Ford Motor’s board of directors voted Thursday to investigate whether it was proper for CEO Bill Ford to buy 400,000 shares of Goldman Sachs stock when Goldman went public in 1999 and whether it is proper for him to continue owning the stock.
Bill Ford was allowed to buy a bigger block of Goldman’s IPO stock than any other individual investor outside Goldman. Ford Motor has done tens of millions of dollars of business with the investment-banking firm, and Goldman co-COO John Thornton is on Ford’s board, as is former Goldman chairman Robert Rubin.
Bill Ford has a paper profit of $8 million on the shares.
Ford, who just began his second year as CEO, broke no securities law. But his transaction was among those labeled ”corrupt practices” in October when it turned up in Goldman documents during an investigation of WorldCom’s accounting scandals by the House Financial Services committee. It also is the subject of a shareholder petition saying that the profits belong to Ford Motor, not to Bill Ford. His affiliation with the auto company is why he was allowed such a big block, the petition says.
A group of five board members will investigate. The board set no deadline.
In a memo to employees Thursday, Bill Ford wrote: ”There is nothing more important to me than the success and reputation of Ford Motor Co. I would never do anything to hurt this company or violate the trust all of you have placed in me.”
Ford spokesman Jon Pepper said that the CEO would not immediately sell the Goldman shares. Instead, he will wait for the committee’s report.
Other executives allowed to buy blocks of Goldman IPO shares though fewer than Bill Ford include former Enron chairman Kenneth Lay and former Tyco CEO Dennis Kozlowski.
”This is very embarrassing to the (Ford) family,” says Gerald Meyers, professor at the University of Michigan, expert in crisis management and former CEO of American Motors. ”I really don’t think he would make this transaction if he had to do it over again.”
Ford is especially visible as the face of Ford Motor because he stars in a multimillion-dollar TV ad campaign.
”The whiff of malfeasance mixed with celebrity lingers in the air longer than if he was largely unknown to his customers,” says Eric Dezenhall, a public relations and corporate communications consultant. ”This situation validates the narrative of sweetheart deals and the gentleman’s club of big business that is most unpopular these days,” Dezenhall says.
Bill Ford wasn’t available for comment Thursday. He told USA TODAY in an interview earlier this year: ”Maybe in an era where some CEOs are looked at as grabbing the money and running, I’m seen, I hope, as being in this for the long haul.”