Identity was important to the Ford family. If the automaker failed, many of them would still be quite wealthy. Money had married money; wise investments had turned small fortunes into large ones. There was land, buildings, and other businesses. But America was full of millionaires and billionaires. What made the Fords different was the fact that they still controlled Ford Motor Company.
Maintaining that control meant maintaining their exclusive ownership of the company’s supervoting Class B shares. The ownership structure that Henry Ford II had put in place half a century earlier ensured that the Fords would always control Ford Motor Company as long as they did not sell those shares. The automaker had issued millions of new shares since its initial public offering in 1956. Now their 70 million Class B shares represented just 3.7 percent of the company’s total stock. But they still wielded the same 40 percent of the vote they always had. That was because none of the shares had ever been sold outside the family. If any were, they would convert to regular Class A common stock and lose their supervoting power. However, in doing so they would also reduce the voting power of the remaining Class B shares and break the family’s hold on Ford Motor Company.*
Not everyone was thrilled with this arrangement. While most employees—even those on the factory floor—welcomed the stability and long-term perspective that the family brought to Ford, Wall Street did not. Most investment bankers and analysts saw the Ford family’s continuing control of the company as an anachronism that stymied the sort of speculation that had made them fantastically rich over the past decade. Some investors also objected, arguing that the dual-stock structure diminished the value of their own shares. In just a few weeks, Ford’s shareholders were due to vote on what had become a perennial resolution at the automaker’s annual meeting to recapitalize the company and make all shares equal. There was no danger of it passing as long as the family retained its control of all its Class B shares, but the chorus of voices objecting was growing louder. What had begun a few years earlier as a bunch of disgruntled stockholders now included influential institutional investors like the California Public Employees’ Retirement System, which owned 9.7 million Ford shares, valued at nearly $80 million, and now called Ford’s ownership structure “undemocratic.”
Many on Wall Street had been hoping for years that the Ford family would one day split, just like the Gettys and so many other fabled families before them. So far, they had not. But as power shifted from the third generation to the fourth with the ascent of Bill Ford to the chairman’s seat, it was becoming more difficult to hold together what now amounted to a very diverse group of more than seventy heirs. One board member compared it to herding cats.
The fourth generation of the Ford family included Bill and a dozen of his cousins, the great-grandchildren of Henry Ford. Some, like Edsel Ford II, were businessmen. Others, like Alfred Ford, were not. He had joined the Hare Krishnas and changed his name to Ambarish Das. It also included New York socialites like Charlotte Ford, author of 21st-Century Etiquette, and philanthropists like Lynn Ford Alandt. Increasingly they were joined at family meetings by members of the fifth generation, which numbered more than thirty. Many of these younger Fords had a tenuous connection at best to the automaker. New CEO or not, some of them were beginning to wonder if the money tied up in their Ford shares might not be more profitably invested elsewhere. If just one of them decided to sell his or her shares on the open market, the Ford family’s control of Ford Motor Company could be threatened.
Ford family attorney David Hempstead believed it would be a good idea to hire someone with no ties to the company to advise the family. After the spring 2006 meeting, he and family adviser Bruce Blythe began putting together a list of potential candidates. They moved cautiously, because they knew that any report that suggested the Ford family might be considering a sale would have major consequences for the company and its stock.
By early 2007, they had narrowed the field to two or three firms. The first was Perella Weinberg Partners, a “boutique investment bank” founded just a few months earlier by Joseph Perella, the former vice-chairman of Morgan Stanley, and Peter Weinberg, the former CEO of Goldman Sachs International, to provide corporate advice and asset management services. They were attractive for a couple of important reasons—the names Perella and Weinberg.
Joseph Perella was widely regarded as a “mergers and acquisitions pioneer” and a key player in one of the biggest corporate takeovers in history—the 1989 leveraged buyout of RJR Nabisco. Peter Weinberg was the grandson of Mr. Wall Street himself, Sidney Weinberg, the legendary Goldman Sachs leader who had developed Ford Motor Company’s unique stock structure for Henry Ford II back in 1956.
Hempstead contacted the two men and asked if they would be interested in meeting with the Ford family. They jumped at the opportunity. Now the firm, which offered “sage counsel in the middle of huge decisions,” was waiting to make its pitch to the men and women who controlled America’s last great industrial dynasty.
But it was Alan Mulally’s turn to speak first.
Mulally was still dazzled by the Fords, though their decision to bring in Perella Weinberg certainly tempered his enthusiasm. He tried to put the presence of the two Wall Street titans out of his head as he detailed the progress Ford was making on its restructuring for the family. He assured them that his plan remained on track, despite missing some sales and cost-reduction targets in the United States.
Then he took their questions.
