OT: Ford Shareholder Meeting and Stock Price
At today's Ford Shareholder's meeting:
"We had a very good first quarter last year and our stock was headed in the right direction," said executive chairman Bill Ford, citing the botched Explorer SUV launch in 2019 and warranty issues as factors that "knocked us back." Now, "coming out of COVID, it really is all about performance and executing on our plan,"
20 years ago, on 5/19/2000 - Ford's stock price was $30.57. 10 years ago, on 5/21/2010 - it had plummeted to $11.26. 3 months ago, on 2/14/20 - pre-Covid and with the rest of market doing great - Ford stock was down to $8.10. Today, as of this post - the stock price is at $4.83.
In 20 years - it has dropped approx. (84%).
I have never seen such putrid ownership and management of a company. Covid has nothing to do with its failure. Henry Ford would be ashamed of how his family has run his amazing company into the ground.
I am usually not one to bash corporate executive salaries but Ford executives are basically stealing money given the level of company performance. Also at the meeting it was announced that the 300 top execs would "defer" salary.
There salary ought to be drastically cut.
Not sure how Ford works, but for most boards and CEOs, "cutting" or "deferring" salary is a PR move. Stock options and bonuses/benefits are where a lot of these guys rake in the real cash.
Their salary might be $1-2 million, but through bonuses and stock options they'll rake in $15-20 million.
Speaking of the CEO, old friend Jim Hackett is not looking good right now.
The peter principle is real.
Wasn’t Hackett a well-regarded CEO prior to the Michigan AD job?
Pretty sure, this is more of a Ford cultural problem at the top than anything else.
Hackett spent thirty years with the Grand Rapids-based office furniture company Steelcase.
Being CEO of a multinational manufacturing giant who produces complicated products is a little different than running a furniture company.
The ability to turn around and auto maker takes a long time. What is the current lead time on a new product? When I was in the industry 25 years ago, it took 5 years. I suspect that it still takes 2-3 years to launch a new product.
That thing isn't going to turnaround in a year.
Hackett may be terrible or he may be great. But all of the automakers are sucking wind right now. Ford was suffering before the world slowed down.
It's not the simple anymore. They aren't just designing the new taurus. They have to make huge bets with R&D expenditures on expensive new technology that could be highly profitable in 10-20 years or worthless. They stopped making cars because they need the capital investment dollars that would typically go into the next generation for R&D spending. They'll attempt to ride the F-150 and mustang cash cows until they develop the next technology. I'm guessing they aren't successful and will be acquired by Toyota or VW in the next 10 years.
My uncle owns a Steelcase distributor. Most of the internal Steelcase folks think he was just a guy who happened to be in charge and well-connected. They didn't think he deserved the credit he got (mostly from the media) and the performance of the company wasn't very good during the stretch.
One of the worst myths in modern America is the myth of the Master Executive. It is nonsense that someone with "extensive executive experience" can walk into a company he has literally zero background in and run it better than someone who has been there for years. It's basically just a flimsy justification for CEO-job hopping as they bounce from one gig to the next bumping up the company's short term profits at expense of long term viability and then leaving before the bill comes due.
No, Alan Mulally was the real deal. Super talented and made a great impact. By far the best CEO Ford has had in decades. The problem is that there aren't many CEOs that good, and they all get paid as if they are.
Mulally's background wasn't auto manufacturing, but it was airplane manufacturing. Not a very big difference considering how the two are assembled. To say he had no background to walk in and run an auto company well, coming in off the street, is to say something totally wrong (not that you're saying that). Bill Ford made a fucking awesome move in hiring Mulally - while admitting he wasn't up to the task of running Ford himself. Mulally proved to be one of the best CEO's in manufacturing history (both airline and autos) - repeating his hiring cannot be expected. It looks like historical corporate inertia is starting to take over again...
You do wonder how much better these CEOs, university presidents, football coaches, would be performing if they didn’t have guaranteed multimillion dollar salaries with multimillion dollar severance packages even after they run their respective companies into the ground.
Then they get hired to do it all over again at a different company! It’s an odd world we live in.
A lot of this is outside of Hackett's control.
In 2009 I read an article that Ford was going to get destroyed by Toyota due to the Ford Pension vs Toyota 401K. Ford's pension was having severe financial problems and they were required to put in ~$2,000 of every new car sold to buttress the pension paying for retired workers no longer working in addition to payments for the current workers who will be future retirees.
Meanwhile Toyota was paying $0 of every new car sold to retired workers, because they have a 401K and workers are left on their own with those once they retire.
The point was that Toyota had massively more money to dump into Research & Development - and therefore would simply have better developed cars and then sell more and more.
