Ford Motor Co's board of directors may name Chief Executive Alan Mulally as nonexecutive chairman to keep him involved with the second-largest U.S. automaker after he leaves the top post, a person familiar with the matter said on Thursday.
The board, which held a meeting on Thursday in Dearborn, Michigan, is also leaning toward promoting Mark Fields, the head of Ford's North and South American operations, to chief operating officer, said the source, who declined to be named discussing internal Ford matters.
Bill Ford, the great-grandson of company founder Henry Ford, will remain executive chairman, the source said.
It is unclear when Mulally, 67, will leave his CEO post, although many analysts expect him to retire by the end of 2013. Naming his successor is crucial because the former Boeing Co executive is so closely identified with Ford's ability to avoid the federal bailouts that rescued U.S. rivals, General Motors Co and Chrysler Group LLC, in 2009.
Analysts and people close to Ford have long expected Fields, who joined Ford in 1989, to wind up as the next CEO. The promotion of Fields, 51, to COO would be the clearest sign yet that he is the frontrunner to succeed Mulally. Ford has not had anyone in the COO role since 2006.
"It's Mark's job to lose," said a second person close to Ford, who declined to be named discussing internal matters.
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The board's deliberations on leadership succession come at a challenging time for Ford, which expects operating profit to decrease in 2012.
Ford expects to lose more than $1 billion in Europe this year, where sales are falling faster than the industry average. And it is playing catch-up in Asia, where Detroit rival GM is a market leader.
COACH AND QUARTERBACK
Fields has been in charge of Ford's largest business unit, North America, since 2005. Before Mulally's arrival, he executed the initial wave of U.S. job cuts and plant closures under a plan called "Way Forward."
Mulally, who was named CEO in September 2006, is credited with steering the automaker back to profitability over the last six years, with $23 billion in borrowing and his "One Ford" plan to reduce vehicle platforms and maximize economies of scale.
Whoever succeeds Mulally as CEO will benefit from his presence as nonexecutive chairman, should the board go through with this plan, several analysts said.
"The longer you can tap Alan's expertise, the more beneficial it will be for Ford," said Jefferies analyst Peter Nesvold.
Guggenheim Securities analyst Matt Stover said having Fields as COO while Mulally is still CEO is smart.
"As the COO you're sort of quarterback of the team and the CEO is kind of the coach," said Stover. "It gives Mark a nice transition point to proceed to a more senior role."
In the three years ending 2008, Ford lost $30 billion. But it showed $29.6 billion in profit in the next three years, including a one-time tax-related gain of about $12.4 billion.
Last December, Ford restored a dividend, and earlier this year it earned back its investment grade credit rating.
Mulally has not said when he plans to retire as CEO, but the board has been mulling succession plans for the post-Mulally era for several years as part of its normal review, executives including Bill Ford have said.
The sources said the board is in no hurry to make a decision. "We have no announcements planned today," said Ford spokesman Jay Cooney.
Ford's executive spokesman, Ray Day, said the company "takes succession planning very seriously" and declined to comment on the board's planning.
CONSIDERED OUTSIDERS
The board, as part of its due diligence, also evaluated "six or seven" external candidates for the top position, including executives at Volkswagen AG
Mulally's success persuaded the board to assess candidates from companies outside the auto industry, including Caterpillar Inc and the technology industry, the first source said.
But it is unclear if the board contacted or interviewed any of the candidates. Over the past year, the board began to believe that Fields was the best person for the job, the source said, adding that Mulally did not suggest to be named a nonexecutive chairman.
His success has earned Mulally "rock star" status within the investment community, presenting a challenge to the board for finding a successor, Stover said.
Fields' recent track record shows he is up for the job, Stover said. The fact that Fields runs the successful North American operations places him at the center of the company's recent financial and cultural transformation.
"Wall Street has watched Mark grow up this past decade," Stover said. "He's really grown into his role."
(Editing by Matthew Lewis)