GM executives were shocked by Ford's mortgaging of everything

[RangerM]

Ford routinely ignores its shareholders.

And yet look at their stock price!!

A smart investor doesn't care what the company thinks of him, or his 'rights' as an 'owner' of the company.

Investors want the company to perform well so they make money.

A company that makes decisions based on short term stock gains or losses will not be profitable in the long run which will hurt investors and hurt the company. Short term gain - long term loss.

Investors are not experts in the businesses they invest in - at least not to the point of guiding company decisions. If they were then they'd be on the BOD or actually working for the companies they invest in.

Ford has to make business decisions that benefit Ford - long term - and the stockholders don't have the information or expertise to make or influence those decisions.

Obviously, in both cases. I'm not saying management has to treat the shareholders with kid gloves, but that can't simply ignore them, either.

 

As kirby said (and Richard is alluding to), 'Investors want the company to perform well so they make money".

 

Businesses (at least not Ford, as far as I can tell) are not performing their function out of altruism. They are merely a conduit of commerce (supply-demand). Ford's investors/shareholders (for the most part) could care less if they sell Escorts or Excursions, so long as they sell something, and increase shareholder equity or pay a dividend.

 

The one thing common to every business, and the same holds true for Ford, is that the two most essential components are demand (customer) and the supply of capital (investor).

[akirby]

And what if the shareholders think Ford should start fleet dumping for short term profits? Should Ford listen to them or ignore them and focus on long term profitability?

[RangerM]

And what if the shareholders think Ford should start fleet dumping for short term profits?

They should vote for board members who will go along, and reap the rewards or consequences of those actions.

[akirby]

They should vote for board members who will go along, and reap the rewards or consequences of those actions.

 

In other words - ignore them just like we said.

[jpd80]

They should vote for board members who will go along, and reap the rewards or consequences of those actions.

 

Just like GM, their stock holders were totally and utterly screwed over.

 

So much for stock holder power.

Edited March 19, 2010 by jpd80

[RangerM]

In other words - ignore them just like we said.

No, that's not what I said, but if you want to think that's what I said, fine.

Just like GM, their stock holders were totally and utterly screwed over.

 

So much for stock holder power.

The stock holders were screwed, by a board who ran their company into the ground. The fault lies with those who elected the board. Although you've introduced another element, government interference in private enterprise. Not good for the taxpayer (in GM's case).

 

Interesting parallel in government, though. Just like the board, those in public office are elected based on what the electorate believes it wants, and are held to account for their actions come election time by (hopefully only) those with voting rights.

Edited March 19, 2010 by RangerM

[RichardJensen]

Yes, RangerM, your typical investor will -continue- to hold stock in a company whose long range outlook does not match his desire for a quick boost in stock price. He'll--all by himself, mind you--continue to nominate board members (if the corporation's bylaws even allow him to do so!!), in the hopes that he can get a short sighted, greedy, 'wreck the company in five years, I'll be out in four' board.

 

He certainly won't 'vote with his wallet' and go find the next Enron, Merrill-Lynch, etc.

 

The real world doesn't work like your elegant little theories.

[RangerM]

The real world doesn't work like your elegant little theories.

Nor does it work with your naive theory that business is an altruistic endeavor. Businesses aren't charities.

 

The real world (of business) is cold, hard, and competitive. Get used to it, because your next competitor will be happy to take your business from you. I know, because I've done it.

Edited March 19, 2010 by RangerM

[Ford Jellymoulds]

Just wondering who on the US government bailout committee monitors GM and what they are doing, GM are selling its Focus class £17,000 Astra's for a base model Fiesta priced £10,000 in Europe it is not going to return GM to profitability? Its commiting GM suicide and it will impact on Fiesta/Focus sales, why are they being allowed to get away with it, who is accountable for monitoring GM?

 

When l buy shares, it must be paying dividends, when will GM be next isssuing one?

 

Could have kicked myself for not buying Ford shares when they were low.

Edited March 19, 2010 by Ford Jellymoulds

[RichardJensen]

Nor does it work with your naive theory that business is an altruistic endeavor.

Oh that's hilarious.

 

--

 

Explain to me how you're going to build a sustainable business with pissed off customers, angry employees, suppliers that refuse to do business with you and creditors that aren't being paid.

 

However, you can quite happily stay in business as a publicly traded company with irked investors.

[Edstock]

Nor does it work with your naive theory that business is an altruistic endeavor. Businesses aren't charities.

You seem to have a comprehension problem. There is nothing altruistic with RJ's so-called "naive theory". Rather, it is "naive" to expect that a company that must plan for decades in the future should be concerned about next quarter's results and how it might affect stock prices.

[jpd80]

No, that's not what I said, but if you want to think that's what I said, fine.

 

The stock holders were screwed, by a board who ran their company into the ground. The fault lies with those who elected the board.

This is not about fault, this is about your notion that stock holders have any power to dismiss the board, they don't as evidenced by GM BK recently. Once GM got into trouble, stock holders had even less voice as noted by the 10 cents on the dollar conversion offered to some of them, the rest of the poor souls are stuck in BK with the old GM while the board has transferred to the new GM, how's that for an end run around stock holder power.

 

Thinking that stock holders have power over an elected board is quite laughable, GM is not an isolated incident and many other companies in trouble often use reorganization to clear debts and liabilities to other groups namely, stock holders....

Edited March 19, 2010 by jpd80