Ford shareholders quiz execs on stock performance, EV strategy and supply-chain woes
Ford Motor Co. executives fielded questions from investors at the company's annual shareholder meeting on Thursday about the automaker's electrification strategy, its faltering stock performance, and how it's navigating complex supply-chain issues.
Shareholders also approved the reappointment of 14 board members and again rejected a proposal that would do away with a dual-class voting stock that gives Ford family members outsized voting power.
That proposal came from shareholder John Chevedden, who has unsuccessfully brought similar language to a vote numerous times.
“This dual-class voting stock reduces management accountability by giving Ford family insiders the power to retain corporate control vastly disproportionate to their money at risk," Chevedden said. The proposal was rejected with 63.2% of the vote against it.
Ford's board of directors also accepted the retirement of Anthony Earley Jr., who was elected to the board in 2009 and has reached the mandatory retirement age of 72. Earley's departure leaves the board with 14 members, four of whom are women and two of whom identify as members of minority groups.
Meanwhile, the company's top leadership fielded questions from shareholders, including what their plan is to improve Ford's stock performance. After being the highest growth auto stock of 2021, Ford shares are down roughly 40% year-to-date.
On Thursday, Ford's stock closed down 3% to $12.44 per share.
Wells Fargo this week downgraded both Ford and rival General Motors Co.'s stock, CNBC reported, with analyst Colin Langan writing that this year could represent a profit peak for legacy automakers. Langan downgraded Ford to "underweight" and cut its price target from $24 a share to $12.
“2021, our stock was on fire. This year it’s come back to Earth a bit. Obviously the whole market is coming back to earth," said Executive Chair Bill Ford Jr.
Still, he said, "My strong belief is that we are building a great business and we’re making products that have created buzz that we’ve never seen before. The stock price, ultimately, will end up reflecting all that. You can’t manage the business for stock price; you manage the business to build a great and enduring company. And I believe that’s exactly what we’re doing.”
And CEO Jim Farley reiterated a point he's made publicly numerous times about the need to shore up supplies of raw materials needed for electric-vehicle batteries. Ford has a joint venture with South Korean battery maker SK Innovation to build EV batteries at plants in Tennessee and Kentucky.
"You can imagine that there will be a day where we not only build batteries in a JV structure, which we will, but actually by ourselves," Farley said.
"The real key first- and second-inning move in building batteries, either in a JV or by ourselves, is going to be securing raw materials — especially nickel and lithium. … We really need to localize the precursor and refinement and mining of the raw materials to where we build the vehicles and the batteries. And that means building, for the first time ever, a raw material ecosystem here in North America, our largest market."
Shareholders also asked questions about the company reorganization announced in March, Ford's strategy concerning hybrid vehicles, EV infrastructure, EV battery recycling, the company's nagging warranty and quality issues, its profit margins and the supply-chain issues that have battered the global automotive industry over the last two years.
"We have a lot of work to do in our supply-chain management," Farley acknowledged. "Although we see the chip shortage easing the second half of the year, as we scale our battery-electric vehicles, we will have new supply challenges in semiconductors, electronic components in general, and batteries and battery raw materials.”