PREVIEW-Ford’s task–convince investors that peak not past

* What: Ford annual shareholder meeting

* When: Thursday, May 13 at 8:30 a.m. EDT (1230 GMT)

* Where: Wilmington, Delaware

* Shareholder vote on tax benefit preservation plan

By David Bailey

DETROIT, May 12 (BestGrowthStock) – Ford Motor Co executives at the
annual meeting Thursday in Wilmington, Delaware, will have to
make the case that the No. 2 U.S. automaker can outperform
rivals in a recovering U.S. market as it did during the
crushing downturn in auto sales that began in 2008.

Ford’s (F.N: ) stock price has quintupled since the end of
2008 and it posted a profit last year while U.S. rivals fell
into bankruptcy, leaving Chief Executive Alan Mulally and other
Ford officers with the task of convincing investors there is
more to come.

“If they just keep doing what they are doing now, they
should be able to do very, very well,” said John Wolkonowicz, a
senior auto analyst IHS Global Insight.

At Thursday’s annual meeting, Ford will ask shareholders to
approve a plan it adopted last September that would tie
preserving tax benefits to limiting the potential for a change
of control.

Ford, which posted net losses totaling about $30 billion
from 2006 through 2008, accumulated net operating losses,
capital losses and tax credit carryovers over several years.

Use of those tax benefits would be severely restricted if
shareholders of more than 5 percent stakes collectively
increased their Ford ownership to more than 50 percentage
points over a rolling three-year period.

Shareholders have raised several proposals to be voted on
at the meeting, including an annual request to revisit the
Ford’s ownership structure that gives the Ford family 40
percent voting control through ownership of nearly 71 million
Class B shares. The family also holds some of the 3.3 billion
common shares.

Trillium Asset Management, which holds a small position in
Ford stock, has raised a shareholder proposal for “greater
transparency and board oversight of the company’s political
spending” for the past three years.

But the bigger focus for investors will be the expected
update on the automaker’s strategy after a restructuring that
lowered its break-even point without resorting to the
government-backed bankruptcies that reshaped the other members
of Detroit’s traditional Big Three, General Motors Co [GM.UL]
and Chrysler Group LLC.

One challenge for Ford is to show investors it has a
management succession plan to keep its recovery on track beyond
the tenure of Mulally, who turns 65 this year, analysts say.

Executive Chairman Bill Ford Jr. has talked down that risk,
assuring Reuters in an interview in April that Mulally will be
around for a while and that the automaker has a stable of
capable in-house successors when he does to retire.

Ford hired Mulally away from Boeing Co’s (BA.N: ) commercial
airplanes business in 2006 and he has been given carte blanche
to stay as long as he would like, Bill Ford has said.

Several aspects of the Ford turnaround plan, including
borrowing more than $23 billion for a cushion, were in the
works before Mulally arrived.

However, executives credit Mulally with a relentless focus
executing the plan and driving Ford’s global operations to work
together to reduce costs by delivering global vehicles like the
new Focus compact sedan.

“We haven’t done that before,” said Elena Ford, director of
global marketing, sales and service operations and a
great-great granddaughter of company founder Henry Ford. “We
have phone calls every single week with Europe, South America,
Asia and the U.S.”


“It’s going to come together really in a phenomenal way;
over the next 12 to 18 months you are going to see this company
bringing out more and more and more cars,” Elena Ford said in
an interview at the Beijing auto show.

Ford has a far heavier debt load than GM or Chrysler after
taking the more than $23 billion “home improvement loan,” but
has ridden a wave of goodwill by avoiding the government
bailouts that supported its rivals in 2009.

The automaker also made deep sales inroads against Toyota
Motor Corp (7203.T: ), which has stumbled over the recalls of
millions of vehicles in the U.S. and overseas.

Through April, Ford was the No. 2 U.S. automaker by sales
but had cut GM’s lead in vehicle sales in half compared with
the same period a year earlier, with just under 17 percent
market share compared with nearly 19 percent for GM.

“I would suggest that Ford’s reputation among consumers
right now is higher than it has been in many decades,”
Wolkonowicz said.

Ford’s automotive debt totaled $31.3 billion after a debt
repayment in early April, but Ford posted a $2.1 billion
first-quarter profit (Read more your timing to make a profit.) and forecasts a solid profit for 2010. It
also reported a $2.7 billion profit last year.

The turnaround plan has included selling off luxury brands
that formerly comprised a premium automotive group within Ford.
Ford has sold Aston Martin, Jaguar and Land Rover brands and
has agreed to sell the Swedish brand Volvo to China’s Geely.

The automaker believes debt reduction will accelerate as it
produces more operating profits and automotive cash flow.

Ford restored a 50 percent cut made in 2006 to annual
compensation for outside directors, raising it back to $200,000
after studying peer companies including GM. Sixty percent of
the compensation is in deferred common stock.

Since the close on April 26, the day before it reported a
first quarter profit (Read more your timing to make a profit.), Ford shares have fallen nearly 15 percent
to $12.31. The stock had reached a five-year high at $14.57
that day before closing at $14.46.

(Additional reporting by Kevin Krolicki, editing by Gerald E.

PREVIEW-Ford’s task–convince investors that peak not past