Ford Board Said to Deliberate on Successor to CEO Mulally
The board is preparing to promote Mark Fields to chief operating officer from president of the Americas as part of a plan to have him eventually succeed Mulally, said the person, who asked not to be named revealing board deliberations. Such a move would make clear the succession plan at the second-largest U.S. automaker, that person said. The meeting ended without directors announcing a resolution, said another person familiar with the gathering.
Investors are eager to learn the timetable and details of Ford’s plan to replace Mulally, who has won acclaim for saving the automaker without a federal bailout or bankruptcy, said Adam Jonas, an analyst with Morgan Stanley in New York. Mulally, 67, has declined to say when he will retire. The uncertainty over the transition of power is weighing on Ford’s stock, Jonas said.
“I don’t think it’s helping,” Jonas said in an interview. “People just generally expect that because Mulally is at retirement age that he will leave soon. Mark Fields is overwhelmingly seen as the successor.”
Ford rose 1.6 percent to $10.14 at the close in New York. The shares have declined 9.8 percent the past 12 months and are trading around their December 2009 price, when the U.S. auto market hit a 40-year low, Jonas said.
“We do not comment on speculation about personnel actions,” Jay Cooney, a Ford spokesman, said in an e-mail. “Ford Motor Co. takes succession planning very seriously, and we have succession plans in place for each of our key leadership positions.”
“Ford has been one of the poorest-performing auto stocks in the world this year,” Jonas wrote in a report, in which he made Ford his top automotive pick and predicted the shares would reach $17 within the next year. He believes investors are undervaluing Ford’s “radically improved product offering.”
Mulally hasn’t made it clear to the board when he plans to step down, though his departure is expected around the end of 2013, the person said. Pressed by reporters in New York last month for a departure date, Mulally said he had no plans to retire from the job leading Ford that he took in September 2006.
“Please don’t write me off yet,” Mulally said Sept. 18 following a press conference in Times Square to discuss the redesigned Fusion’s fuel economy. “I mean, I love it here.”
Investors are worried about whether Mulally’s cultural and operational changes at Ford will be carried on by his successor, Jonas said. The changes Mulally made, such as globalizing product development and holding management accountable in weekly meetings, will not be easily dismantled, Jonas said.
“Mulally’s One Ford strategy has left a permanent mark on the company,” Jonas wrote. “The boats have been burned. There’s no turning back from Ford as a globally integrated machine.”
Ford avoided bankruptcy because it borrowed $23.4 billion in late 2006, less than four months after Mulally arrived from Boeing Co. (BA) The automaker put up all major assets, including its blue oval logo, as collateral. It recovered control of those assets in May after Moody’s Investors Service followed Fitch Ratings in upgrading Ford’s debt to an investment-grade credit rating.
Mulally revived the Dearborn, Michigan-based automaker by focusing on quality, fuel economy and technology. He also cut jobs and sold off European luxury brands Jaguar, Land Rover, Aston Martin and Volvo. Ford lost $30.1 billion from 2006 through 2008 and earned $29.5 billion in the last three years, mostly in Fields’s North American operations.
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