Ford shareholders lament sagging stock, slowed production amid pandemic

Jordyn Grzelewski
The Detroit News

Ford Motor Co. shareholders on Thursday quizzed company executives about the low value of the automaker's stock — a longstanding point of frustration that the coronavirus pandemic appears only to be deepening. 

"We did not hide from the crisis, we stood up to it," Ford Motor Co. Executive Chairman Bill Ford told employees in a year-end letter.

Company leaders also were pressed during the virtual annual shareholder meeting about steps the company is taking to manage its finances amid COVID-19, and how quickly production will ramp up to full capacity as the automaker prepares to restart its North American operations on Monday.

Meanwhile, a proposal to abolish the company's two-tiered share structure — which enable Ford family members to wield 40% voting control of the 117-year-old automaker — was voted down, as it has been in previous years.

"The true economic fallout (of the coronavirus) ... won't be known for some time," CEO Jim Hackett told shareholders. "And we're mindful there might be new (COVID-19) outbreaks ahead. That's why we've taken significant actions to reduce costs, preserve cash, and make sure we've got the financial flexibility to ride this out and emerge as a stronger company on the other side."

The Dearborn automaker and its crosstown rivals shut down North American operations in late March to help halt the transmission of COVID-19. After nearly eight weeks of down time that has cost the Detroit Three billions of dollars, plants are set to begin phasing in production Monday. Ford reported a $2 billion net loss in the first quarter, and has said that its losses in the second quarter will be much greater — perhaps another $5 billion.

Top among the questions from shareholders was why Ford's share price trades so low compared to its industry peers — on Thursday, Blue Oval shares closed up 3.6% at $4.90 but down 48 percent since the start of the year — and what company leaders are doing to boost it.

"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," he said. "Management's compensation is heavily tied to our stock, so it's in everyone's interest to get our stock price back up."

Queried about the company's suspension of its dividend in March in a move to preserve cash, chief financial officer Tim Stone said company executives will consider reinstating the payout "as soon as is practical."

In another move to strengthen its cash position during the downturn, Ford has been working to cut costs even as it issues new debt and draws on existing credit facilities to raise capital to weather the coronavirus-induced downturn.  

The company's top 300 executives are deferring 20% to 50% of their salaries for five months, and Bill Ford is deferring his entire salary during that time. Asked whether company leadership would consider adjusting performance-based targets for executive compensation or further pay cuts for management or board directors, executives said they are focusing on deferring, rather than eliminating, compensation, but continue to evaluate. 

The company has identified billions in potential spending cuts, but "we know this will not be enough to recover everything this year from the production stoppage," Stone said.

And, as the company shifts to ramping production back up, shareholders wanted to know how long that will take. Production is already coming back up in Asia and Europe, and North American autoworkers will start returning to work Monday on reduced shifts and with stringent health and safety protocols in place.

The intricate restart process depends in large part on the automaker's supply base, Chief Operating Officer Jim Farley said: "It's a very complex formula, because the ecosystem of getting our plants back up to full production is complicated. ... It will really come down to our suppliers' preparation."

Executives emphasized that the automaker remains committed to upcoming product launches — namely a redesigned F-150 truck and the revival of the iconic Bronco SUV — as well as an all-electric future. Ford is investing $11 billion in electrification to deliver 40 new hybrid and electric vehicles by 2022, the company said.

John Chevedden, a shareholder long critical of Ford, again presented a proposal that each share be worth one vote. Via Class B shares, Ford family members have greater voting power than other shareholders — which Chevedden argued "reduces accountability by allowing corporate control to be retained by insiders disproportionately to their money at risk."

That proposal was defeated, with only 35% voting in favor.

Twitter: @JGrzelewski