Family Feud: Ford Dynasty Questioned by Investors
Ford investors are reportedly irked that Ford Motor Co. seems to be pursuing the dynasty management route by issuing elevated positions to individuals of the correct bloodline. Like it or not, Ford has been a family business for the majority of its existence, but it’s facing new scrutiny after adding 32-year-old Alexandra Ford English to the board of electric truck manufacturer Rivian and making 39-year-old Henry Ford III (great-great grandson of the big dog himself) the face of investor relations.
The Ford family currently holds the largest slice of the corporate pie, thanks to their special class of stock, and 40 percent of the voting rights. But the business faces severe headwinds, hampered by the coronavirus and a share price that’s trended stubbornly downward since 2014. This has prompted concern among longtime shareholders and split opinions on whether or not Ford should continue keeping things within the family.
We don’t know what the ultimate plan is — at least not in terms of the grooming of Henry and Alexandra as the next wave of the Ford dynasty. Bloomberg made it seem fairly clear-cut that the pair were intentionally elevated to high-level positions as part of a continued ascension to automotive royalty:
Henry Ford III and Ford English are likely years away, if ever, from assuming the uppermost leadership roles. Jim Farley, promoted March 1 to chief operating officer, is the clear heir apparent to current CEO Jim Hackett. But each is now moving through a variety of jobs at the company. Henry, known as “Sonny” among friends and family, was director of corporate strategy before taking the investor relations job. He is the son of Edsel Ford II, a board member and now a company consultant.
Ford English, the daughter of Bill Ford, assumed a corporate strategy position similar to the one previously held by her cousin, while also being named to the board of Rivian Automotive, the electric-truck maker in which Ford has taken a significant ownership stake.
Each declined an interview request through a Ford spokeswoman.
Their seasoning is similar to what their fathers received while rising in the ranks in the 1980s and ’90s. Bill and Edsel Ford landed on the company’s board of directors in 1988 while still in their 30s and agitated successfully for more prominent roles as directors. Edsel eventually rose to president of Ford’s highly profitable credit unit before retiring in 1998, and Bill became company chairman in January 1999 and served as CEO from 2001 to 2006.
Both received Ivy League educations prior to earning their business degrees, working in fields outside of the automotive landscape before swiftly rising through the ranks at Ford Motor Co. This raised concerns of nepotism that are both difficult to prove and fairly normal among large companies. Still, the matter came up during Thursday’s shareholder meeting via a proposal to strip the family of its special class of stock and swap to a one-share, one-vote arrangement. The suggestion garnered a support rate of 35 percent support — a slight improvement over last year’s 34 percent.
The concern is that family-controlled entities often perform worse on the stock market because you’re often gambling with new leadership. Rather than finding someone competent from the outside, you’re grooming someone from within the family who hopefully has enough of their forebear’s DNA to not sink the business.
“That’s why we don’t have Kings and Queens anymore — it’s a roll of the genetic dice,” said Nell Minow, vice chair with ValueEdge Advisors, a shareholder advocacy firm. “We’ve seen in companies like Motorola and Anheuser Busch that it hasn’t worked out to continue to pass the baton from generation to generation.”
You could just as easily make the claim that relations to the founding members of a business have more reason to want to see a company thrive. The Ford family’s track record also hasn’t been all been that bad. Imperfect, to be sure, but comparatively successful at avoiding drama when you consider other automotive dynasties throughout history.
That’s assuming the Fords are actually being groomed for something greater, which Minow argued is probably the case. Henry Ford III isn’t being given a cushy position where he can quietly earn a paycheck until his inheritance comes in. He’s having to work as a go-between for investors and the business — a task we do not envy.
“Investor relations is the best place that you can put somebody that you’re trying to groom for leadership because they are going to be dealing with complaints all the time,” Minow said. “It will give him a real reality check.”
Meanwhile, Ford English has a comparatively easy position on the Rivian board, though it’s not an unimportant placement. She also worked a stint in the automaker’s mobility arm, giving her a taste for the industry. “I was originally hesitant to join Ford because I don’t have a technical background and it’s a company built upon engineering,” she said in 2018. “But I knew what I could bring to the company and I was very aware of those skills.”
What do you think? It’s not like Ford has a history of elevating familial relations without some skin in the game, but it does have a history of promoting them. Are the subset of investors attempting to uncouple that legacy on the right track, or is this all just a distraction from Ford’s real problems?
[Images: Ford Motor Co.]
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- Jpolicke Manufacturers put such little effort into making AM reception sound like anything tolerable to listen to, they may as well drop the pretense and eliminate it altogether. Maybe it's not coincidental that my last car that had decent reception also had a traditional metal stick for its antenna.
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- Irvingklaws Still listen to AM from time to time. Mostly just to find what's out there, often just after something has cleared all my presets. Lots of christian and rightwing politic talk shows, but there's still music, local news, traffic, and weather. I've found lots of non-English (as a primary language) stations as well. Kind of like local access cable. You can find more local content that can't get air time on the big stations. It can be fun to explore on trips just seek/scanning up and down the dial.
- Oberkanone AM is choice for traffic reports, local news, and sports. FM is choice for music. I don't own a cell phone. How often is AM radio accessed? Over 90% of drives I use AM at some point.
- Art Vandelay So half of them voted for the same people that were selling them out and taking bribes? Wow
Worked for Toyota. Didn't work for Wang Labs. We shall see.
Investors should refuse to buy stock in companies which issue "special voting rights" shares to certain people. Ford was one of the first to pull this trick decades ago, Facebook/Zuckerberg have done it in modern times. In fact, IMO the SEC should simply make this practice illegal. But without that hammer, investors can and should just say no. Why should a bloodline determine who gets top jobs at Ford, or anywhere else?