Ford 2006 Annual Report Download - page 80
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Notes to the Financial Statements
78
NOTE 16. SHARE-BASED COMPENSATION (Continued)
As discussed above, performance-based options granted in 2006 were measured on the date of grant using a Monte
Carlo model. Expected terms range from 2.1 years to 3.3 years with each criterion. The key assumptions used for
valuing the performance-based options during 2006 are as follows:
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Other Share-Based Compensation
Pursuant to the 1998 LTIP we also grant other share-based awards to select executives and other key employees, in
addition to stock options. These awards include restricted stock, restricted stock equivalents, performance stock rights,
performance-based restricted stock equivalents, and stock appreciation rights. These awards have various vesting
criteria which may include service requirements, individual performance targets, and company-wide performance targets.
Other share-based compensation expense was as follows (in millions):
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NOTE 17. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES
Automotive Sector
General
We have implemented a number of different employment separation actions during 2006 and our accounting for them
is dependent on the individual benefit design. Jobs Bank Benefits (defined below) provided to our hourly employees at
facilities that will be idled by 2008 are expensed when it becomes probable that the employees will be permanently idled.
The cost of both hourly and salaried voluntary employee separation actions are recorded at the time of the employee's
acceptance, unless the acceptance needs explicit approval by the Company. Conditional voluntary separations are
accrued for when all of the conditions are satisfied. Involuntary separation programs are accrued for when management
has approved the program and the affected employees are identified.
Jobs Bank Benefits Reserve
In 2006, we announced a major business improvement plan for our North American Automotive operations, which we
refer to as the Way Forward plan. As part of this plan, we announced that the following facilities would be idled through
2008: Atlanta Assembly Plant, Batavia Transmission Plant, Essex Engine Plant in Canada, Maumee Stamping Plant,
Norfolk Assembly Plant, St. Louis Assembly Plant, Twin Cities Assembly Plant, Windsor Casting Plant in Canada and
Wixom Assembly Plant. We also announced a shift reduction in advance of idling the facilities at Norfolk and Twin Cities
and that production at our St. Thomas Assembly Plant in Canada would be reduced to one shift. In addition, we announced
that all Automotive Components Holdings, LLC ("ACH") operations would be sold or closed by the end of 2008.
Hourly employees working at the U.S. plants identified above are represented by the International Union, United
Automobile, Aerospace and Agricultural Implement Workers of America ("UAW"); hourly employees working at the
Canadian plants identified above are represented by the National Automobile, Aerospace, Transportation and General
Workers Union of Canada ("CAW"). Our collective bargaining agreement with the UAW contains a guaranteed
employment numbers provision, pursuant to which we are required to pay idled employees who meet certain conditions
substantially all of their wages and benefits for the term of the current agreement; our collective bargaining agreement
with the CAW contains a provision pursuant to which we are required to pay idled employees a portion of their wages and
certain benefits for a specified period of time based on the number of credits an employee has received. We refer to
these benefits under the UAW and CAW agreements as "Jobs Bank Benefits."