The Greedy Mr. Ford

You’d think that a senior executive and scion of a great family business that bears his name would be extra

You’d think that a senior executive and scion of a great family business that bears his name would be extra careful about the way he conducts himself. But if you think that, then you haven’t met William Clay Ford (F) Jr., the 45-year-old chairman and chief executive of Ford Motor Co., the American car giant founded by his great-grandfather. As was recently reported, Goldman Sachs allocated 400,000 shares of its stock to Mr. Ford when the investment bank went public in 1999. In an almost unprecedented example of corporate overreach and old-fashioned stupidity, Mr. Ford leapt at the money and didn’t bring Ford shareholders in on the deal. For some perspective, note that a reasonable allocation of a hot stock offering to a good customer of an investment bank would be 1,000 shares. How outrageous can you be? Today, Mr. Ford’s shares are worth $30 million. How does Mr. Ford’s pocketing 400,000 shares of Goldman benefit the shareholders of Ford Motor Co.? The answer, of course, is that it doesn’t. But it surely makes William Clay Ford Jr. happy. Or at least it did-until shareholders got wind of his smarmy deal; some are demanding that Mr. Ford sell his Goldman shares to Ford Motor at the price he paid for them. Meanwhile, the board of Ford Motor has formed a committee to look into the matter. The board should disgorge Mr. Ford of the Goldman stock profits and return them to the shareholders who rightfully deserve them.

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Goldman apparently thought it had good reason to line Mr. Ford’s pockets: Since 1996, the bank has raked in almost $90 million in fees from the automobile manufacturer. It also turns out that Mr. Ford was prep-school buddies at Hotchkiss with Goldman president and co–chief operating officer John Thornton-who happens to be a Ford board member. And as The New York Times recently reported, just prior to Mr. Ford’s appointment as chief executive officer in 2001, his predecessor, Jacques Nasser, had been freezing Goldman out of deals, to the anger of Goldman executives. Things between the automaker and the bank became more chummy when Mr. Ford engineered Mr. Nasser’s firing and plunked himself down in the corner office. Of course, by that time Mr. Ford had already picked up his 400,000 shares of Goldman Sachs Group common stock.

How can Ford shareholders trust that Mr. Ford will do what’s best for the company and its owners? With Ford Motors in lousy shape and its debt approaching junk levels, it can hardly be reassuring that Mr. Ford has $30 million of Goldman shares stuffed in his mattress and his old school chum Mr. Thornton whispering in his ear.

In an e-mail to employees, Mr. Ford claimed that his piece of the Goldman I.P.O. was a long-term personal investment that had nothing to do with Ford Motors. How dumb does he think his shareholders are? By his actions, Mr. Ford has shown that he has neither the smarts nor the judgment to run the family business.

Junior Bronfman: He Made a Small Fortune From a Very Large One

Years ago, Edgar Bronfman Jr. was handed a fortune and a legacy, thanks to the work of his father, grandfather and uncle. The Bronfmans were a great philanthropic family, supporting the arts, culture and a variety of Jewish charities and causes with the millions they earned from Joseph E. Seagram & Sons. But thanks to Edgar’s incompetence and his obsessive desire to be a player in the world of mass entertainment, the Bronfman family is in danger of becoming a shell of its former generous self, and a magnificent New York landmark, the Four Seasons restaurant in the Seagram building on Park Avenue, is going to be stripped of its most stunning feature, a 22-foot-high curtain painted by Pablo Picasso in 1919 for Diaghilev’s ballet, Le Tricorne .

How did this happen? Two years ago, Mr. Bronfman foolishly sold Seagram, source of the family fortune, to Vivendi Universal, the French entertainment conglomerate. And, as the world now knows, Vivendi is in the tank. And let’s not forget that wonderful switch from DuPont to Universal, which probably cost the family more than $10 billion. Instead of Vivendi shareholders, the Bronfmans could have been DuPont shareholders-how’s that for sheer brilliance? And so the family’s world-famous art collection-including the Picasso curtain as well as paintings by Miró and Rothko and photographs by Stieglitz and Steichen -is being auctioned off by Vivendi, which is moving out of the Seagram building and into cheaper digs. The collection that was so carefully assembled over the years by the Bronfman clan is to be placed on the block because of Edgar’s shortsighted selfishness. And New York is also losing a piece of its artistic heritage. Architect Robert A.M. Stern compared the Seagram building’s artwork to the Sistine Chapel and said, “My heart is in my mouth, I’m so upset. These works are absolutely essential to the character of the space.”

Some members of the Bronfman family are also understandably upset. Phyllis Lambert, the daughter of patriarch Samuel Bronfman and the family’s champion of the arts and architecture, told The New York Times that the impending sale is “part of a whole Greek tragedy,” adding: “I’m heartbroken. These collections are really part of the heritage of New York.” She doesn’t have to look far around the dinner table for who is to blame.

It’s the Recession, Stupid

Economists say we came out of the most recent recession at the beginning of 2002. So now we can look forward to modest growth and better times, right? Not exactly. In fact, there’s a strong possibility that we’re in for a “double-dip” recession, according to the Federal Reserve Bank of Philadelphia’s “Anxious Index,” which measures forecasters’ opinions on whether the economy is about to start shrinking. The index recently rose to 24.1, and previously when it exceeded 20-such as it did before 1990-91 – a recession has followed about half the time. “It’s a little bit worrisome,” said Dean Croushore, an economist at the Philadelphia Fed, to The New York Times. “The data for the last three months, and even the last six months, have been weaker than the forecasters expected.”

Naturally, no one wants a recession. But at the moment, investors should forget about growth and just be happy if we hold even. Indeed, things are pretty darn good-we’ve got 6 percent unemployment and low inflation. The 1990’s spoiled Americans’ appreciation for undramatic economic times, leading to false expectations that the economy would continue the growth it’s shown over the past 30 years. In fact, we can count ourselves very fortunate if we can hold a steady, even position over the next several years.

Happy Holidays

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The Greedy Mr. Ford