Ford's Board Said to Question CEO on Strategy as Shares LagBy
Directors reportedly extend meeting to press for details
Profits, sales decline as automaker shifts to autonomous age
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, according to a person familiar with the discussions.
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.”
GM dominates the highly profitable large sport-utility vehicle segment with models such as the GMC Yukon, which has given the automaker a $2 billion annual earnings advantage over Ford, according to Morgan Stanley. Ford later this year will introduce redesigned versions of its Expedition and Lincoln Navigator SUVs. GM also is ahead of Ford in fielding a long-range electric vehicle that can take on Tesla Inc.’s popular models.
“GM has been a bit more aggressive in pure electric cars and on car sharing and ride hailing with their investment in Lyft,” Whiston said. “And then there’s Tesla.”
Tesla surpassed Ford in market value last month, despite selling about 80,000 vehicles last year compared to Ford’s 6.7 million.
Fields has defended his strategy of trying to transform Ford into a mobility company that will field robot taxis in 2021 and develop ride sharing services that are essential to the 114-year-old company’s survival.
“We’re having one foot in today and one foot in tomorrow,” Fields said on Bloomberg Television April 27 of his dual strategy to invest in the autonomous future while defending Ford’s turf in the car and truck market.
That dual strategy is proving difficult to pull off, said Michelle Krebs, a senior analyst with Cox Automotive.
“They’re in a tough position because they have to focus on selling products today, making money, paying dividends,” Krebs said. “And yet they’ve got to position themselves for the future and there’s not going to be a payback on that anytime soon.”
A Ford spokesman declined to comment on the board meeting.
“We do not share details or discussions from our board meetings for competitive reasons,” Mike Moran, the spokesman, said in an emailed statement. “We also are unable to comment on rumors or speculation.”
The Wall Street Journal reported earlier the board’s plan to question Fields.
Ford’s shares closed Tuesday at $11.16 in New York, up 0.3 percent.