The Fords were respectful, but he could tell some were concerned about the company and its future. They asked for more information about the terms of the financing deal, seeking a better understanding of what would have to go wrong for them to lose control of the Ford name. They also wanted to know more about his plans for Jaguar and Land Rover now that the Aston Martin deal was finished. Mulally knew that Bill’s father, William Clay Ford Sr., drove a Jag, as did many of the other people in the room. So he trod carefully. But what they really wanted to know was if Mulally’s turnaround was creating “value” for the company yet. He took that as code for “When are you going to restore our dividends?” Mulally admitted that might take a while.
Then he left them to it.
The presentation from Perella Weinberg was more general and focused on the firm’s bona fides. There was no concrete discussion of the state of the company, no predictions about its future, and no alternatives to staying the course that Bill Ford had charted for the automaker and the family. Those would only be offered if the firm was actually retained by the Fords.
Once the bankers left the room, the real debate began. Family members peppered Bill Ford with questions.
“What if Alan can’t get it done?”
“What are the alternatives if it doesn’t work?”
If Bill Ford was angry about this challenge to his authority, he did not show it. His voice was calm as he addressed the other members of the Ford family, his argument simple and compelling. The company had carefully weighed all of its options before hiring a new CEO and had concluded that was the best course for Ford. The family’s own interests would be best served by following that course and lending its support to Alan Mulally. He needed it, and he needed it to be unanimous and unequivocal.
“When the going gets tough, it’s time to pitch in,” Bill said, “not head for the hills.”
He told his relations that he had studied Mulally’s turnaround plan carefully. Now Bill went over it once again for their benefit and said it represented Ford’s best chance at success in many years. He could not promise it would work, but he had faith that it would. Mulally had already proven he could do it at Boeing. Bill said he understood why some in the room might want a second opinion, but he warned them that hiring a firm like Perella Weinberg to advise the family now would undermine Mulally and everything he was trying to do to save their company.
However, Bill said he would abide by whatever the family decided. He reminded the other heirs of Henry Ford that they had so far managed to rema
in publicly united. Maintaining unity was essential—now more than ever. He urged them to reflect on the drama then playing out in the Bancroft family. The owners of the Wall Street Journal, they were unraveling in the face of relentless advances by media mogul Rupert Murdoch. History was filled with such cautionary tales, Bill reminded them.
“Whatever the family does now or in the future, we’re always going to be better off unified rather than divided,” he said, urging them to consider what had happened when those other famous families had fractured and split. “There was never a good outcome. It never ends well.”
Then he excused himself and left the room so that they could discuss the matter without worrying about his feelings.
At some point in the discussion, someone asked what the family’s Class B shares would really be worth if they were sold on the open market, suggesting it might be time for the Fords to cut their losses and get out while they still could. For many in the room, this was crossing a line.
Elena Ford was one of them.
The daughter of Charlotte Ford and Greek shipping magnate Stavros Niarchos, she was born Elena Anne Ford-Niarchos in 1966. She dropped the Niarchos and eschewed the glamorous New York society life of her mother and siblings for the smoky factories and sharp-elbowed corporate politics of Dearborn. With her plain appearance and blunt manner, she fit right in. Though the fortune she inherited from her father made her wealthy even by Ford standards, Elena was no pampered debutante. A self-described “car freak,” she asked for a Mustang for her sixteenth birthday. Now in her forties, she still drove one—often to lunch at Miller’s Bar, a favorite Ford hangout a few miles down Michigan Avenue from World Headquarters that was famous for its greasy burgers. After joining the automaker in 1995, she began a grand tour of the company typical of the Fords who decided to work there—starting as a communications coordinator for Ford’s truck division and making a rapid ascent up the corporate ladder, including brief stints as a finance specialist in product development, brand strategy leader in global marketing, director of business strategy for Ford’s international automotive group and director of product marketing for the Lincoln Mercury division. Now she was director of North American product marketing, planning, and strategy.
Unlike some of the other Fords who had taken jobs at the company, Elena had a reputation for being a tireless worker. She was eager to prove herself, but she was also passionate about the company. It was the first place she ever felt she really belonged, and she took immense pride in the respect its employees had for the Ford family. During her time in Dearborn, Elena had developed a respect for her coworkers, too, as well as a modicum of disdain for her relatives who chose to live off their inheritances and did nothing to contribute to the success of their company.
Elena’s strong emotions for Ford and its employees were evident as she rose to address her aunts, uncles, and cousins at the family meeting.
“I work inside this company, and I believe in it,” she began with characteristic directness. “The people who don’t work here have to trust the people who do work here.”
Part of Elena’s responsibilities included powertrain and product planning. That meant she was more aware than most at Ford of the new products already under development, along with a new generation of engines that promised to get more power out of less gas. These were game-changers, she said, and Ford was committed to bringing them to market even if it had to make deeper cuts to pay for them. In the past, the company had eaten its seed corn. But not this time. Mulally was committed to that.
“It’s going to be tough, and it’s going to be hard, but we are going to get through it,” she insisted. “We have the expertise. We have the product.”
Elena choked up when she turned to the family’s obligation to the company’s employees.
