In the midst of an $11 billion restructuring plan that has failed to woo Wall Street, Ford Motor Co. (F, Financial) announced President and CEO Jim Hackett’s unexpected retirement on Tuesday morning.
Hackett, who was selected for the top leadership role in 2017 after his successful tenure with furniture company Steelcase (SCS, Financial), will be succeeded by current Chief Operating Officer Jim Farley on Oct. 1. Over the next several months, the two will work together to facilitate a “smooth leadership transition.”
Farley will become the Dearborn, Michigan-based automaker’s fourth CEO since the Great Recession, which nearly bankrupted it a decade ago. Since then, the company has struggled to get back on its feet, seeing three CEOs try and fail to put the bounce back in its step. Over the years, Ford’s financial position has deteriorated as U.S. car sales stagnated and debt mounted.
Executive Chairman Bill Ford, who is the grandson of founder Henry Ford, praised Hackett’s progress and vision in a press release, thanking him for all he has done to “modernize” the company and “prepare us to compete and win in the future.”
“We now have compelling plans for electric and autonomous vehicles, as well as full vehicle connectivity,” he added. “And we are becoming much more nimble, which was apparent when we quickly mobilized to make life-saving equipment at the outset of the pandemic.”
While the launch of the new Ford Bronco and Mustang Mach-E show some promise in reinvigorating the product portfolio, CNBC reported that Hackett, who previously had not expressed any interest in retiring, has been criticized for a lack of transparency and leadership in the execution of his multiyear restructuring plan that was preparing the company for production of all-electric and autonomous vehicles.
In a statement, Hackett said that now is the perfect time for leadership to transition to Farley due to the momentum from the new products as well as a better-than-expected performance during the coronavirus pandemic.
“My goal when I took on the CEO role was to prepare Ford to win in the future,” he said. “The hardest thing for a proud, long-lived company to do is change to meet the challenges of the world it’s entering rather than the world it has known. I’m very proud of how far we have come in creating a modern Ford and I am very optimistic about the future.”
While he will remain at the company in an advisor position until March 2021, Hackett expressed his confidence in Farley after working with him over the past three years.
“He has been instrumental in crafting our new product portfolio and redesigning our businesses around the world,” Hackett said. “He is also a change agent with a deep understanding of how to lead Ford in this new era defined by smart vehicles in a smart world.”
As for Farley, the incoming CEO said he is “honored” by the opportunity to lead the iconic company.
“Jim Hackett has laid the foundation for a really vibrant future and we have made tremendous progress in the past three years,” he said. “I am so excited to work together with the whole Ford team to realize the full potential of this great company in a new era.”
Following the announcement, shares of Ford popped 3% in premarket trading to $6.90. The stock, though, has languished since even before the Covid-19 pandemic halted manufacturing and kept cars on the showroom floor. GuruFocus estimates the stock has tumbled over 20% year to date.
According to GuruFocus’ Industry Overview, Ford is the third-largest company in the vehicles and parts sector. Other top players include Tesla Inc. (TSLA, Financial) and General Motors Co. (GM, Financial).
Disclosure: No positions.
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