By on October 10, 2008

Talk about getting out while the getting’s good… Ford Motor Company has just announced that Chief Financial Officer Don Leclair will retire Nov. 1 “after an accomplished 32-year career.” Ford CEO Alan Mulally performed Leclair’s last rites for the press. “Don’s expertise and business acumen have been invaluable to Ford. Under his leadership, Ford has made significant progress in lowering costs, improving quality, improving efficiency, divesting non-core assets, improving our balance sheet and moving us to our One Ford.” Improving our balance sheet? Is that PR humor of some kind? Anyway, that’s all FoMoCo’s got to say about Donny’s exit, stage right. Of course. it’s no coincidence that Mr. Leclair is leaving the family firm at a time when the automaker’s share price is so far down the waste pipe that it’s only a matter of time before Ford gets de-listed from the stock exchange and files for bankruptcy. Then when Ford applies for a REAL bailout– none of that $25b “retooling” loan nonsense– there will surely be some kind of executive accountability proviso that would tear some big ass gashes in Leclair’s severance pay, pension, health care, free cars, jet travel, etc. Meanwhile, Leclair banks $4.1 and $5m upon his retirement, according to Ford’s 2008 proxy statement (p. 65). Lewis Booth – who played a leading role in the successful transformation of Ford of Europe and Mazda during the past decade – will become the company’s Executive Vice President and Chief Financial Officer. [thanks to ChrisHaak for the update]

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12 Comments on “Ford CFO Leclair Unfurls His $4m – $5m Golden Parachute, Retires...”


  • avatar
    jerry weber

    Many corporate watchers tell us that it isn’t the CEO’s resignation that waves the red flag in a corporation, it is the CFO. The chief financial officer is usually the canary in the coal mine. He or she sees the depth and timing of the financial mess in their own corporation before anyone else. When the bomb goes off the financial head takes the heat first from all sides. The resignation usually comes when there is no way this person can turn the situation around and the canary is now on stage. Does this sound like the scenario presently at Ford?

  • avatar
    jerry weber

    Many corporate watchers tell us that it isn’t the CEO’s resignation that waves the red flag in a corporation, it is the CFO. The chief financial officer is usually the canary in the coal mine. He or she sees the depth and timing of the financial mess in their own corporation before anyone else. When the bomb goes off the financial head takes the heat first from all sides. The resignation usually comes when there is no way this person can turn the situation around and the canary is already laying on the floor of the cage gasping for breath. Does this sound like the scenario presently at Ford?

  • avatar

    Oh boy, this is worse than GM putting the RenCen up for sale.

  • avatar
    Dr Lemming

    Out with the old. May not be a bad thing.

  • avatar
    RobertSD

    @ RF:

    Despite your rant, Leclair was one of the best CFOs in the industry. Frankly, he works with what he is handed. But, it was under his reign as CFO that Ford began removing excess and streamlining their drastically bloated systems of production/engineering/etc instead of just pinching-pennies. The focus on cost of quality was also a big issue under his tenure, and that helped Bill Ford’s initial case for drastic quality improvements that have occurred in the last 5 years (whether people on this site admit it or not). It’s difficult to blame him for the poor decisions of marketing or product engineerng. He works within the confines of what he’s given – but I think he’s done great things within those confines.

    I am particularly impressed with his ability to manage Ford’s cash flow and debt servicing. Ford would be in much bigger problems (probably as bad as GM – maybe bankrupt already) if not for his efforts to keep the balance sheet tight. Yes, he has done great things for the balance sheet, including the 2006 financing, managing debt-equity swaps, managing bond sales, managing cash and controlling Ford Credit debt in light of its junk rating. Despite the weak profit results during 2007, Leclair oversaw a $9B improvement in net equity of the company – not through goodwill tricks like GM, but servicing debt and managing Ford Credit’s assets and risk. That’s managing your assets and liabilities properly. That doesn’t erase the fact that this market will elminate all of that $9B, but none of that is within his control at the moment. All he can do is minimize the impact of the markets, and we’ll find out in Q3 how well he’s done.

    This doesn’t answer the question of what will happen to Ford in this market where people are scared to death of everything with any risk, where every action seems to be emotional. I am almost positive now that it will doom GM. And whether or not this is a sign of things to come for Ford, the fact remains that with his hand he had to play, Leclair has done a good job for Ford – much better than his counterparts at many companies in the industry – and may be looked back as one of the men who kept Ford out of bankruptcy.

  • avatar

    RobertSD :

    None of what you say changes the basic thrust of my rant: Leclair is leaving the sinking ship before he loses his payoff and benefits. Before his stock options are completely worthless.

  • avatar
    Landcrusher

    Robert,

    I didn’t see a rant here, or really, any unjustified knocks on Leclair. Your title starts with Chief, you company is tanking, you take your licks.

    I also think that if he spent 32 years at Ford, it’s probably good they get someone with wider experience to be the chief given the circumstances. When an entire industry is going south, you want to look for folks who change the game. It’s when an industry is booming that you reward success and longevity. Strangely, it seems to me that companies often do the opposite.

  • avatar

    RF, his stock options are already worthless. The lowest priced ones he had as of this spring were $7.55 per share, and they go as high as $31.95 per share. I’d say it’s pretty unlikely that Ford would get as high as $7.55 anytime in the next few years, saying nothing of $31.95.

    He gets between $4.1 and $5.0 million upon his retirement according to their 2008 proxy (p. 65).

  • avatar
    GS650G

    Someone had to exercise some options before they turn into pumpkins. Granted he had 32 in and was probably due to retire but it looks real bad. Almost as sick as the head of WaMu who stands to collect 14 million in pay after three weeks on the job.

    These guys may have been promised these benefits by a willing BOD in good times but surely they can write in exceptions, like total collapse of the stock price, that negate multi million dollar payouts. That is real pay for performance. If they don’t get their shit together on this the gov’ment is going to start dictating what execs make and that is not good. Political hacks should not be deciding on CSPAN what a CEO somewhere should make. It might draw attention to what some of them are making and why.

    How can I get a gig as a board member of some failing company that has millions tucked away. As long as the final check clears it looks very lucrative.

  • avatar
    RobertSD

    I guess my point, and forgive me any insult I may have unjustly thrust, is that unlike a golden parachutes for, say, some the current banking directors, Leclairs’, whether he’s leaving to beat the titanic shrinking or just worn out after 2 long years of trying to balance the books, has not unjustly earned his money. Most of Fords’ problems are not related to his actions – his actions, if anything, have bought Ford more time so that the new management can do their best to straighten things out.

    As such, I believe the context of golden parachute is certainly where I”m having the issue

  • avatar
    Landcrusher

    Robert,

    I don’t think you insulted anyone, only misapplied the rant label.

    As far as Mr. Leclairs compensation, I don’t see a big problem with anything I have heard, but I am surprised he would get a golden parachute. If he really had been at Ford for 32 years, was there really a big market for him that justified a big golden parachute? I thought the justification for parachutes was to get someone to take a risk by coming over to a NEW company. By providing a parachute, you take away the fear of someone coming to a new position and it not working out as planned.

    OTOH, if he got the same money as a retirement benefit, I really wouldn’t care. I suspect though, there are lots of other retirement benefits, too, though.

    It’s just a product of the transparency in CEO pay. Now everyone near CEO wants what everyone, in every other industry and situation, gets. What we ought to demand is more pay transparency for all positions. I am thinking if it worked for them, it would work for the rest.

  • avatar
    jkross22

    @Landcrusher

    You mean pay for performance. I’m cool with someone making big time dollars if they did something to earn it.

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