Some of the news coming out of Ford Motor Co. during the second half of May likely will befuddle many—especially those of us who can't see the situation from the perspective of a board of directors hearing growing complaints from shareholders about lagging stock prices.
Looking at profits, it seems like now-former CEO Mark Fields was doing a solid job. Since Fields took over as CEO in 2014, Ford posted pre-tax profits in 2015 of $10.8 billion, $10.4 billion in 2016 and is projecting $9 billion this year.
But those numbers apparently weren't good enough for Wall Street. With Ford's stock down 40 percent during Fields' tenure and board members questioning the company's future strategy—one that called for heavy spending in driverless and electric vehicles—Fields was unceremoniously shown the door.
One report from sister publication Automotive News said "shareholders complained about the lagging stock and asked why Ford was investing in the future if it hurt profits today."
That statement reminded me of an interview I had in 1998 with former Goodyear CEO Robert Mercer. Talking for a piece commemorating the Akron-based tire maker's centennial, Mercer remarked how he worked for Goodyear for 42 years, but many concentrated only on a six-week period of 1986 when the company faced a hostile takeover attempt by financier Sir James Goldsmith.
Mercer wasn't shy about sharing his opinions about Wall Street. He said there was too much attention paid to stock prices because there were many ways to manipulate a company to create a price spike. Mercer told one broker that he was running the "biggest off-track betting facility in the country."
The longtime Goodyear executive also said putting money into Wall Street wasn't investing in America, that anything other than IPOs or later offerings to raise capital was "swapping paper and betting horses." All the attention paid to the investment community, Mercer said, discouraged diversification and long-term investment, such as in those businesses Goodyear was forced to sell off to keep control of its core business.
He also felt that Wall Street's insistence on putting the shareholder first was backward thinking. His pecking order was the customer, employees, suppliers and government entities. He argued that if a publicly held firm handled those four properly, the fifth constituency—the shareholder—would make off like a bandit.
Most boards today no doubt would look at Mercer's philosophies as "crazy talk." In turn, though, I'm sure he would shake his head in disbelief over Ford's actions.