/3/2010         2/25/2010                                                                               171,983         12.69         1,239,997      
        3/29/2010         3/10/2010                 1,250,000         2,500,000                                                                            
                                                                                                                             
William Clay Ford, Jr. 
      3/3/2010         2/25/2010                                                 275,807                                                 3,496,491      
        3/3/2010         2/25/2010                                                                               485,436         12.69         3,499,994      
        8/5/2010         8/5/2010                                                                               1,320,754         12.98         9,535,844      
        3/29/2010         3/10/2010                 1,000,000         2,000,000                                                                            
                                                                                                                             
Mark Fields
      3/3/2010         2/25/2010                                                 78,802                                                 998,997      
        3/3/2010         2/25/2010                                                                     18,344                             232,785      
        3/3/2010         2/25/2010                                                                               171,983         12.69         1,239,997      
        3/29/2010         3/10/2010                 1,350,000         2,700,000                                                                            
                                                                                                                             
John Fleming
      3/3/2010         2/25/2010                                                 59,101                                                 749,242      
        3/3/2010         2/25/2010                                                                     58,896                             747,390      
        3/3/2010         2/25/2010                                                                               128,987         12.69         929,996      
        3/29/2010         3/10/2010                 785,000         1,570,000                                                                            
                                                                                                                             
 
(1)The amounts shown in columns (e) and (f) represent the target and maximum amounts payable for 2010 performance under the Incentive Bonus Plan. Our Incentive Bonus Plan does not have a formal threshold award in that there is no minimum amount payable for a certain level of performance under the plan. The Compensation Committee exercises discretion as to whether to make payouts if performance does not achieve target levels. The material terms of the awards are described in “Compensation Discussion and Analysis — Annual Compensation — B. Incentive Bonuses” at pp. 39-42. For awards made under the Incentive Bonus Plan for 2010 performance, see column (g) of the Summary Compensation Table and footnote 4 on pp. 51-53.
 
(2)The amount shown in column (h) for each of the Named Executives reflects the target amount of annual Performance Units grants for the 2010 performance period. The target amount of the opportunity for 2010 performance was measured against the metrics and weightings discussed in “Compensation Discussion and Analysis — Equity-Based Compensation — A. Annual Performance Unit and Stock Option Grants” on pp. 43-45. The Final Awards of Restricted Stock Units earned for 2010 performance have a two-year restriction period and will not pay Dividend Equivalents during the restriction period. No Dividend Equivalents were paid during the 2010 performance period for this award opportunity. Following the restriction period, shares of Ford common stock will be issued, less shares withheld for tax withholding.


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(3)The amounts shown in column (j) for Messrs. Booth and Fields represent a supplemental grant of time-based Restricted Stock Units (see “Compensation Discussion and Analysis — Equity Compensation — A. Annual Performance Unit and Stock Option Grants” on pp. 43-45). The Restricted Stock Units have a three year restriction period. For Mr. Fleming the amount in column (j) represents a supplemental grant of 13,191 of time-based Restricted Stock Units with a three year restriction period and an incentive grant of 45,705 time-based Restricted Stock Units with a two year restriction period (see “Compensation Discussion and Analysis — Equity-Based Compensation — A. Annual Performance Unit and Stock Option Grants” and “B. 2009 Incentive Grants” on pp. 43-45). No Dividend Equivalents will be paid during the restriction period for the awards listed in column (j). Following the restriction period, shares of Ford common stock will be issued, less any shares withheld to cover tax withholding.
 
(4)The amounts shown in column (k) represent 10-year stock option grants. In general, 33% of each stock option grant vests one year after the grant date, 33% after two years, and 34% after three years. Any unexercised options expire after ten years. If a grantee retires, becomes disabled, or dies, his or her options continue to be exercisable up to the normal expiration date. In most other instances of employment termination, all options generally end upon termination of employment or are exercisable for a specified period. Options are subject to certain conditions, including not engaging in competitive activity. Options generally cannot be transferred except through inheritance. In general, each grantee agrees to remain a Ford employee for at least one year from the date of the option grant. Mr. Ford received two option grants in 2010. The first amount shown relates to the 2010 annual stock option grant. The second amount shown relates to the 2008 option grant that he would have received in 2008 but for his commitment to forego compensation until the Company’s Automotive sector returned to full-year profitability, excluding special items (see column (f) of the Summary Compensation Table and footnote 1 thereto on pp. 51-52).
 
(5)The exercise price of the options is the closing price of Ford common stock traded on the NYSE on the effective date of the grant (see “Compensation Discussion and Analysis — Equity-Based Compensation — C. Timing of Awards” on pp. 45-46).
 
(6)The amounts shown in column (m) represent the full grant date value of each equity-based award shown in the table for each Named Executive computed under FASB ASC Topic 718.


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Outstanding Equity Awards at 2010 Fiscal Year-End
 
                                                                                               
Option Awards     Stock Awards    
(a)     (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)    
                                                      Equity
   
                                                      Incentive
   
                  Equity
                            Equity Incentive
    Plan Awards:
   
                  Incentive
                            Plan Awards:
    Market or
   
                  Plan Awards:
                      Market
    Number of
    Payout Value
   
                  Number of
                Number of
    Value of
    Unearned
    of Unearned
   
                  Securities
                Shares or
    Shares or
    Shares, Units
    Shares, Units
   
                  Underlying
                Units of
    Units of
    or Other
    or Other
   
      Number of Securities
    Unexercised
    Option
          Stock That
    Stock That
    Rights That
    Rights That
   
      Underlying Unexercised
    Unearned
    Exercise
    Option
    Have Not
    Have Not
    Have Not
    Have Not
   
      Options (#)     Options(1)
    Price
    Expiration
    Vested(3)
    Vested(4)
    Vested(5)
    Vested(6)
   
Name     Exercisable     Unexercisable     (#)     ($)     Date(2)     (#)     ($)     (#)     ($)    
Alan Mulally
                1,040,221                   12.69         03/02/2020         4,958,708         83,256,707         4,417,546         74,170,597      
        1,650,000         3,350,000                   1.96         03/10/2019                                              
        2,350,440         1,210,834                   6.14         03/04/2018                                              
        1,680,672                             7.55         03/04/2017                                              
        3,000,000                             8.28         08/31/2016                                              
        250,000                   750,000         8.28         08/31/2011                                              
                                                                                               
L. W. K. Booth
                171,983                   12.69         03/02/2020         651,786         10,943,487         78,802         1,323,086      
        248,316         504,159                   1.96         03/10/2019                                              
        249,056         128,302                   6.14         03/04/2018                                              
        742,296                             7.55         03/04/2017                                              
        47,000                             16.91         03/14/2012                                              
        100                             24.49         06/28/2011                                              
        33,000                             30.19         03/08/2011                                              
                                                                                               
William Clay Ford, Jr. 
                1,320,754                   12.98         08/04/2020         1,788,642         30,031,299         3,145,807         52,818,100      
                  485,436                   12.69         03/02/2020                                              
        1,145,100         2,324,900                   2.84         03/26/2019                                              
        1,685,393                             12.49         03/10/2015                                              
        1,587,301                             16.49         01/04/2014                                              
        62,396                             15.98         12/30/2013                                              
        67,446                             16.12         06/27/2012                                              
        66,845