Ford's Board Turns Up Heat on CEO Mark Fields

By Christina Rogers and Joann S. Lublin Features Dow Jones Newswires

Ford Motor Co.'s directors are pressing Chief Executive Mark Fields to sharpen his strategy as the company races to catch up on electric cars, reverse its shrinking market share in the U.S. and buoy its languishing stock price, according to people familiar with the situation.

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Company directors, meeting this week in Dearborn, Mich., ahead of the annual shareholders meeting Thursday, scheduled an additional day of talks Tuesday to address growing uncertainty about the auto maker's course, these people said. Ford has been solidly profitable since Mr. Fields became CEO in July 2014, but its stock price has fallen by about a third in that period.

Mr. Fields is pushing to retool the company for an industry that is migrating to new technologies such as electric vehicles and self-driving cars. But amid uneven progress on that front, he has come under criticism from some managers for shifting too much focus away from conventional businesses that still account for the bulk of profits.

While Chairman Bill Ford and other directors support Mr. Fields, the people say, they are urging him to heighten his focus on growth opportunities.

"We do not share details or discussions from our board meetings for competitive reasons," a Ford spokesman said. "We also are unable to comment on rumors or speculation."

Ford shares closed Tuesday at $11.16. The stock slipped below $11 earlier in May, its lowest point since August 2015.

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Founded in 1903 by one of the industry's most iconic figures, Henry Ford, the auto maker was dealt a blow in early April when its market capitalization fell below electric-car startup Tesla Inc.

Tesla is valued at $52.4 billion, or 18% higher than Ford, despite the Silicon Valley electric-car company's financial losses. Tesla sells a fraction of the cars delivered by Detroit's auto makers but is seen as having a lead on new technologies.

When asked about Tesla's surge during an earnings call last month, Mr. Fields said Ford needs to do a better job quantifying the revenue and profit-growth potential of its technology bets. "We've talked about the investments, and we'll do that going forward," he said.

Mr. Fields, a 28-year veteran of Ford, took the helm after his predecessor, Alan Mulally, restructured the company by selling off brands and simplifying operations.

Mr. Mulally, currently a member of Google parent Alphabet Inc.'s board, oversaw a succession race that included members of Mr. Fields's current management team. He also helped the No. 2 U.S. auto maker avoid bankruptcy, unlike its Detroit rivals.

Mr. Fields has focused on accelerating growth in Asia, jump-starting the company's Lincoln brand and placing bets on future technologies.

Ford is facing pressure as the U.S. auto market is leveling off after seven consecutive years of growth. The auto maker's profits have been dented by declining sales and vehicle recalls.

The company also is shouldering higher costs as Mr. Fields seeks to venture beyond its core business of building and selling cars. He is pushing into new areas such as ride-sharing and autonomous vehicles and investing in new initiatives aimed at reducing Ford's exposure to the auto industry's boom-bust cycles.

However, some senior managers are concerned the company is spending too much time and energy on bets that will take years to pay off, say people familiar with the situation.

Ford's closest rival, General Motors Co., also is investing in technology and is far ahead on electric cars. Ford doesn't plan to launch a long-range battery-powered vehicle until 2020.

At the same time, Silicon Valley firms such as Alphabet, Apple Inc., Intel Corp. and a number of startups are acquiring auto suppliers and spending billions on vehicle testing in a bid to unseat Detroit.

In 2016, Mr. Fields was awarded a $2.5 million stock incentive to continue broadening Ford's strategy beyond the profitable trucks and SUVs that deliver the bulk of profits.

Under a deal laid out in the company's proxy statement, management was to focus on making progress on autonomous vehicles, supercharging the Lincoln brand, increasing market share in China, "developing a lean mindset" and pursuing "moonshot" ideas such as ride-sharing ventures.

Under Mr. Fields, Lincoln has gone from a tarnished afterthought in the global luxury car market to one of the faster-growing brands in the U.S. It is also making inroads in China, a huge auto market where Ford is far behind.

But Ford's share of its core market, the U.S., is in decline. The company accounted 15.1% of U.S. car sales in the first four months of the year, down from 15.6% in the year-earlier period, after a 5.1% volume decline.

Mr. Fields predicts eventually earning 20% margins on services ventures -- twice the margins it earns in the North American market -- though he hasn't specified what exactly those ventures are or when they might be a meaningful part of the business.

Some efforts are in the early stages. Ford earlier this year announced a $1 billion investment in Argo AI, a Pittsburgh-based artificial-intelligence company that is still considered a startup.

There have been stumbles.

Ford joined with Boston-based van-shuttle service Bridj for a pilot program in Kansas City. The startup's CEO, Matt George, announced last month that he was folding the company after it wasn't able to secure funding.

Ford, in a statement Tuesday, said it provided vehicles for the startup, but that the partnership didn't extend beyond that.

Some top managers worry Mr. Fields's operational structure has become more complicated as the company launches new divisions and creates new management roles, say people familiar with the matter.

Some industry analysts have compared Mr. Fields's challenges to those faced by Jacques Nasser, a Ford chief executive who was ousted and replaced by Bill Ford in 2001. Mr. Nasser invested in a number of luxury brands and new ventures, but those bets proved to be too costly and complicated for Ford to pull off.

Write to Christina Rogers at christina.rogers@wsj.com and Joann S. Lublin at joann.lublin@wsj.com

(END) Dow Jones Newswires

May 09, 2017 19:54 ET (23:54 GMT)