Ford Motor execs 'frustrated' about low stock price

DETROIT -- Ford sought to reassure shareholders Thursday that the company is on the right track and has the right strategy for the future even though its stock price has been falling and U.S. industry sales are cooling off.

The Dearborn automaker, which held its annual meeting through a digital only format for the first time on Thursday, also faced criticism for not hosting shareholders in person. Executives argued the meeting was even more accessible to a wider range of shareholders in the past years when the automaker held its annual meeting in Wilmington, Del.

"We have reached more people. We've taken more questions, and that was really the point of this. I think in many ways it's been more interactive," said Ford Executive Chairman Bill Ford. "We're getting questions all over the map."

Shareholders pressed Ford's management about the automaker's product plans, quality issues, and advertising strategy, and the perception that shareholders are not being rewarded enough for investing in the company. The annual meeting also was held amid reports that Ford's board of directors this week pressured company CEO Mark Fields to better explain the company’s falling profits and stock price, according to several media reports.

Ford's board members scheduled extra time in meetings earlier this week so Fields could explain the company's strategy as Ford’s stock continues to stall, according to Bloomberg News.

Ford's shares have dropped $2.13, or 16%, since January to $11.04 on Wednesday. The Dearborn automaker's profits sank 35% during the first quarter to $1.6 billion as higher costs for warranties, recalls and materials eroded profits.

"You both say that your main priority is to provide long-term shareholder value," one shareholder asked. "Losing 40% of the value since Mark (Fields) took over as CEO doesn't seem to be upholding that pledge."

Ford assured the shareholder that company's stock price matters both to the Ford family and Ford's top management but alluded to the fact that Wall Street has historically undervalued automakers, even when they make millions in profits.

"Look, we're as frustrated as you are by the stock price.  And a couple of people have said, 'well, does the Ford family care about the stock price?' The short answer is yes, a lot.  Much of our -- most of our net worth is tied up in the company.  And the stock price matters a lot to us," Ford said.

Ford first quarter profits fall 35% to $1.6B
Ford CFO Bob Shanks pointed out that Ford has distributed $15.3 billion back to shareholders since it reinstated a dividend in 2012 if the company's plans to distribute $2.7 billion to shareholders this year is included.

Ford, like all automakers, is facing a North American automotive industry that is starting to cool down after seven years of rising sales. The decline in demand for new cars and trucks is hitting just as the industry is investing billions into the development of autonomous vehicles.

"I think the problem with buybacks in a company like ours is that we tend to do them when the market is close to its peak because we're flush with cash," Ford said. "And then we go into a downturn.  And the stock goes down.  And we end up destroying value."

Fields reiterated the company's strategy to become a leader in autonomous vehicles. The company said earlier this year it would spend $1 billion to acquire a company called Argo AI, a developer of artificial intelligence, as it builds up a staff of software engineers to develop the brains of its autonomous vehicles.

Ford bets $1 billion on self-driving car start-up
Ford also has launched a new division called Ford Smart Mobility and Fields has said repeatedly that the company is transforming itself into an automotive and a mobility company.

"This is, again, part of us becoming an auto and mobility company," Fields said. "By 2030 -- in the next 15 years -- we expect one out of every five vehicles sold could be an autonomous vehicle.  So clearly it's a big business opportunity."

Ford also, once again, beat back a shareholder proposal to restructure its two classes of shares into a single class of shares. Currently, the dual-share structure gives shares held by Ford family members 16-votes per share compared to the one-vote per share for regular shareholders, according to John Chevedden of Redondo Beach, California.

"This dual-class voting stock reduces accountability by allowing corporate control to be retained by insiders disproportionately to their money at risk," he said in an official shareholder proposal.

While the proposal was defeated with 64.4% of the votes cast in opposition to the idea, Chevedden says support has consistently grown since 2009 when he first introduced the measure and only 19% of shares were cast in favor of the measure.