One of the saddest discussion topics around Ford (NYSE:F) is the future retirement of the company's CEO Alan Mulally. Everybody knows that sooner or later Mr. Mulally will be retiring, but it is a very difficult fact for many of us who have grown so fond of him. Over the years, I've done plenty of research on Mr. Mulally and I can tell you one thing: he will stay at his position (at least) until Ford becomes profitable in Europe.
Note: This article is part of my Ford Series. You can find my previous Ford articles here: 1) When Will People Understand Ford's Debt?, 2) The Ford Story Continues In Europe, 3) Ford: Opportunities Exist In South America, Asia And Africa, 4) Ford Credit Is An Important Part Of Ford, 5) Digging Deeper Into Ford Creditand 6) So How Can Ford Steal Market Share From Competitors? 7) Ford to Fund Its Pension Fully by Mid-Decade
Before I get to the discussion of why I think Mr. Mulally will stay with Ford (at least) until the company's European operations are profitable, it is important for me to mention one thing. Today, many investors are putting their money in CEOs rather than companies because they know that some CEOs are much better than others when it comes to getting things done. There are some CEOs people can trust and invest in, such as Elon Musk, (the late) Steve Jobs, Bill Gates (back in the day), Jeff Bezos, Warren Buffett and of course Alan Mulally. Many times, when an iconic CEO leaves a company or retires, this leads to a sell-off because investors don't know whether the next CEO will be as good as the one they've put their trust in. Today, many of us invest our money in CEOs rather than companies and there is nothing wrong with that. After all, there is a reason CEOs are being paid the amounts they are (they add a lot to companies' value).
Now, we can go back to the topic. After doing great things and leading projects that saved Boeing (NYSE:BA) from a very possible disaster, Alan Mulally was offered his current job at Ford in 2006. When he took the helm of the company, he knew that there were two possible pathways awaiting him and he was going to end up in either one or the other. The first pathway was a definite success where he would save Ford from bankruptcy, turn the company around, make it profitable and earn the bragging rights of saving two American industry giants in a row. The second pathway was a definite failure where he would go down in the history as the last CEO of Ford before the company becomes bankrupt (or government-owned). This was a huge risk and if he was not successful at Ford, all the good things he did in Boeing could be forgotten. Mr. Mulally was well-aware of this fact when he took the helm of Ford and we all know how the story became a happy ending.
Of course, the success didn't come easy. Having understood the difficulty and seriousness of the task, Mr. Mulally worked for 7 days a week and 15-20 hours a day for years. His house was a few miles away from Ford's headquarters and he would go home only to sleep at night. There are stories where he would make bets with some of Ford's executives on who'd arrive at the office the earliest, and no matter what they did, they could never beat him because he would always be at work by 5 am regardless of weather conditions or how hard he had worked the night before. Mr. Mulally is an extremely hard working man and his name will go down in the history as "the man who saved Ford and Boeing." Even after this, Mr. Mulally still has one more thing he can (and will) accomplish. That is, repeating Ford's North American success in Europe.
Ford expects to become profitable in Europe by 2015. There were also a few times when Mr. Mulally reportedly said that he won't retire until at least 2015. Now, I am not saying that Mr. Mulally is waiting for Ford Europe to turnaround to be able to retire in peace. What I'm saying is that when Mr. Mulally is set on a target, he will accomplish it and he is not going anywhere until he accomplishes it. Obviously this is a great quality for a CEO to have.
I'm confident that when the time comes, Mr. Mulally will leave behind a Ford that's growing profitably in all regions and "running on all four axles."
I believe that this is very important for investors to know, because if investors know that the company will continue to be run by a CEO they can trust and rely on, they will sleep more comfortably at night. Knowing that Mr. Mulally will not leave the company until its successful in all fronts, ensures me to sleep comfortably at night as a Ford investor.
Disclosure: I am long F. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.