CEO Alan Mulally and Chairman Bill Ford at Ford's 2012 shareholders meeting.
It is the question that won’t seem to go away – even if Alan Mulally insists he isn’t planning to leave anytime soon.
During the maker’s annual shareholders meeting and during a subsequent Q&A session with reporters the topic of Ford Motor Co.’s succession plan was again the hot topic. And, once again, the CEO insisted he is not counting the days until retirement.
While that may be good news for many folks who believe Mulally is the best man to keep the company on track, might his reluctance to set a timetable and name a successor be working against Ford, particularly in its bid to drive up its stock price?
“We have a robust succession plan for every member of the team,” said the 66-year-old Mulally, echoing comments he has made, seemingly ad nauseum, over the last several years.
Ford Chairman Bill Ford Jr. tried to deflect the latest round of questioning with a little humor. As to when the company would be willing to let Mulally stay on, he responded, “Well, we said 2025, maybe 2030.”
But it is a serious question that likely won’t go away. In his six years at the helm of the nation’s second-largest domestic automaker Alan Mulally has had some stunning achievements, certainly not the least of which was steering the maker around the shoals of bankruptcy that caught Ford’s two Detroit rivals, General Motors and Chrysler.
It wasn’t a cheap fix, Ford taking on a massive debt load that Mulally has aggressively pushed to pay off. And that has, in turn rewarded one of his key goals: to lift the maker back to an investment-grade credit rating. Fitch last month took that jump, though Standard & Poor’s and Moody’s have yet to follow.
Like any CEO hoping to maintain the support of his board and the company’s investors, Mulally also knows he has to maximize Ford’s stock price. And there’s where he’s had more trouble. Shares soared from barely $1 to as nearly $19 under his stewardship but have lately slipped back sharply, hovering in the $10-13 range in recent months despite the credit upgrade and the revival of Ford’s dividend.
What is holding the stock price back? Morgan Stanley analyst Adam Jones raised the question of whether Mulally himself is now the obstacle, or more precisely, whether concerns about the timing of his departure and his succession plans are worrying investors.
“Shareholders like to have a sense of what’s coming,” said one source asking not to be identified on something that might seem critical of the CEO, “and right now they just don’t know.”
What does appear to be the case is that Ford’s succession plan is a “horse race,” weighs in Joe Phillippi, head of AutoTrends Consulting. While Mark Fields, Ford’s President of the Americas, is considered the odds-on favorite, there are other contenders, including Joe Hinrichs, who runs the maker’s vast Asia, Pacific and African operations.
“There are still major, major, major issues to be faced,” by Ford, stresses Phillippi, ranging from the continued mess in the European market to an unexpected slowdown in China. “So, (Mulally) is probably waiting to see how his team handles these issues before making a final decision.”
For his part, Chairman Ford insisted “there’s no anxiety” within the company about Mulally’s plans. And unlike in Europe, where stricter rules typically nudge top executives out at ages as young as 60, the trend in the U.S. seems, if anything, to be moving in the other direction. GM Vice Chairman Bob Lutz remained with the company until his mid-70s.
And then there’s Berkshire Hathaway’s legendary boss Warren Buffett. The “Wizard of Omaha” is now 82 and has suggested that – despite a recent cancer diagnosis – he’d like to keep at it until he’s 100.
Fit and trim, still playing an aggressive game of tennis, the boyish-looking Mulally might harbor similar hopes considering the way he frequently talks about “having fun” at Ford. At the least, he has made it clear he still has several goals in mind before considering retirement. And that’s fine with Chairman Ford and the rest of the company’s board, apparently.
“There’s no new news, and needless to say the board is more than happy with the way Alan has led the company,” the chairman said. “It has been really fun for the two of us to work together, and I’d like to see it continue for some time.”