Recommended Reading - Boards Refuse to Act Despite Poor Governance, Time.com

Douglas A. McIntyre wrote a piece for Time that attributed many of the recent problems top companies have been facing as a failure of the respective companies’ board of directors. McIntyre is very close to the truth. Boards have for too long just gone along and followed the lead of top management. It is now time for them to accept their real responsibilities to help guide management to make sensible corporate strategy and important business decisions. According to McIntyre,

… Each of these four companies ( referring to Bank of America, Citigroup, General Motors and Ford) has directors who chose not to ask hard questions and demand answers. How does a bank that was making $1 billion a year suddenly make $10 billion? How does a car company that nearly went out of business when oil prices rose sharply over three decades ago decide to reduce spending for the development of fuel-efficient vehicles?

Boards have some understandable reluctance to cross some lines if they may not have a tangible effect on company results. The Apple (AAPL) board clearly decided that Steve Jobs had some right to his privacy about his health. That may have been bad for investors. No one may ever know.

Several of America’s most famous companies have fallen on very hard times recently and investors might want to ask whey their boards appear to have done nothing demonstrable to help shareholders.

The short piece is worth a quick read.  Let’s hope boards get a chance to read the piece as well. 

CEO Watch, Rick Wagoner, GM, Update 10

It has been close to one month since my last warning on the possibility that Rick Wagoner, GM's CEO,  may be forced (and I contend should) to take a permanent vacation from General Motors.  According to stories in the press the pressure increased on GM to force Wagoner out if the firm is to get a government bailout.  According to a story by Gregg Stoll and Greg Hitt in today's Wall Street Journal,

On Sunday, Sen. Christopher Dodd (D., Conn.), a supporter of emergency loans for Detroit, suggested Mr. Wagoner should go if the government follows through and provides billions of dollars to help the auto giant restructure and return to profitability.

"I think you've got to consider new leadership," the senator said on the CBS talk show "Face The Nation." A Dodd aide said later the senator's demand for change would not be a "condition written into the" rescue package coming together on Capitol Hill, and draft legislation prepared by top Democrats doesn't make that explicit requirement. But Mr. Dodd's displeasure was clear. "If you're going to restructure, you've got to bring in a new team to do this," he said. "I think [Mr. Wagoner] has to move on."

...In a statement, a GM spokesman said the company "appreciates" Sen. Dodd's comments but added GM's employees, dealers, suppliers and its Board of Directors "all support Rick Wagoner and are confident he is the person to lead GM through these difficult times."

But calls for Mr. Wagoner and others to step down appear to be growing. In a statement from his office Sunday, Sen. Charles Schumer (D., N.Y.), said that, "while it can't happen tomorrow because of the urgency of the companies' financial situation, I would like to see management changes as part of any restructuring."

On Sunday, Jerome B. York, an adviser to billionaire investor Kirk Kerkorian who served as a GM director in 2006 when Mr. Kerkorian owned a stake in the company, called publicly for sweeping change at GM.

"Aside from a failure of leadership at the most senior executive management level, GM has five long-serving directors who have been on the board 10 years or more," Mr. York said in a telephone interview. "They have approved of and overseen many of the moves that have contributed to the company's troubles. They should also resign."

We will just have to wait and see how this all plays out.  Unfortunately, it is very late in the game to be considering new management but at a minimum it's a start.  Of the big three Wagoner has to be the first to go.  Mulally at Ford has shown he understands the situation and has made a start at turning Ford around. 

For more:

Globe and Mail (12/10) AP Story

AP (NPR Marketplace)

Portfolio.com

Reuters

The Deal.com

Jalopnik

Auto News (video)

U.S. News and World Reports

Ford Makes Key Management Change - New CFO

Ford Motor Company F (NYSE), the struggling American car manufacturer, has turned to its 59 year old European executive Lewis Booth.  On November 1, Booth will replace Chief Financial Officer Don Leclair who has been the firm's CFO since 2003.  Booth is often slated as a potential successor to Alan Mullahy, Ford's current CEO.  As American car firms seek a way out of their current serious financial and sales predicament, Booth comes to his new position at a propitious moment.  According to the Free Press Booth has been considered to have,

played a leading role in the successful transformation of Ford of Europe and Mazda during the past decade.

Can Ford and General Motors find a way out of their circumstances? Stay tuned.

For more:

NY Times DealBook

Reuters

International Herald Tribune

MarketWatch

NPR

Recommended Reading - Positive News From Detroit

Bill Koenig wrote a story in today's Bloomberg entitled, Ford's Alan Mulally May Repeat Boeing Success at Automaker (Update 1).  With the surprising news that Ford F (NYSE) actually showed a profit of $100 million for the first quarter, a result well-beyond Wall Street's expectations, Mulally may actually be succeeding in his efforts to turn the automaker around.  It is still far too early to declare victory but hope is a real possibility.  With car quality up, expenses down, now Ford needs to focus on fuel economy and marketing. We will just have to see.  

For more:

NPR (Audio)

BBC

Financial Times

Recommended Reading - Ford Announces Six Candidates As Mulally's Future Successor

Amy Wilson and Richard Truett of Automotive News wrote a story today that examined six potential internal candidates that might rise to ultimately succeed Alan Mulally as Ford's CEO. The six candidates listed were as follows:

Lewis Booth, EVP in charge of Europe and Premier Automotive Group

Jim Farley - Group VP of marketing and communications

Mark Fields - President of the Americas

Joe Heinricks - Group VP of global manufacturing

Don Leclair - CFO

Stephen Odell - COO Ford of Europe

Let's hope they can do more for Ford than Mulally and the family have done. With the Automotive News story panic embraced Ford headquarters. According to a story by Alex Taylor III in CNN Money,

Immediately, the company went into panic mode.

"I'm not going to go there," said one of the purported candidates, Americas boss Mark Fields, when Automotive News asked him about the report. "I'm going to let the chips fall where they may."

Laymon's untimely disclosure will have the following negative effects on the company:

... It immediately sets up a horse race among the six candidates that could create unnecessary conflict and backbiting. Ford has a history of corporate infighting going back decades (Harry Bennett and Henry Ford II, Henry Ford II and Lee Iacocca, Bill Ford and Jac Nasser) and hardly needs any more of it.

It immediately makes Mulally a lame duck, even though his contract doesn't expire until 2011. Scuttlebutt around the copy machine will now focus more on who will replace Mulally than what Mulally himself is trying to accomplish.

Stay tuned to see how the company manages to handle this messy announcement.

For more:

Autoblog