The writer, a Los Angeles freelancer and former Detroit News business reporter. This column first appeaared in his blog, Starkman Approved.
By Eric Starkman
At the recent Los Angeles Marathon, runners who couldn’t finish the 26-mile race because of the unseasonal heat were given the option to drop out at mile 18 and still collect a finisher medal.
In an amateur marathon, that arguably constituted compassion. At Ford Motor Company, it constitutes corporate governance.
Ford disclosed in a regulatory filing that it awarded its CEO Jim Farley $27.5 million in compensation for his 2025 performance, a 12 percent pay bump over the previous year despite Ford acknowledging that it fell short on EBIT (earnings before interest and taxes), a metric any analyst worth their salt considers the clearest measure of performance.
Taking a page from its GM rival, Ford’s board moved the compensation goalposts to goose Farley’s pay and make him feel good about what he achieved. Among the metrics Ford used to enrich Farley were internal quality measures, global EV volume, and revenue per vehicle—targets that can be met even when overall profitability falls short.
Yes, Farley got a bonus for quality improvement in a year when Ford issued a mind-boggling 153 recalls, more than double the record GM set in 2014. Ford had already broken GM’s record by July.
In fairness, some of those recalls involved vehicles manufactured before Farley assumed command in October 2020, so he can’t be faulted for all of them. And while Ford’s internal metrics may suggest progress, the proof is in the NHTSA pudding, which already looks lumpy for 2025 and 2026 models built squarely under Farley’s watch after more than five years at the helm.
The NHTSA just this week issued a recall covering more than a quarter-million SUVs after regulators identified a software defect that can disable rearview cameras and critical driver-assistance systems while the vehicle is in use, increasing the risk of a crash. The recall spans multiple current models, including 2025 Ford Explorer and Lincoln vehicles.
Notably, the defect reportedly was identified by federal regulators—not Ford—raising the uncomfortable question of how long a serious safety issue can persist before the company itself catches it.
Ford has also recalled nearly 48,000 vehicles from its 2025 model lineup over a defect involving the exhaust gas recirculation (EGR) valve that can lead to a sudden loss of drive power. According to the filing, Ford does not yet have a remedy. It hopes to have one by September.
September!
That’s not a software glitch or a cosmetic issue. That’s a core engine component tied directly to vehicle operation, and Ford is effectively telling customers to wait months for a fix.
Additional recalls affecting 2025 models include issues with driveshaft separation in Super Duty pickups—another defect that can result in sudden loss of drive power and increase crash risk.
Under Farley’s watch, the issue isn’t whether recalls happen. It’s when.
And for that performance, Farley received his largest payday yet.
It’s comedy worthy of Farley’s legendary SNL cousin Chris that he was rewarded for Ford’s EV sales in 2025. Ford’s Mexican-made electric Mustang Mach-E vehicles were robust earlier in the year, but demand weakened dramatically when taxpayer incentives were removed.
Let’s not forget that Ford has burned nearly $20 billion pursuing its EV strategy, much of it under Farley’s watch, only to scale back ambitions as reality set in.
CEOs are supposed to enrich their shareholders, and Ford’s stock has been more volatile and delivered returns that are, at best, in line with the S&P 500 during Farley’s tenure.
Ford’s stock is up about 74.2% since Farley was named CEO, achieving a compound annual growth rate of 10.6%. Over the same period, the S&P 500 grew 90.6%, achieving a compound annual growth rate of 12.4%.
Even factoring in Ford’s generous regular and special dividends, the company’s total return is hardly the kind of standout performance that would justify a record-setting CEO payday.
Among the Ford shareholders benefiting from those generous dividends is Executive Chairman Bill Ford, who received $20.2 million in compensation for his 2025 performance. As executive chair, Ford was instrumental in overseeing the company’s EV strategy, yet his compensation has remained consistently robust despite the strategy’s costly reversal.
Since Farley’s appointment, Bill Ford has received $105.7 million in compensation.
Farley’s compensation is particularly notable given the scale of the challenges he faces. Having recently labeled China an “existential threat” to the U.S. auto industry, one might expect he is focused on Ford round the clock.
Think again.
In February, McDonald’s named Farley to its board of directors, a position that will allow him to pocket more than $330,000 a year for his “service” attending board meetings chaired by CEO Chris Kempczinski. It is widely considered poor corporate governance to allow a CEO to also chair their company’s board.
Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, told veteran auto writer Phoebe Wall Howard that effective board service takes the equivalent of one to two months of work annually.
In addition to his McDonald’s board role, Farley serves on the President’s National Security Telecommunications Advisory Committee. He also hosts a podcast and is a frequent presence in the media.
Of course, GM CEO Mary Barra is also a prolific board member, serving as a senior director at Disney and holding positions with multiple organizations.
What’s disappointing is that if Fortune created an executive Mensch Index ranking the most decent senior executives in the Fortune 500, I’m confident Farley and Bill Ford would rank highly. Farley quietly volunteered at a Detroit homeless shelter even before becoming CEO, and without Bill Ford, his family’s company might well have followed GM’s lead in shifting headquarters and other critical functions out of Michigan.
Still, being a mensch should be a prerequisite for a top corporate job—not a bonus metric.
Farley’s and Ford’s compensation is an insult to Ford employees, shareholders, and U.S. taxpayers who have funded billions in industrial policy bets that have yet to deliver the promised returns.
CEOs are paid to deliver results, not narratives. At Ford, the results fell short on the one metric that mattered most, yet the compensation system delivered anyway.
That’s not performance pay.
It’s participation pay.