“You’ve got to believe in this company, because the people who work here are so dedicated and so intensely proud that they will do everything in their power to make it work,” she said, adding that she had already lost many friends to the layoffs and seen others quit because they had given up hope before Mulally was hired. “If you don’t live it every day, it’s hard to understand. It’s not about whether Ford can be saved or not. We have no choice!”
As for the idea of selling out, Elena wanted no part of it. She understood why some of her relations might be uneasy about the challenges still facing Ford. She knew that many did not work for a living and had much of their wealth tied up in a company that had stopped paying dividends and offered little prospect of resuming those payments anytime soon.
“I know times are tough, but this company is going to succeed. I’m going to continue to support it, and I think you should, too. If you don’t, that’s fine—but I don’t think you’re making the right choice,” she said, reminding them that she and others in the room were more than willing to purchase shares from any family member who needed cash or who no longer had the stomach for it. “I believe in the company, and I’m going to support the company.”*
By the time she sat back down, at least a few in the room were dabbing their eyes. Several of Elena’s relatives came up afterward and thanked her, including her cousin Bill, who had been told of her impassioned plea.
Bill’s father also opposed bringing in Perella Weinberg or any other investment bank. William Clay Ford Sr. was the family’s patriarch—the last of Edsel Ford’s children, which also made him the last of Henry Ford’s grandchildren. He also was the largest individual holder of the family’s Class B shares. At the time, he owned 11.1 million of them, worth $90.6 million and accounting for 15.63 percent of the total. It was a tiny fraction of his immense fortune, which also included a significant chunk of the company’s regular Class A shares.† He was the invisible hand behind his son’s rise to power, and if he said no to something, most of the other family members were not likely to say yes.
Bill also received strong support from his onetime rival for the Ford throne, Edsel Ford II. Hank the Deuce’s son had been out-maneuvered by his cousin in the 1990s, but he had taken his defeat gracefully. Though he remained on the board of directors and was the family’s designated liaison with the company’s dealers, he quit his day job at Ford and bought Chrysler’s corporate jet division, Pentastar Aviation, which he turned into one of the region’s largest jet charter companies. Edsel also became a major force in Michigan philanthropy, representing both the family and the company in the community. It was an important role, and he excelled at it.
Edsel controlled more of the Class B shares than anyone other than William Clay Ford Sr., owning 4.18 million, or 5.89 percent, as well as a substantial number of publicly traded Class A shares. More important, he, along with Bill and his father, controlled the family trust, that held the vast majority of its stock—51.7 million shares that were voted as a bloc.
Edsel was traveling and could not be present at the meeting, but he wrote a two-page letter that was read aloud there, urging his relatives not to hire Perella Weinberg, asking them to instead give their full support to Bill and Mulally.
With the biggest shareholders rallying around Bill, and his cousin Elena ready to buy the shares of anyone who did not believe in the company’s future, the dissent was squelched.
There are no votes at Ford family meetings. The emphasis is on consensus, and by the end of the session one had been reached: If anyone could save Ford Motor Company and the family’s legacy, it was Alan Mulally. His plan was the right one, and the heirs of Henry Ford owed it to Mulally to give him the time and the space necessary to execute it. They all agreed that hiring an outside adviser—particularly one with a reputation as a Wall Street dealmaker—was a mistake.*
Bill Ford breathed a long sigh of relief that night. For the first time in its history, the Ford family had been faced with a real threat to its unity and to its continuing control of the company. But he had held it together. Some shares would exchange hands, but not outside the family. In the months and years ahead, he would face persistent questioning from his re
lations about the resumption of dividends, but he would never again face a direct challenge to his authority, or to Mulally’s.
At least as far as the family was concerned, Mulally now had the breathing room he needed to execute his turnaround plan. They were on board. So was his senior leadership team. Now he just needed to win over the United Auto Workers.
*For example, if 7 million Class B shares were sold, the voting power of the remainder would only be 30 percent.
*It was not unheard-of for family members to sell some of their shares to other family members to pay for their children’s college education or cover other major expenses.
†Bill Ford himself owned 3.4 million Class B shares, then valued at $27.7 million. Like other family members, he also owned a sizable chunk of the company’s common stock.
*Ironically, the U.S. Treasury Department would hire Perella Weinberg in 2011 to advise it on the initial public offering of Ally Financial, the reincarnation of General Motors’ former credit arm, GMAC.
Henry Ford with his Model T, circa 1919—the man and the car that put the world on wheels.
Henry Ford’s grandsons—Benson Ford, William Clay Ford, and Henry Ford II—in 1949 with one of Ford’s popular postwar models. Hank the Deuce had already been president of Ford Motor Company for four years. William Clay’s son, Bill Ford Jr., would be born eight years later.
Chairman Bill Ford Jr. surveys the damage after a deadly explosion at the Rouge complex on February 1, 1999. Ford, who had only become chairman a month before, would spend the rest of the day comforting the families of the victims.
American Icon Page 24