Ford Shareholders Question Executives on Share-Price Fall

By Christina Rogers Features Dow Jones Newswires

Ford Motor Co. shareholders put heat on Chief Executive Mark Fields and Chairman Bill Ford during the company's annual shareholders meeting Thursday morning, pressing the executives to explain why the stock price has lost more than one-third of its value during Mr. Fields' tenure.

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The 114-year-old auto maker, like its Detroit rival General Motors Co., has booked substantial profits during a seven-year hot streak for U.S. car sales and strong appetite for lucrative trucks, but shares in domestic auto companies have been battered. Ford and GM have long been subject to the industry's boom-and-bust cycle, and have struggled to sell investors on a strategy to escape that trend.

Tesla Inc., the Palo Alto, Calif., electric-car maker run by billionaire Elon Musk, surpassed Ford and GM's market capitalization earlier this year, underscoring Wall Street's concerns about Detroit's ability to outgun Silicon Valley in developing must-have electric cars or autonomous driving capabilities. Tesla sells a fraction of what Ford or GM delivers, yet has consistently won favor among investors impressed by the company's growth prospects.

Mr. Fields faced heightened scrutiny from the company's board this week, as directors scheduled an additional day pressing the executive for clarity on strategy. Mr. Ford, great grandson of Henry Ford, also faced considerable criticism concerning the stock price during his tenure as chief executive early last decade.

Ford investors, submitting questions ahead of time for the virtual meeting, described the share price as "pathetic" and wanted to know what company executives are doing to increase value. Ford's earnings have resulted in hefty bonuses to its top executives, including Mr. Fields and some shareholders feel left behind.

One shareholder, who wasn't named, asked why Ford isn't using its "hordes of cash" to do additional share buybacks. GM has been repurchasing billions of dollars of shares, and Ford has employed similar tactics in recent years.

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Messrs. Ford and Fields defended the Dearborn, Mich., auto maker's performance, saying the focus is on strengthening the core automotive business, while investing heavily in future technologies that will help drive growth.

Mr. Ford said the company has a mixed record with share buybacks, and while not ruling them out, is more focused on sustaining enough of a cash cushion to weather a downturn.

"We are as frustrated as you are about the stock price," Mr. Ford said. "The stock price matters a lot to us."

Ford management narrowly steered around a bankruptcy filing nearly a decade ago, and the broader industry was rocked by the chapter 11 restructurings of GM and Fiat Chrysler Automobile NV's Chrysler unit.

Ford, for the first time in its history, is holding its annual shareholder meeting online, a move that got mixed reviews from investors -- some of which would have preferred to ask their questions in person.

The pressure on Ford comes amid a broader malaise for the shares of Detroit auto makers. Greenlight Capital Inc., which owns 3.6% of General Motors Co.'s common stock, released details in March of a pitch it is making to GM shareholders in an effort to "unlock substantial value."

Greenlight President David Einhorn notes GM -- currently trading at $34.23, or slightly above the $33 initial public offering price set in 2010 -- has a relatively low price-to-earnings ratio. Mr. Einhorn has proposed three directors and splitting GM shares into two classes.

GM management has held meetings with Greenlight, but the company's board has rejected Mr. Einhorn's proposal.

Write to Christina Rogers at christina.rogers@wsj.com

(END) Dow Jones Newswires

May 11, 2017 10:50 ET (14:50 GMT)