This Is One Incredible CEO

The Motley Fool's readers have spoken, and I have heeded their cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here's my previous selection.

This week, we'll turn our attention to the automotive sector and focus on Ford's (NYSE: F  ) CEO, Alan Mulally, who has done a phenomenal job of turning around the once-aching car company.

Kudos to you, Mr. Mulally
Based on Ford's rising share price you'd just assume that things are peaches and cream in the automotive industry... but that couldn't be further from the truth.

General Motors (NYSE: GM  ) is still struggling with the stigma of having declared bankruptcy in 2009 and utilizing government loans to finance its operations during its restructuring. Also, what Japanese automakers Honda Motor (NYSE: HMC  ) and Toyota Motor (NYSE: TM  ) have gained in terms of U.S. market share they're ceding in rapidly growing China because of ongoing distrust between the two nations. On top of this, global growth in many developed markets isn't very conducive to strengthening sales. Both the U.S. and China's GDPs are growing well below their historical average, while Europe has been a disaster for nearly all automakers due to region-wide austerity measures.

Despite these concerns, Alan Mulally has masterfully positioned Ford to succeed by steering the company toward sleek, fuel-efficient designs, and driving over the competition in China.

Source: Commons.wikimedia.org.

One primary key to Mulally's success as CEO has been the introduction of the EcoBoost engine. Built with turbochargers that are meant to add serious power when needed, EcoBoost engines run leaner the remainder of the time which makes them considerably more fuel-efficient. Better fuel-efficiency means fewer out-of-pocket costs for consumers, ultimately leading to a happy customer.

Perhaps Mulally doesn't get nearly as much credit for his innovation when you have geniuses like Elon Musk, CEO of Tesla Motors (NASDAQ: TSLA  ) , forecasting the rollout of 21,000 all-electric Model S sedans this year. However, Tesla is also crippled by its own production capacity and the fact that little electric-vehicle infrastructure currently exists. Make no mistake about it: This is still a combustion-engine-dominated auto market, and Mulally isn't getting nearly his fair share of accolades with regard to his innovative skill set.

China is another area where Mulally's strategies are crushing the competition. As I mentioned, Japanese automakers Honda and Toyota are struggling mightily in China – in spite of gains exhibited in May – partly because of tensions between the two cultures, and also because it's designs simply aren't hitting home with Chinese consumers. Ford, on the other hand, is crushing it! In May, Ford's China sales vaulted 45% to 70,540 units and plans to double its production capacity in the country to 1.2 million vehicles by 2015. Ford is accomplishing this by introducing 15 new vehicle lines based on practicality and value. By comparison, GM gained just 9.4% in unit sales in May, thanks largely to higher Buick sales. 

A step above his peers
In addition to completely revamping Ford, Mulally is responsible for reinvigorating Ford's shareholder incentives, reinstituting numerous employee perks, and giving back within the community.

To start off, Ford has repurchased approximately 160 million of its own shares over the past three years. Share repurchases don't put money directly in shareholders' pockets, but they do act to lower the number of outstanding shares and make the company cheaper on a P/E basis. The real boost came from a doubling in the company's dividend earlier this year from $0.05 per quarter to $0.10. The new annual payout of $0.40 has returned to where it was prior to Mulally taking over and gives shareholders a handsome 2.5% yield. 

Shareholders aren't the only winners, though. Ford's employees – thanks to Mulally's hard efforts – had all of their perks reinstituted in 2009. These perks include discounts on Ford vehicle purchases, qualified tuition reimbursement, merit pay increases, and 401(k) matching. More importantly, Ford has been hiring. In the face of high unemployment, Ford has been aggressively expanding its operations and providing work for skilled individuals.

Mulally also understands that community comes first. In the wake of the multiple tornado tragedies in Oklahoma, Ford is matching donations from its employees up to $250,000 with its dealers pledging another $150,000 via United Way to help afflicted families. It also is providing a $500 credit toward the purchase of a new vehicle for tornado victims. Beyond the tornado relief, Ford also recently announced a $1 million donation to be spread over five years to the College for Creative Studies to help Detroit's youth. These are but a snippet of Ford's many community giving programs.

Two thumbs up
Like I always say, this isn't rocket science; it's just proactive and innovative management. Ford's Mulally understands that consumers want good value, fuel efficiency, sleek designs, practicality, and reliability in an automobile – and he's delivering on that promise across numerous continents. Ford's U.S. and China sales volumes are zooming, its dividend is back to 2006 highs, and he's doing a phenomenal job of rewarding the workers and communities that have helped bring back Ford's glory days. For that I certainly feel Mulally is well-deserving of two-thumbs up from me!

Worried about Ford?
If you're concerned that Ford's turnaround has run its course, relax – there's good reason to think that the Blue Oval still has big growth opportunities ahead. The Fool's premium Ford research service outlines those opportunities. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.


Read/Post Comments (7) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 13, 2013, at 9:18 AM, neely1 wrote:

    Why can't the greedy morons on Wall Street recognize this stellar performance by Ford? Yes, the Ford stock has increased in value; but still way way undervalued! I think this is because the morons on Wall Street love the foreign auto companies and hate anything that is American. What have we degenerated to? Factual article.

