For a long time, the heads of the auto companies for very good reasons were very high public personalities. The auto industry was large, it had new models every year and we were very open to the ideas of the auto industry. Times changed, people came in and left and outside of Ford which is still controlled by the Ford family you might be hard pressed to name CEOs of the auto companies. One name that might have come up was Carlos Ghosn CEO of France’s Renault, Chairman of Mitsubishi of Japan, Chairman of Nissan. He is accused of significant financial misconduct including understating his income. He was paid in the $17 million range plus.
According to an article by Eric Reguly, Mr. Ghosn and former CEO of Fiat Chrysler Sergio Marchionne believed the route to success required consolidation that would allow auto makers to save costs and achieve synergies by launching an array of models off common platforms. Recently Mr. Ghosn oversaw a large investment in AvtoVaz, the Russian car company that produces the Lada. The car is improved and is now Russia’s top car brand. This investment allow Renault to take an early lead in battery-powered models which account for 1 in every 4 electric models sold in Europe.
When Mr. Ghosn was charged shares of Nissan, Renault fell because of the unknown answer what happens to the partnerships and relationships. Mr. Ghosn had increased his power, but is it enough to continue the partnerships or will the car companies go their own way? Time will tell
Linking to dividend paying stocks, visionaries and power in CEOs can be a great thing, but one of the concerns of the Board and the people who elected the Board is succession planning. Who takes the reigns if something happens unexpectedly? When it comes to the next person, what stamp will they do or put on the company? If you are reasonably happy with the next round of leadership, then you hold your shares. If you are not positive, finding alternatives is a good thing to have in your decision making process.
There are more questions than answers, till the next time – to raising questions.