Ford Motors seems reluctant to let go of Chief Executive Alan Mulally. Understandably so: he steered the automaker clear from going bust like Ford’s two Detroit rivals. Rather than just sending the 67-year-old boss on his way, the board is mulling plans to make him co-chairman, Reuters reports. That would make for quirky governance and suggests the board doesn’t yet have full confidence in his successor. But keeping Mulally’s magic touch trumps these downsides.
The notion of having two chairmen seems like a recipe for confusion. In Ford’s case, however, it may make sense. For a start, investors will be happy to retain Mulally’s talents. The former Boeing executive is justly credited with turning Ford from a basket case into a profit-maker. When he took over in 2006, Ford posted a pre-tax loss of $15 billion. Last year it made $8.7 billion. His shake-up ensured that Ford was the only US auto maker that didn’t need a government bailout after the 2008 financial crisis. In May Moody’s even restored an investment grade rating to the company’s bonds.
Meanwhile it is hard to imagine a rift between Ford’s two potential chairmen. Bill Ford, who would stay on as the executive chairman, recruited Mulally and the two have worked in harmony ever since.
Finally, the board may feel that Mulally’s presumptive successor Mark Fields, the current president of the American operations, is not yet ready to go it alone. Fields is indeed a worthy successor, having executed Mulally’s turnaround of the US business. He is also ideally placed to help revive Ford’s loss-making operations in Europe, where he served as an executive vice president. Analysts still expect Fields to be elevated to the position of chief operating officer, a stepping stone to the top job. Still, the 51-year-old executive may benefit from a more gradual transition to full control.
Ford’s idea of splitting the chairman role is unlikely to catch on elsewhere. But under the circumstances investors should be willing to overlook a minor breach of corporate governance etiquette.
