Let’s talk about Ford.  I just bought 150 shares.

Two epiphanies about Ford have come out of this recession:

• CEO compensation is out of control.  Who gets paid $20 million to lose $14.7 billion, and need a $9 billion dollar bailout to stay in business?
• You don’t want to be driving a Ford lately. The Consumer Reports Car Issue tells all.

OK, so these aren’t exactly epiphanies.  U.S. consumers have felt let down by Ford - and other U.S. car companies - for a while.  The difference now is that Americans are no longer willing to tolerate poor quality for the sake of buying American.

Let’s look at Ford in more detail.

CEO Compensation

In an effort to address investors’ and taxpayers’ explosive negative feelings surrounding skyrocketing CEO compensations whilst they are all being hung out to dry,  CNN reports that Ford has given their President and CEO, Alan Mulally, 5 million shares of stock options between now and 2012.

Mulally will take a 30% pay cut for the next two years, reports CNN.

Further, all previous incentive bonus plans for both 2008 and 2009 have been eliminated - not only for. Mulally, but for all executives and salaried employees.

Mulally can sell up to 1/3 of the options a year from now, 2/3 two years from now, and all must be sold by 2019.

What’s good about this announcement?

• (Finally) tying executives’ incentive packages directly to profits makes sense.  They got away with blockbuster paychecks for as long as they could.  And without any regulation, you can bet when the heat’s off they’ll be walking away with  them again.  But at least their salaries are being held in check right now.
  

• As an owner of 150 shares of Ford stock (purchased at $2.04/share this week,) it gives me a “we’re all in this together” kinda feeling.  I like that.

What stinks about this announcement?

• On Dec. 4th, 2008, CNN reported that Ford promised to cut Mulally’s salary to $1 per year if they took the government bailout loan. Well, they took the $9 billion loan, but even with the 30% pay-cut, Mulally is still making over $1 million dollars a year. His standard salary without bonuses was $2 million.
  

• His stock options were priced at $1.96/share.  The stock closed at $2.19/ share on Friday.  That means if the company goes nowhere and the stock stays exactly where it is until 2012, Mulally still makes $11 millon.

Have You Driven a Ford Lately?

The really sad question, of course, is “Why would you want to drive a Ford lately?“

And the really sad answer given by many Americans is “You don’t.”

In 2007, Time magazine published the Top 50 Worst Cars of All Time.  The Ford Model T (1909), Edsel (1958), Pinto (1971), Explorer (1995), and Excursion (2000) all made the list.

I owned an Escort station wagon in the 1990’s, and once the car hit 75,000 miles it was over.  I became friends with the Triple A towing service dispatcher.

This got me to wondering:  “Were Fords ever any good?”  Or was it just that we didn’t know any better?  The success of Ford - and other poorly built American cars - may be purely the result of:

• brain-wash type marketing, and
• the “I must buy American” guilt complex.

Were Fords actually better built then?  Or was it just that we didn’t know any better?

Case in point.  Who remembers the Ford Pinto scandal?

Many of the Ford cars made the 50 top selling lists and 50 top famous cars lists as well.  That’s what makes me love them even as I hate them. When I was in college, I traveled many miles in an old (even back then!) blue ’60’s mustang.  A milk crate kept the driver’s seat from falling back.

So, if I feel this way about Ford, why did I buy those shares?  Because Ford has momentum right now.  They aren’t going under any time soon.  They’re making press announcements that say what I want to hear.  And the market is gaining momentum. Oh, and at $2/ share, they’re a bargain.

I checked out the Ford website, and right now - other than the Ford Ranger pick-up, which has always been my secret dream vehicle - nothing is catching my eye.  How about you?

What’s been your Ford experience?

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