Ford Motor Co. (F:US) Chief Executive Officer Alan Mulally, presiding over his final annual meeting, said he has “no regrets” about his eight years leading the automaker’s turnaround and gave a vote of confidence to his successor.
“I’ll always be very pleased and very proud and no regrets,” Mulally told reporters today after the automaker’s annual meeting in Wilmington, Delaware. “I have all the confidence in the world that the leadership team, the management system and the strategy is solid. This is a Ford that’s absolutely ready to go soaring and Mark is going to be a fantastic leader.”
Mulally, 68, said last week that he plans to retire on July 1, six months earlier than planned, to make way for his successor, Mark Fields, Ford’s chief operating officer, who also attended the meeting. Mulally, who came to Ford from Boeing Co. (BA:US) in 2006, engineered a turnaround at the automaker by globalizing new models, cutting costs, boosting technology and overhauling the lineup with fuel-efficient vehicles such as the Fiesta subcompact.
Shareholders repeatedly praised Mulally at the meeting, with Arthur Knechtel of Chadds Ford, Pennsylvania, leading a standing ovation and asking Executive Chairman Bill Ford to keep him on in some capacity.
“You have instilled the American spirit back into Ford Motor Co.,” William MacNamara, a shareholder from Westport, Connecticut, told Mulally.
Mulally declined to say what he plans to do after he retires from Ford, though Bill Ford joked: “Can you imagine him in retirement?”
“I am so excited about looking forward to what the future is going to bring,” Mulally said. “My most important priority is to complete this orderly transition.”
Under Mulally’s stewardship, Ford earned $42.3 billion (F:US) in the last five years after losing $30.1 billion from 2006 to 2008. Fitch Ratings upgraded Ford’s outlook to positive, from stable, on April 22. Surging sales of Escape sport-utility vehicles, F-Series pickups and Fusion sedans drove up Ford’s U.S. sales 11 percent last year. In China, the world’s largest car market, Ford now outsells Toyota Motor Corp. (7203)
Ford, which yesterday announced plans to buy back $1.8 billion of its shares, saw its stock rise 2.3 percent to $15.81 today at the close in New York.
“He’s left them in a very good position,” said Michael Levine, a fund manager at Oppenheimer Funds Inc. in New York, who said Ford is one of the top 10 stocks in the $5.8 billion equity income fund he manages. “Their balance sheet is in great shape. The product lineup continues to be overhauled this year.”
Ford’s prosperity will continue because it will not deviate from the plan Mulally laid out, Bill Ford said.
“Typically what’s happened is the new CEO always feels like they have to chart a new direction, I’ve seen that many, many times and that’s confusing to an organization,” Ford said. “Because Mark has been an architect of the direction that we’re going, there is going to be a continuation and a continuation of the culture.”
Fields, 53, who is also replacing Mulally on Ford’s board, is a 25-year veteran of the automaker. Born in Brooklyn, New York, and raised in Paramus, New Jersey, he became an early acolyte of Mulally’s culture of collaboration and candor, a sharp turn away from the executive infighting that had plagued Ford. Before becoming COO in 2012, he revived Ford’s North America business, which earned a record operating profit (F:US) of $8.78 billion last year.
“He’s just got to continue to steer the ship in the right direction,” Levine said of Fields. “He should be able to do a very good job there and take over where Alan left off.”
Ford is rolling out a record 23 new models worldwide this year, including 16 in North America. The cost of retooling factories and promoting the new products will cause the company’s pretax 2014 earnings to drop to between $7 billion and $8 billion, down from $8.8 billion last year, Ford has said.
The most critical new model introduction is the aluminum-bodied F-150 pickup, Ford’s best-selling and most profitable vehicle. The company has said it is closing its two U.S. F-Series truck plants for 13 weeks this year to convert them to build the truck with lightweight aluminum, which it says will significantly boost fuel economy.
“The aluminum truck is obviously a very big deal industrywide,” Levine said. “A greater use of aluminum is a big evolution for the industry.”
Ford, beset by bad weather and rising recall costs, saw first-quarter net income fall 39 percent to $989 million, less than analysts’ estimates. It has asked investors to be patient with this year’s new model costs, which it has said will pay off in 2015.
The Dearborn, Michigan-based company’s shares have advanced 2.5 percent so far this year after adding 19 percent in 2013.
“The stock certainly has been frustrating for the last year or two,” Levine said. “I don’t think the stock reflects the competitive position of the company and the opportunities ahead of them. Investors are viewing the glass as half empty.”
At Ford’s meeting today, shareholders also rejected a proposal to strip the founding family of its 40 percent voting control of the company and move to one vote per share. The vote was 65.6 percent against and 34.4 percent in favor. That’s more than the 33.4 percent of shares voted in favor of a similar proposal last year.
The family controls the automaker through Class B shares that only its members can own.
To contact the reporter on this story: Keith Naughton in Wilmington, Delaware at firstname.lastname@example.org
To contact the editors responsible for this story: Jamie Butters at email@example.com Niamh Ring, John Lear