© Reuters. FILE PHOTO: FILE PHOTO: Ford President and CEO Jim Hackett speaks at a news conference in New York
By Rachit Vats
(Reuters) – Ford Motor (NYSE:) Co’s Jim Farley, who is chief operating officer, will succeed Jim Hackett as chief executive and president on Oct. 1, the auto maker said on Tuesday.
Farley, 58, will be Ford’s fourth CEO since 2014.
Executive Chairman Bill Ford said the company had not considered outside candidates.
“I wouldn’t expect any big surprises,” Ford said in terms of additional management changes.
“Our board felt that we were on the right path,” he said, adding, “we did not do a deep dive externally.”
Farley joined the company in 2007 and headed the company’s New Businesses, Technology and Strategy group before being named COO in March.
Hackett and Farley will work together during a two-month transition period, and Hackett, 65, will continue as a company advisor through March 2021.
Ford shares were up 1.8% in mid-morning trading, after earlier rising 3% on news of Farley’s succession as CEO.
The stock has lost nearly 40% of its value since Hackett took the reins as chief executive in May 2017 and has been at lows not seen since the depths of the Great Recession in 2009. In the year to date, Ford shares have lost 26%.
Last week, Ford reported a quarterly profit thanks to an investment by Volkswagen AG (DE:) in its self-driving Argo AI unit, more than offsetting a loss caused by a coronavirus-induced production shutdown.
Ford said it expects a full-year loss, but added it should have ample cash on hand through the rest of 2020, even if global demand falls further or the coronavirus pandemic forces further shutdowns of vehicle assembly plants.
Ford executives insisted that although the company had dramatically scaled back the amount it will spend on a global restructuring of its business, that overhaul had not stalled.
The No.2 U.S. automaker also faces slumping demand in China, its second-largest market.
Ford lost $771 million in China last year, about half its 2018 loss, and its market share there has shrunk. The company has struggled to revive sales in China since its business began slumping in late 2017.
In an SEC filing, Ford said Farley’s annualized base salary increased to $1,700,000 from $1,400,000, while Hackett’s remained unchanged at $1.8 million. Farley will receive stock options valued at $4,000,000.
Hackett’s total compensation, including stock options, fell to $17.4 million in 2019 from $17.8 million in 2018. He will cease to have access to private aircraft for personal travel effective Oct. 1. Ford will consider an equity grant for Hackett in March 2021 based on his performance and contributions as a company advisor in the first quarter of 2021.
Farley previously led Lincoln, South America, Ford of Europe and all of Ford’s global markets in successive roles.
He is credited, along with Hackett, with forcing a redesign before Ford’s introduction of the all-electric Mach-E crossover, and the decision to make it a Mustang vehicle, leveraging that iconic brand.
In a Tuesday conference call with media, Farley said Ford faces competition from a wide variety of companies.
“It’s Amazon (NASDAQ:), Baidu (NASDAQ:), Tesla (NASDAQ:), Apple (NASDAQ:), Toyota and others.”