Ford family unity tested
DEARBORN -- With the Ford Motor Co. mired in a dangerous decline, Ford
family members gathered April 21 for a critical meeting on the company's
future and their role as controlling shareholders of one of America's
last great industrial dynasties.
But this gathering, held at Greenfield Village not far from Ford's world
headquarters, was quite different from previous family summits because
of the presence of two of Wall Street's hottest dealmakers, Joseph
Perella and Peter Weinberg.
The Detroit News has learned that Ford family members invited Perella
and Weinberg and considered hiring them to advise the family about its
huge stock holdings in Ford Motor -- a clear sign of growing concern
about the automaker's long-term prospects.
At the end of the meeting, the family voted not to hire Perella Weinberg
Partners as independent outside advisers.
But with their stock sinking in value and the automaker on the skids as
shareholders convene Thursday in Wilmington, Del., for their annual
meeting, the Ford family's resolve to retain its 103-year ownership
position is being tested as never before.
People close to the situation told The News that the tense meeting
highlighted differences within the family, particularly between Ford
Motor Executive Chairman Bill Ford Jr. and his older sister, Sheila
Hamp, and her husband, Steven Hamp, who became Bill Ford Jr.'s
chief-of-staff in 2005 and left the company last year.
The Hamps, along with family adviser Bruce Blythe, were said to support
the hiring of Perella Weinberg, whose principles have a track record of
arranging blockbuster corporate mergers and acquisitions.
Some opposed advisers
Bill Ford opposed bringing outsiders into the family's secretive
strategic discussions, as did his cousin, Ford Motor director Edsel B.
Ford II. He was out of the country, but outlined his views in a two-page
letter to family members, according to people familiar with the events.
Bill Ford's father, family patriarch William Clay Ford Sr., also
rejected the idea of hiring outside investment bankers. Another
prominent family member, Ford Motor executive Elena Ford, was said to
have offered to buy the stock of any relative interested in selling out.
A Ford Motor spokesman said Monday that the company would have no
comment on the family meeting. Bill Ford was also unavailable for comment.
However, in response to inquiries from The News about the family
meeting, the automaker arranged an interview in which Steven Hamp
offered his version of events.
Hamp, the former president of the Henry Ford complex, left his position
last year as Bill Ford's chief of staff after the hiring of CEO Alan
Mulally. Hamp said the April 21 meeting was a "dialog" about the
company, but not a showdown on whether to sell it.
"Nobody said they were interested in selling -- that just simply did not
come up," he said.
But he said that some Ford family members wanted an open forum on the
company's performance and the value of the family's 40-percent voting stake.
"These are lay people," said Hamp. "They don't run auto industries. They
simply are interested in a dialog about details of the family's
The meeting also featured a lengthy presentation by Mulally, wooed to
Ford's top executive job from Boeing Co. last September. He outlined the
progress of the company's turnaround efforts after last year's
devastating $12.7-billion loss.
People familiar with the meeting said family members questioned Mulally
about Ford's decision to borrow $23.5 billion to finance a turnaround,
given that $18.5 billion of that is backed by the company's U.S. assets
-- including the Blue Oval itself. Family members also asked Mulally
when the stock dividend payments might be restored.
Hamp said the family was unanimous in its support of Mulally: "The
notion that there's a revolution going on, or that there is in any way a
lack of confidence in what Alan is doing, is categorically wrong."
He also described himself as "one of the architects" of the push to
bring Mulally to Ford, as well as other pieces of the analysis
underpinning the automaker's turnaround. "So, I consider myself quite
invested in what is going on," he said.
Hamp was more circumspect about the proposed hiring of Perella Weinberg,
a top-echelon Wall Street firm that the New York Times recently said
seeks to be "the sage counsel in the middle of huge decisions."
He called Perella and Weinberg "very bright guys," but said the family
was not ready to hire them. He wouldn't directly answer whether he and
his wife had pushed for the family to hire Perella Weinberg in the weeks
leading to the meeting. "Ultimately, the concept of bringing in an
outside advisor everybody agreed it was not time."
