Shareholders are not job 1.
Ford Motor Company’s management has just done what all past Big 3 managements have done… kicked their union problem down the road at the expense of shareholders.
They and the UAW agreed to have Ford pay for 1/2 of its medical benefit trust payments as company stock. Doing so now they immediately take money directly from shareholders rather than from over benefitted pensioners. They also pay for these benefits with stock at a very low price, ensuring higher dilution on paying shareholders.
The right answer, from a shareholder perspective, is to declare bankruptcy and build a new, strong, company from the parts of Ford that are sustainable operating under labor agreements that are driven by worth not political clout and management expediency. The right thing to do would be to stop making those payments, fire lots of dead wood, and to cut back on factories and wasteful labor practices. And to focus on making their cars better values so that they can capture the pent up demand for cars in 1 to 2 years.
If only Rahm Emmanuel were running Ford now. He wouldn’t let this crisis go to waste with lame deals like this. He would squeeze the unions and Ford’s retiree’s mercilessly.
And they would fight back. And it would get sorted out with the shareholders at least having a voice. Now they just get hosed and the only thing they can do is flee the market.
Until somebody actually looks out for shareholders risking capital, instead of transferring their wealth to the politically connected, the markets will continue to respond like they have in recent weeks.
Theft generates a response. It can’t be helped.