That isn't Hackett's fault and the union wouldn't budge much on the pension so...
Also, Ford has something like $37 Billion in cash, but a whopping $154 Billion in debt, that was all in place before Hackett got there.
Ford in fact is just barely above junk in the credit rating system and would have already defaulted on their debt had we not had artificially low interest rates from the Federal Reserve.
Hackett walked into a bad situation...history should remember that when they judge his performance with Ford.
I view Hackett at Ford identically to Brandon at Toys R' Us. I don't think either were brought in to succeed. Hackett was a well liked Michigan guy with zero automotive experience who was asked to walk into an absolutely shitty situation.
Rank and file have no confidence in Hackett. Neither to rating agencies or Wall Street analysts. You can take Covid out of the equation. It has been apparent that he's in way over his head for a long time now. He's brilliant at brown-nosing with Bill Ford and at shirking responsibility and deflecting blame. He really is stealing every dime the company pays him, and his failed leadership means a lot of people have had to lose their jobs.
and a decent amount of that debt is paying 9% right now. The bonds maturing in 2030.
Could be a good deal
So what you’re saying is that the Fords run their own company like how they run the Lions?
Color me surprised.
The General Electric company seems to be giving Ford a run for its money.
5/16/2000 - $53.06
5/13/2010 - $17.72
2/14/2020 - $13.07
Today - $5.68
You beat me to it, I got distracted by work before I could finish posting. Just a horrible 20-year run for GE.
The current leadership team (in place for a little over a year) is actually pretty good and seemed to have GE on the verge of turning things around after the huge mess left by Welch and Immelt. Massive debt after a series of botched mergers and other missteps. Now Covid is decimating the commercial aerospace industry which was the best thing going for GE. They still make the best aircraft engines in the world.
Speaking of airplanes, you don't want to look too hard at Boeing today versus where it was before the 737 Max disasters.
Boeing has been a shit show since MD ranks infiltrated their management.
I suppose six sigma doesn’t solve everything.
or anything for that matter.
I'll bet it sent some management consultants' kids through college. That's something.
Sears would like a word......
2007 average: $155.44/share
2012 average: $64.70
2017 average: $7.72
Today’s price: $0.18
I can't believe Sears was ever that valuable in this century. Investors were paying that much for a share of Sears stock in 2007?
I think that was still the afterglow of the merger with K-Mart which, in itself was pretty unbelievable, considering they had combined themselves with one of the most poorly run companies of the last 30 years and felt somehow that was going to spearhead their comeback.
K-Mart and Sears were a perfect marriage, but not because they were primed for success. Two dying companies stuck in a timeline that ended 40 years before (which, not coincidently, was the last time a lot of their stores had been refurbished) joined at the hip to sprial into death together.
Perfect indeed.
Sears was taking on water but KMart was floating debris at the time of the merger - why the venture fund idiot that was/is running Sears bought KMart was beyond pretty much anyone.
I remember when SS Kresge morphed into KMart. Kresge opened the first Kmart just four months before the first Walmart opened - and managed to fail. Anyone remember Builder Square - The Home Depot wanna be was a KMart company starting in 1984 and managed to fail to beat Home Depot, Lowes or Menards.
KMart did not lack the ideas - just the execution.
As a kid I thought the KMart idea was great and I got 2 shares and a crappy return. If that had only been Walmart stock...
Kmart was successful for a long time, of course, but they got stuck in the 80s. Builder's Square is a cause as well as a symptom--Kmart spent a lot of effort acquiring other chains (Builder's being one of them) instead of adapting to the challenge of Walmart. They, quite literally, were stuck in the 80s, and even recent revival attempts have focused on nostalgia for things like blue-light specials rather than actually revitalizing their image and stores.
Seriously, stuck in the 80s. I was visiting A2 when the Maple Road Kmart was holding its going-out-of-business sale. That's the store my friend and I used to ride our bikes to with $3.12 (cost plus the old .04 sales tax) in our pockets to buy a new GI Joe after school. When my wife and I were there with our children, one of whom was a similar age to my friend and I way back when, the store was basically the same. Same floors, same structure, everything. They've barely touched it. The Ann Arbor-Saline road Meijer has been built and then completely remodeled something like four times since then.
I'm sadder about Sears, since I really liked some of their hardlines, but if you were following what Eddie Lampert was doing to the company, their plunge was completely predictable.
Eddie Lampert is an idiot who thought he could arbitrage shopping mall/center leases into pay dirt and made a huge bet. He continued to fund Sears through quasi-DIP financing for years.
The minute that started, Sears was effectively bankrupt. The company I worked for sold them a lot of IT services over that run, though, and I made a fair amount of dime along the way.
