Ford CEO: Turnaround Plan is Progressing

From AFX News Limited

WILMINGTON, DE — Ford President and Chief Executive Alan Mulally reassured shareholders Thursday that the automaker’s turnaround plan was on track and that it was investing in environmentally friendly technologies amid concerns about climate change.

Mulally, making his first appearance before company shareholders, said Ford was taking "painful but necessary steps" to streamline costs and bring more accountability to the company with the goal of building "more of the products that people really want and value."

"We are moving quickly and making real progress, but it’s going to take time to turn things around," Mulally said. He promised "clearly stated goals and candid assessments of our progress based on facts."

With several shareholders asking Ford to take a more active role to guard against global warming, Mulally said Ford was committed to making environmentally friendly vehicles that "protect their passengers and our planet."

Shareholders overwhelmingly re-elected the Dearborn, MI-based company’s 12 board of directors and rejected eight ballot proposals, including measures on global warming, health care and a plan to give one vote to each share of outstanding stock.

Descendants of Henry Ford, who make up 40 percent of the combined voting power of all outstanding family stock, are allowed 16 votes each while other shares get one vote apiece.

Some shareholders voiced their displeasure with the company’s leadership, including one of Henry Ford’s descendants: Executive Chairman Bill Ford Jr.

Bill Ford, who recruited Mulally last year, was scolded by two shareholders who opposed his re-election to the board and accused him of wrecking the company.

"Bill Ford is Toyota’s No. 1 reason for success. Ford is in utter chaos," said Linda Joanette of Clarkston, MI.

Bill Ford responded that the management team was dedicated to turning the company around and said Mulally was the best person to lead Ford through its restructuring.

Ford Motor Co. lost $12.6 billion in 2006, the largest loss in its 103-year history, and has seen its sales decline nearly 13 percent this year against the backdrop of a slowing economy, sluggish housing market and a shift from larger vehicles because of rising gasoline prices.

The nation’s No. 2 automaker has mortgaged its factories, brand names and other items to secure a $23.4 billion line of credit to pay for the restructuring plan and cover losses.

Mulally, a former Boeing executive, has pressed for more discipline as Ford undergoes a restructuring that will significantly reduce its work force and shutter 16 facilities by 2012.

Mulally told 79 shareholders in attendance that the company was committed to returning its North American operation to profitability no later than 2009. Speaking to reporters after the meeting, he said Ford was on track to have a 14-to-15 percent market domestic share.

The executive also predicted that the auto industry could see further consolidation in the future, because of overcapacity in the marketplace.

During the meeting, a plan to give one vote to each share of outstanding stock came the closest to passage, with 27.4 percent supporting it. Descendants of Henry Ford, led by 13 great-grandchildren, collectively own 70 million shares of so-called "Class B" Ford Motor stock, which make up 40 percent of the combined voting power of all outstanding company stock.

John Chevedden, of Redondo Beach, CA, who has proposed similar measures in the past, noted that nearly half the non-family shareholders supported the plan. He said it represented a growing trend of investor unease against special classes of shares with powerful voting rights, also found at the New York Times and Dow Jones & Co.

"The people who have their money at risk should have a proportionate vote," Chevedden said in a telephone interview.

Mulally said Ford family members asked him during a recent meeting if the company would restore its 5 cents per share quarterly dividend, which it suspended in September. Mulally said the company would continue to evaluate it and "someday in the future we look forward to paying dividends again."

In other action, about 86 percent of shareholders rejected a plan to set goals for reducing total greenhouse gas emissions from the company’s products and operations and require the board to publish annual reports on global climate change.

"This really is a critical moral issue facing all of us on this earth," said Sister Patricia Daly, executive director of the New Jersey-based Tri-State Coalition for Responsible Investment.

Mulally described the company’s development of vehicles propelled by gas-electric hybrid technology, ethanol-blended fuels, advanced batteries and hydrogen fuel cells, part of Ford’s plan to be "good stewards of the earth."

Shares of Ford fell 2 cents to $8.33 in afternoon trading.