A rocky past year hasn’t dislodged Jim Hackett from his lofty perch in the Glass House, nor does the CEO feel he’s destined for the door. This assertion comes after a dismal earnings report born of recalls, a botched product launch, and ongoing streamlining efforts, the latter of which hasn’t given Ford’s stock the bounce many had hoped for.
Why does Hackett feel so confident? Friendship.
Specifically, friendship with the one person who really matters: Chairman Bill Ford.
As reported by Bloomberg, the bond between Hackett and Ford is a strong one, perhaps insulating the CEO from flack arising from the company’s poor showing on Wall Street. It’s generally agreed that failure to move share prices in a sustained upward direction is what doomed Hackett’s predecessor, Mark Fields. Since that departure, Ford’s stock has resisted that long sought-after climb.
“Harmony in businesses is a good story,” Hackett told Bloomberg on Monday. “And it doesn’t burst out of lack of accountability at all. It’s more, frankly, of a shared view of how much work we have in front of us to transform the company to be really viable for another 50-plus years.”
In a recent internal town hall, Hackett said the grim earnings report had no bearing on his job. He’s staying put.
The close connection between CEO and chairman has bought Hackett precious time. Shareholder opposition arose quickly under Hackett’s reign, with the CEO’s sedan-sinking plans and desire for electric mobility and automation leaving many wondering if the gamble would pay off. The automaker’s concurrent efforts to streamline its global businesses, bolster its Chinese strategy, and forge an alliance with Volkswagen gave investors food for thought, and a steady march of tried-and-true product introductions (read: trucks and SUVs) placated car-loving shareholders with visions of big margins.
That strategy hit a snag when the Ford Explorer and Lincoln Aviator launched last summer with serious quality control issues, forcing Ford into an expensive repair operation. The damage resulting from the launch earned the automaker a serious profit dive (and its investors a drastically diminished dividend). It also led to the punting (officially, retirement) of automotive boss Joe Hinrichs earlier this month and the elevation of Jim Farley to chief operating officer. That promotion came with a $2 million raise.
“Others will say, well, why has it taken so long? Or why are you contemplating this so rigorously? It’s because we’re balancing the needs of shareholders versus employees, suppliers, dealers,” Hackett said. “We’re not willing to lose the hearts and minds of our people to have one quarter exceed earnings.”
Ford’s stock is currently the lowest it’s been in a decade. At last report, the company’s share price was $7.56, down from $9.18 on February 4th (right before the earnings report landed). This, after the stock appeared to be stabilizing, and perhaps even recovering, in the summer months of 2019. When Fields left in May of 2017, share prices were flirting with $11.