At one point in the meeting, Bill Ford left the room to allow family
members to hold further discussions in his absence.
Telephone calls to Perella Weinberg's New York office were not returned
Advisers are well known
A veteran of landmark deals including the leveraged buyout of RJR
Nabisco, Joseph Perella has been a star in investment banking circles
for nearly 30 years. His partner, Peter Weinberg, is the grandson of
Goldman Sachs legend Sydney Weinberg, who was a confidante of founder
Henry Ford and the architect of the Ford Motor's initial public stock
offering in 1956.
Hamp declined to say whether the family would revisit its decision to
not seek outside counsel. "I don't know what the family would choose to
do in the future or not," he said.
While the family has always presented a united front, auto industry
insiders say the dramatic decline in the value of their Ford Motor
holdings is bound to cause unrest.
"The family has been amazingly cohesive. There has never been any public
dissension. (But) they're being tested now in a way that they have not
been before," said David Lewis, a University of Michigan business
professor and author of six books on Ford Motor and its founding family.
The Ford family today is a sprawling clan anchored by the 13
great-grandchildren of Henry Ford. Many family members don't live in
Michigan and have never worked at the auto company.
They are intricately tied, however, by the 70 million shares of
so-called "Class B" Ford Motor stock that they collectively own --
shares that have a combined voting power of 40 percent of all
outstanding Ford Motor stock.
Those shares have always been voted in unison, and the family is famous
in corporate circles for standing together through any crisis. But with
Ford Motor struggling amid falling sales and record losses, the vast
wealth of the family is under unprecedented attack.
Stake has fallen to $578M
When Bill Ford took over as chairman in 1999, the family's Class B
shares had a market value of about $2.25 billion. Ford Motor's plunging
stock price has reduced the stake to about $578 million.
And where the Class B shares generated $130 million in annual dividend
payments to family members back in 1999, there are no dividends today.
Many Ford family members also have significant holdings of common stock.
The troubled outlook at Ford Motor includes the specter of bankruptcy if
the Mulally-led turnaround fails. In that event, the family's holdings
could be wiped out entirely.
Industry watchers have long wondered what corporate catastrophe, if any,
could break the Ford family's iron grip on the auto company.
"I used to think that the Fords were going to be able to maintain their
financial interest in perpetuity," said historian Douglas Brinkley,
author of the Ford saga "Wheels for the World." "But it's pretty bleak
at Ford Motor right now, and I think all bets are off."
Family's power may change
Among holders of Ford's common stock, the family's "super-voting" shares
have long been a point of contention.
At Ford Motor's annual meeting on Thursday, shareholders will be asked
to vote on a recapitalization plan that would make all shares equal and
give all shareholders one vote for each share that they own. Similar
resolutions have been introduced in the past, but the family has the
power to effectively veto such moves.
But the California Public Employees' Retirement System, a major
institutional investor that owns 9.7 million Ford shares valued at $79.6
million as of May 3, told The News it will support the initiative as
matter of principle.
"It's undemocratic," said spokesman Brad Pacheco. "Any kind of change
like this can only have a positive impact on shareholder value."
People close to the situation told The News that Steve and Sheila Hamp
have been voicing their concern about Ford Motor for some time. But Hamp
said all the family members are understandably concerned.
"In a moment of great tension and great volatility in the industry, the
members of the family are interested in knowing as much as they can
about what is going on in the industry, what the prospects likely will
be, what is going to happen," he said.
"A great deal of interest, a great deal of history, a great deal of
culture and a great deal of passion goes in across the board to the
members -- now in the fifth generation -- of that family."
He said that one reason the family voted against hiring Perella Weinberg
was that it could be interpreted as a lack of confidence in Ford Motor Co.
"Largely," he said, "the agreement not to proceed with (hiring) anyone
is because it would potentially be misunderstood" by outsiders as a move
to sell the company.