They hired MBA students from top schools as VP's right out of college. While they were smart they were also wet behind the ears and didn't know chit from shinola. Guess they hird on just to get the titles? They didn't last long.
Lampert was a Yale guy. Guess who his roommate there was? Steve Mnuchin (who sat on the BoD throughout Sears' demise).
The truth is Sears never stood a chance as they were a general retailer in the times the Internet is lopping 10%+ off brick and mortar sales every year. Lampert fell in love with himself and didn't put even cursory research into the way retailing was heading.
And his old roommate? Another idiot who I saw offering Covid advice on TV last night..
Lampert should have his head on a pike for what he did to that company, although he's certainly not alone.
Sears was Amazon before Amazon existed. They could have turned their catalog business into an online giant.
Kmart was a great store 30 years ago, but like so many others they failed to adapt to the competition.
Serious questions (prompted by your comment but really inspired by the whole Sears/Kmart/etc. discussion):
1. Among retailers, but excluding grocery chains, are there any large companies that where considered leaders, at the top, etc., 30 years ago that are considered similarly successful today?
2. Same question but for non-retail large companies.
Maybe large companies (especially retail companies) stumble into something that is very successful for a particular time period, but then things change and most are unable/unwilling to adapt and, therefore, enter decline. Maybe that is the rule. Large companies that are highly successful in Time period 1 and also highly successful in a later era are the exception...
What are the large companies that have been "highly successful" over two or more eras?
GM. Don't forget technically they are a different company with new stock, their original stock went to zero in 2009 and will stay there forever.
At one point GM was arguably the strongest company in the world.
My company.
June 23, 2000 - $22.00
June 25, 2010 - $35.44
January 31, 2020 - $154.57
today - $162.75
Healthcare/Science companies with low risk are money in the bank. Check out WuXi, LabCorp, Eurofins ........
I put a lot of money into Covance like 15 years ago, and it paid off more than my Abbott, Abbvie etc. The LabCorp acquisition helped no doubt, but I always like the CRO business model and its long term prospects.
I started an orthopedic medtech company a couple years ago, so I get to see who's doing well and who's doing poorly in the start-up space with regards to COVID impact.
Winners: telehealth and infection prevention.
Losers: VR, AR, AI or any piece of expensive capital equipment.
Yea. They’re absolutely necessary to bring new drugs/therapies/vaccines to market and have none of the risk if they fail due to unforeseen toxicity or lack of efficacy. As long as humans are making drugs/therapies and governments require them to be tested for safety and efficacy, they’ll be a good bet.
i bought a decent amount of both GE and Ford stock in the last few months. IMO, both are pretty low because of disastrous stints with horrible leadership, but both are just a good leader away from turning it around. Not saying they'll hit heights in their heyday, but I see no reason Ford and GE cant hover in the 15-20 range in a year or two
or you could just stuff cash in your mattress.
I made money on Ford they were at about $1.75 in 2008. Sold at about $10. Might gamble on that again.
Same here. And still holding a ton.
Ill never lose money on it with what i already made.
Damone forgot to mention that little steal though.. was probably playing chicken little back then too.
Got gun shy after all of those cheap trick tix he got stuck with back in high school.
Boeing loves plucking from the General Electric tree when it comes to executives, which should surprise exactly nobody.
What are the odds that Boeing has members on the board over at GE and visa versa? Lots of nepotism in the corporate world.
I worked for GE for 5 years.
If you only knew how poorly run the company was run under Immelt, you'd think the stock would be $0.00. Aviation is worth more by itself, and should spin off. They have so much liabilities with pensions and current salaries, I am amazed they haven't filed for bankruptcy. If it goes below $5, they just might.
I would tell you that this is news to me, but my Dad, two uncles, and my grandfather, as well as my father-in-law, all spent the majority of their careers at Ford. My grandfather, in fact, knew Henry Ford I personally (my grandfather was a watch and gunsmith in addition to being one of the skilled trades in the 1920s and 30s, and the Old Man paid him extra $ to take care of his collections).
Consequently, I'm more than aware of how poorly managed that company has been for much of its history. The 1960s, 1980s and the Mulally era were high points. The rest has been a story of hitting rock bottom and digging.
And even in the 60's till 80's wasn't Lee Iacocca leading Ford at that time? And even he was pushed out after a power struggle with Ford jr?
Iacocca did the Mustang in the early '60s and it won him the presidency of the company until around '79, I think. Henry Ford II (grandson of Henry I) fired him because, as he was quoted at the time, he just didn't like him.
It wasn't until Hank the Deuce stepped down that Donald Peterson and Red Polling turned the company around on the back of the original Taurus.