Coverage: Ford board presses CEO on strategy
Ford Motor Co.’s board of directors is turning up the pressure on Chief Executive Officer Mark Fields to better explain the company’s fading fortunes and his plan to turn things around.
Keith Naughton of Bloomberg News has the news:
The directors scheduled extra time in their meetings this week in advance of Thursday’s annual shareholders meeting so they could question Fields on his strategy as Ford’s stock continues to stall, said the person, who asked not to be identified revealing internal deliberations. The shares have fallen 35 percent since Fields became CEO July 1, 2014.
Investors have been indifferent to Fields’ plan to pour billions into new technologies like driverless cars and robo-taxis to take on upstarts like Uber Technologies Inc. and Waymo, Alphabet Inc.’s self-driving spinoff. Ford’s traditional automotive business has struggled more than crosstown rival General Motors Co. as the U.S. auto market declines following seven years of growth. Ford’s first quarter adjusted earnings fell 42 percent, while GM appears on pace for another record annual profit.
“This is the first public sign that the board is becoming impatient,” said David Whiston, an analyst with Morningstar Inc. in Chicago. “It’s likely proof that the board is frustrated with the stock price languishing for the past several years. It may be a grilling session for Mark.”
Christina Rogers and Joann S. Lublin of The Wall Street Journal reported that board members want to focus on growth opportunities:
While Chairman Bill Ford and other directors support Mr. Fields, they are urging him to heighten his focus on growth opportunities, the people said.
Mr. Fields, a 28-year veteran of Ford, took the helm after his predecessor, Alan Mulally, restructured the company by selling off brands and simplifying operations. Mr. Mulally, currently a member of Alphabet Inc.’s board, oversaw a succession race that included members of Mr. Fields’s current management team. He also helped the No. 2 U.S. auto maker avoid bankruptcy, unlike its Detroit rivals.
Mr. Fields has focused on accelerating growth in Asia, jump-starting the company’s Lincoln brand and placing bets on future technologies.
Ford is facing pressure as the U.S. auto market is leveling off after seven consecutive years of growth. The auto maker’s profits have been dented by falling sales and vehicle recalls.
The company also is shouldering higher costs as Mr. Fields seeks to venture beyond its core business of building and selling cars. He is pushing into new areas such as ride-sharing and autonomous vehicles and placing bets on new initiatives aimed at reducing Ford’s exposure to the auto industry’s boom-bust cycles.
Ian Thibodeau and Daniel Howes of The Detroit News report that investors are skeptical:
The moves come as investors show increasing skepticism that Ford’s strategy to fortify its so-called “profit pillars,” to transform its luxury and small-car business and to grow electrification, autonomy and mobility is gaining traction.
As prodigious as Ford’s revenue and profits have been since the end of the Great Recession, they remain tethered to its market-leading pickup and SUV business. Electrification, mobility and autonomy, by contrast, consume capital and executive attention, contributing to neither the top nor the bottom lines.
And as U.S. sales, the engine of Ford’s profitability, slow, the tension between the traditional business and the next-generation autonomy-and-mobility spaces is magnified — and not to the benefit of Ford or its CEO.
The message: The core business that generates automotive revenue and profit shows little prospect for meaningful growth. And the growth business of electrification, mobility and autonomy is contributing scant revenue and even less profitability.