Ford Motor on Friday effectively tapped COO Jim Farley as its next chief executive.
According to a filing with the Securities and Exchange Commission, Ford has agreed to award Farley a stock grant worth $2.5 million should someone else eventually succeed 64-year-old CEO Jim Hackett. If Farley is offered the position of president and CEO and declines, he would not receive the stock grant, the filing said.
Farley, 57, assumed the COO post on March 1, a job widely viewed as a stepping stone to the top role. But the Friday filing is the first time Ford has tied financial incentives to Farley and CEO succession. Ford has revived the COO post as part of a sweeping turnaround and effort to boost operating profits.
The automaker's board of directors made the unusual move "to offer a long-term incentive for a highly accomplished, highly regarded executive who’s playing a major role in transforming Ford," a company spokesman said.
Ford previously disclosed with the SEC that Farley's total compensation as COO will rise to $8.29 million, up nearly $2 million from his compensation as president of new business, technology and strategy at the automaker.
The compensation payouts reflect base salary, stock grants and yearly bonus targets.
Farley's base salary rises to $1.4 million from $1.1 million. His annual bonus target rises to $1.89 million from $1.375 million and his annual stock grant rises to $5 million from $3.82 million.
Farley earned $5.86 million in 2018, according to Ford's most recent proxy filing.
Hackett became CEO in May 2017. He previously was on Ford's board of directors.
Farley joined Ford in 2007 and initially held a number of marketing and senior executive positions.