Languishing stock prices vex Ford, GM
Underperforming stocks continue to vex leaders at two of Detroit’s automakers.
Ford Motor Co.’s top executives on Thursday faced multiple questions from concerned shareholders at its annual meeting in Delaware, while General Motors Co. CEO Mary Barra addressed the issue at a conference in Detroit.
Wall Street has remained indifferent in recent months, even as Ford and GM post record profits and diversify their businesses to compete with upstart disruptors like Google, Uber and Tesla. Analysts say the financial market’s tepid response is due to fears that the financial good times won’t last.
Executive Chairman Bill Ford Jr. defended the Dearborn automaker as some shareholders asked if changes were needed, with one even asking whether Ford could bring back former CEO Alan Mulally in a special advisory role.
“We can’t drive the stock price,” Ford said. “We are frustrated with the stock price. As someone who owns a lot of stock myself, I watch it every day. To me, the important issue is, is this company being well-run, is our financial future looked after and are our shareholders being rewarded as best we can do it? In every case, I believe the answer is yes.”
Ford’s stock on Thursday afternoon closed up 3 cents to $13.35 a share. The price has remained relatively low even as the company made record profits last year and issued a supplemental dividend in addition to its regular dividend. In addition, it’s been investing in alternative mobility experiments.
But some aren’t impressed with the new ventures.
Roger Heymann, a shareholder from Rockville, Maryland, said Ford’s investment in mobility was “creating confusion and uncertainty. It’s hard to grasp how this is going to relate to profits.”
Heymann also implied that President and CEO Mark Fields had something to do with the company’s underwhelming stock price. Ford quickly defended Fields, saying his first year as CEO was “the best first year any CEO has had” in their first year at the company.
“It’s unclear to many analysts where this is all headed,” Ford said of the company’s mobility initiatives, like ride-sharing. “Our goal though is to begin to put some clarity around that in terms of where we think this mobility space can go, and much more importantly, where Ford is going to focus our efforts in that space.”
Fields has said the mobility industry is a $5.4 trillion industry that Ford is currently not tapping into.
GM as ‘tech company’
Ford’s crosstown rival is also facing stock price concerns. Stock at GM ended Thursday up 10 cents to $31.18 a share. It’s trading more than $2 a share lower than its initial public offering price of $33 a share in fall 2010.
“With General Motors, in our not so distant past we disappointed shareholders greatly,” Barra said Thursday at the Michigan Council of Women in Technology 2016 Executive Connection Summit. “So we just need to earn our way out of it.
“By leading in technology, by being first to market, by having really industry-leading products like the Chevrolet Bolt or the being first with OnStar and 4G LTE, with the investments we’re making in autonomous, I believe it will happen over time.”
Barra said as she reads analyst reports on the company, she believes people are starting to see GM as a new company being led in a different way with different goals. She called GM a “tech company,” as it moves into the autonomous, connectivity, ride-sharing and car-sharing spaces.
“I’m excited about it. I could choose to be frustrated or I could choose to let it motivate me,” Barra told an audience of hundreds. “And I’m a competitive person, so it’s motivating me.”
Morgan Stanley recently upgraded GM’s stock to equal-weight from underweight, but with a target stock price of $29.
Barra also said auto stocks have been affected as analysts try to predict when auto sales will hit their peak. Some analysts believe U.S. sales are close to peaking, while others are more optimistic.
“We believe that’s it’s a plateau and it’s going to be longer,” she said.
Ford two-tier stock
Ford shareholders again rejected a proposal to end the two-tier class system that allows the Ford family to control the company while owning a relatively small proportion of shares, but it got a record percentage of “yes” votes — 36.9 percent — up from 36.3 percent last year and 34.4 percent the year before.
The Ford family holds a special class of stock worth about 40 percent of the voting shares, getting 16 votes per share. That gives the family effective control of the company.
Separately, shareholders approved 14 nominees for the automaker’s board of directors, along with compensation plans for its executives. They also voted down a proposal to hold special meetings between the annual shareholders meeting.
During a question and answer period, one shareholder noted Ford’s pledge to add 13 electrified vehicles and invest $4.5 billion by 2020, and asked if the automaker would ever consider partnering with Tesla Motors.
“We are always open to talking with others,” Fields said, adding that Ford is comfortable with its own development of electrified vehicles.
Staff writer Melissa Burden contributed.