Today's presentation includes some forward-looking statements about our expectations for Ford's future performance. Actual results could vary materially from those suggested by our comments here. The most significant factors that could affect future results are summarized at the end of this presentation. These risk factors and other key information are detailed in our various SEC filings.Now I'd like to turn it over to Mark Fields. Mark Fields Well, thank you, George, and good morning, everybody. We're pleased to be able to share with you the details of the 2011 UAW-Ford collective bargaining agreement. Now during today's call, I'll be covering the modifications to the operating agreement, including wages and benefits, productivity and product and capacity actions. I'll also will summarize the profit impacts of the agreements. And of course, we'll leave time at the end for your questions. Now moving to Slide 2, I'll start with an overview of the agreement. But first, I'd like to review our plan, which remains unchanged. And that includes aggressively restructuring to operate profitably at the current demand and changing model mix, accelerate the development of new products our customers want and value, enhance our plan and improve our balance sheet and work together effectively as one team, leveraging our global assets. I'd also like to thank the UAW leadership for their part in this process. This agreement is the product of collaborative bargaining with a shared goal of creating a stronger Ford Motor Company. Bob King, Jimmy Settles and the entire UAW leadership team were true partners throughout this process. This new labor agreement supports our plan and will enable us to improve our competitiveness in the United States. Overall, we expect that the cost associated with the improved compensation over the contract period will be more than offset by the increased operating flexibility and the continued commitment to focus on ongoing efficiency improvements. Overall, this contract is really another great example of working with our stakeholders, in this case, our employees, to deliver profitable growth for all.
Slide 3 covers the wages and benefits changes to the operating agreement. This contract did not provide for any general wage increase to Tier 1 employees, nor did it provide for reinstatement of cost to living adjustments. These used to be calculated from consumer price index changes and automatically added to employee's wages. This contract did provide for several lump-sum payments to employees. These include a ratification bonus of $6,000 to most employees, annual inflation protection lump sum of $1,500 for 4 years and annual operational performance bonus of $250 for 4 years.Entry-level wages remain generally consistent with the prior agreement, starting at $15.78 per hour and increasing annually to $19.28 by the end of the contract. The profit-sharing formula has been simplified and is now based on reported North America pretax profits. The amount is equivalent to $1 per employee for $1 million of North American earnings before interest and taxes, as long as profits exceed $1.25 billion. The maximum payout is capped at $12,000 per employee annually. In addition, an advanced payment of profit sharing based on first half 2011 profits will be made this year. And the payment will average about $3,750 per employee. There are no pension benefit improvements to the Ford UAW pension plan or lump sums to current or future retirees, and defined benefit plans are closed to all new employees. These new employees will be covered by a defined contribution plan. Finally, legal services benefits will be eliminated during the contract period. Read the rest of this transcript for free on seekingalpha.com