U.S. News

Ford CEO to Appear at Annual Meeting


In his first car industry venture, Ford President and Chief Executive Alan Mulally has received solid reviews as he tries to steer his company through a massive turnaround plan in an ultra-competitive North American market. He may get an indication Thursday if some shareholders think the honeymoon is over.

Mulally, who will update investors in Wilmington, Del., on the company's "Way Forward" turnaround plan, hopes to return Ford to profitability in 2009. He succeeded Bill Ford as chief executive of the Dearborn, Mich.-based company in September.

"He's at the tail-end of his honeymoon phase," said Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co. in Memphis, Tenn. "Investors would like to see a detailed or comprehensive turnaround plan further explained, particularly as it relates to new models and additional cost reduction."

Ford Motor Co. lost $12.7 billion in 2006, the largest loss in its 103-year history, and has seen its sales decline nearly 13 percent this year amid a retreat by consumers from larger vehicles as gasoline prices top $3 a gallon.

Ford has mortgaged its factories, brand names and other items to secure a $23.4 billion line of credit to pay for the restructuring plan and cover losses. Punctuating the troubles, the nation's second-biggest automaker has lost money during the past seven financial quarters.

"It's hard for the next couple of years," Mulally said during a speech last month at the New York International Auto Show. "It's absolutely the right thing to do, and we are transforming a phenomenal company into a long-term and viable business."

Sheds Thousands of Workers

Mulally, a former Boeing Co. executive, has been credited with bringing discipline to the company as it sheds thousands of workers and executes a plan of closing 16 facilities by 2012.

Analysts say Ford needs to show improvements in its vehicle lineup, provide evidence that the turnaround plan is working and gain some help from the United Auto Workers during the summer's contract talks.

Sales of the popular F-Series pickup, a longtime moneymaker, have declined in recent months, and the company has pared back its fleet sales. Ford has posted success with sales of its new crossover, the Ford Edge, and has touted the upcoming release of another crossover, the Ford Flex.

Ford is expected to refresh about 70 percent of its vehicle lineup by 2008 and its entire line by 2010.

"People still have questions on their future product lineup," said Rebecca Lindland, an auto analyst at Global Insight, an economic research and consulting company. "Mulally is a very bright, very smart guy, but he is not a car guy, and he's trusting everyone around him."

At the company's annual meeting, shareholders are expected to elect 12 members of the board of directors and vote on several proposals opposed by the automaker, including measures that would:

- Give holders of 10 percent of Ford's outstanding common stock the power to call special shareholder meetings.

- Delete references to sexual orientation from Ford's equal opportunity employment policies.

- Require the automaker to identify all executive officers who are entitled to receive more than $500,000 a year.

- Demand the company submit a report on how it intends to address rising health care costs.

Shareholders also will consider requiring Ford to set goals for reducing total greenhouse gas emissions from the company's products and operations and require the board to publish annual reports on global climate change.