  • Report this Comment On June 13, 2013, at 12:00 PM, ckgod wrote:

    Yeah great achievement for improving to 75% from 80% of wasted energy in ICE cars. No matter what you do you will always use whole lot more fuel to generate heat than to move the car. All this just shows why electric cars with 85%+ efficiency is so desirable.

  • Report this Comment On June 13, 2013, at 2:12 PM, Intuos wrote:

    "Yeah great achievement for improving to 75% from 80% of wasted energy in ICE cars. No matter what you do you will always use whole lot more fuel to generate heat than to move the car. All this just shows why electric cars with 85%+ efficiency is so desirable."

    1. Where does this electric energy to juice up your electric vehicle come from? Coal fired electrical plants? Natural gas fired electrical plants? So are you going to install a massive set of solar panels covering many acres at each owner's house or a windmill at each owner's home to juice up the car?

    You might want to take a look at an actual 300 foot wind tower once. I can drive to dozens of them within a 40 mile radius and let me tell you they are not cheap. And wow, fossil fuels were used to construct the towers. Without the fossil fueled trains bringing in the components they would not even be here in the first place. It takes one train car to move two bus sized tower housing and one train car to move three blade shafts on a specially built rack.

    2. Try driving your electrical vehicle here in a Midwest winter. You battery is not going to last and you are not going to have a enough power to drive through the snow.

    3. Want to tell me how a electrical vehicle is going to do the work of say a farm pickup like say a F150 or F250 with a V8 gas engine in it? I'd like to see your electric vehicle tow two full hack racks filled with tons of hay, let alone drive through the field with empty hay racks.

  • Report this Comment On June 13, 2013, at 3:01 PM, Soakee wrote:

    Not only that, but electric cars have been around since BEFORE ICE cars. And you think that electric cars are the future?

  • Report this Comment On June 13, 2013, at 5:04 PM, Carfan79 wrote:

    You are giving too much credit to Alan Mulally and not enough to Musk and here is why:

    1. You praise Ford's ecoboost, while Musk is the co-founder of a company that makes 100% electric vehicles with more range than any ecoboost crap.

    2. Alan Mulally makes 30 Million dollars a year according to Forbes, while Elon Musk takes home California minimum wage from Tesla Motors, now that is a loyal CEO.

    3.Tesla is not "crippled" by their production capacity, they only have one shift hired at the factory. The 21,000 vehicles they are making this year isn't even close to their total capacity because Tesla wants to achieve 25% margins in Q4 before ramping up production

    4. You say there is no charging infrastructure, but there is charging infrastructure everywhere. Download the iPhone app called "Plug Share" and see. I live in the suburbs of Philadelphia and there are about 80 charging locations within 25 miles of me. Also, the Tesla Supercharger Network will allow you to travel anywhere in the US by 2015.

    5. You praised Ford for buying its own shares while Musk bought $100M worth of shares of Tesla with BORROWED money. This guy definitely has faith in this company if he is risking that much.

    6. Ford's 2.5% dividend yield has nothing on Tesla's skyrocketing 190% since January 1, 2013.

    7. Ford's "donations to the community" seems to be a sign of not being able to spend money in a smarter way.

    8. Musk is the main cause of Tesla's Short squeeze with his insistent announcements that he had revealed back to back. He is serving the shareholders well.

    9. Tesla, like Ford, also makes goof value, efficient, sleek, practical, and reliable cars.

    10. Let's not forget that Musk is cutting the middleman (Dealerships) for the consumers. Musk said that it is at disservice to the customers to charge for servicing a car. Tesla Model S barely needs any servicing, and dealerships always have a price markup to make money off of the consumer.

    The best CEO by far is Elon Musk.

  • Report this Comment On June 13, 2013, at 5:31 PM, spawn44 wrote:

    Are electric cars really efficient.

    1) Way heavier than normal auto. Takes more real energy to move this boat around.

    2) Zero emissions a myth. Where did the power come from. Do you know how much power is lost transmitting electric power over power lines. As long as the emissions are far away, I guess it ok to make believe their running ZERO EMISSIONS.

  • Report this Comment On June 22, 2013, at 10:09 AM, Stymie67 wrote:

    Zero emissions for EVs may be a fallacy, but some of the comments here betray a lack of full understanding of the facts. Perspective, folks. The fact is, that EVEN WITH charging from coal, an EV has a smaller overall carbon footprint, as well as pollution footprint, then even the most efficient ICE hybrids. That's considering the entire logistics chain and all factors. And only 40% of the US is actually powered by coal, for the rest the comparison is even better in favor of EVs. Google the study from the respected UCS...if these guys discovered EVs were in fact worse, they would certainly say so. They didn't.

    EVs can, once constructed, be essentially zero emissions, off solar, and I suspect will see a slow but steady increase in this kind of application for EVs. But sure, they still have impacts, and its understandable for some folks to get cynical...but don't confuse the facts. EVS are on average a cleaner choice. And they also offer a future pathway (i.e. by expanded use of alternative energy) for even further reductions in emissions and reducing reliance on (non-renewable) fossil fuels , in a way that ICEs are unable to do.

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