The Ford family's $581 million loss
(Fortune Magazine) -- What would you do if $581 million of your family's
fortune had been vaporized in just 5 1/2 years? That's a question that Bill
Ford and the other 46 fourth- and fifth-generation members of the Ford auto
dynasty are grappling with these days.
The family's class B stock was valued at $1.14 billion when Bill took over
as CEO of Ford Motor (Charts) in 2001. Today the shares are worth less than
half that. To make matters worse, the clan's once-lucrative dividend stream
has dried up: Payouts that amounted to more than $28 million annually as
recently as 2005 have been slashed to zero this year.
Some of the heirs are concerned about their stake, and they've begun talking
with investment banks about their financial options. One of those they've
consulted is the boutique strategy firm Perella Weinberg, where co-head
Peter Weinberg is the nephew and grandson of two former executives at
Goldman Sachs (Charts), Ford Motor's longtime investment bank. So far, the
family has yet to retain anyone.
The move to seek outside investment advice raises some questions, many
stemming from the possibility that the descendants of Henry Ford might sell
some of their stake to raise money or diversify.
Will the family, which has controlled the automaker for its entire 103-year
history, continue to hold enough special class B stock to maintain its 40
percent control of the company's shareholder votes? And could the family's
interests be diverging from those of the company's other shareholders?
After all, unloading a significant number of shares could batter an already
wounded stock. And if so, will Bill Ford, who now serves as executive
chairman of the board after resigning as CEO in September, have to choose
between his corporate duties and his kin? (A Ford Motor spokesman says,
"There is no divergence of interests between the common and class B
shareholders. The Ford family, like the common shareholders, want a strong
That may be, but Ford Motor is in perilous shape. It lost $12.6 billion last
year and is burning cash at a furious rate: It expects $17 billion to be
consumed in the next three years. In order to stay in business while it
tries to develop a hit car or two, it has pledged most of its assets as
collateral for $23.5 billion in loans.
Ford's own employees show little faith. After being offered buyouts, they
are stampeding toward the exits with fewer than half expressing confidence
in the company's future.
As with any clan, there are some Fords who are more concerned about the
company's future than others. If anyone is crying poverty, though, the news
has not surfaced publicly.
Today's Fords are spread around the country, settled in old-money redoubts
such as New Canaan and Greenwich, Conn., Southampton on Long Island, and
Hobe Sound in Florida. They still gather for twice-yearly meetings and
maintain a family office in Dearborn to handle financial matters.
Two fourth-generation members, Bill and Edsel, represent the wings of the
dynasty, which so far show no signs of clashing on the search for financial
alternatives. The men are first cousins, and both sit on the company's
12-person board of directors. Edsel, himself a former executive at Ford
Motor and Ford Credit (Charts), was once considered a contender for the job
that Bill ended up getting. But despite Bill's rocky reign, there are no
visible challengers to his position as clan leader.
When asked whether their relatives still stand behind Bill, his older cousin
Anne Ford replies, "Oh, yes, yes, yes." Still, if Ford Motor's finances
continue to weaken, the family might even consider selling its entire stake,
leaving a different answer to the company's old slogan, "Is there a Ford in
"I have tried to live my life so that my family would love me and my friends
respect me. The others can do whatever the hell they please."