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Bill Ford Doubles Ford Stocks, Gains More Control Over Company

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Bill Ford Doubles Ford Stocks, Gains More Control Over Company

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New Ford CEO Jim Farley (left) and Ford Executive Chairman Bill Ford Jr. pose with a 2021 F-150 during an event on September 17, 2020 at the company’s Michigan plant which produces the pick-up.

Michael Wayland | CNBC

DETROIT – Ford Motor chairman Bill Ford slowly amassed more stock and control of the automaker than his great-grandfather founded in 1903.

Unlike Elon Musk and other CEOs who recently cashed in on a portion of their company’s stock as prices skyrocketed, Ford has doubled its namesake company over the past decade.

The 64-year-old is the company’s largest individual shareholder with 2.3 million Ford common shares. More importantly, he is also the largest holder of Class B shares in the automaker which has exceptional voting powers that have allowed the Ford family to retain control of the company. While Class B shares represent 2% of Ford’s outstanding shares, they control 40% of the voting rights.

Bill Ford directly owns 16.1 million, or 23%, of Class B shares, which are only available to family members. That’s quadruple the roughly 4 million, or 5.7%, he owned in 2012, according to FactSet.

“I think it’s really important that the family legacy continues. It gives us a face and maybe a humanity that a lot of other companies don’t have.”

From Satya Nadella at Microsoft to Jeff Bezos and Elon Musk, the CEOs, founders and other insiders of the company have cashed in their shares at the fastest rate ever. Ford’s growing stake in the company flies in the face of a recent trend by CEOs and corporate insiders who sold a record $ 69 billion in shares in 2021 amid tax hikes looming and high stock prices have encouraged many to take profits.

Ford, whose participation has grown thanks to his work as chairman of the board, said he is keeping his shares because of his “huge confidence” in the company’s management team, led by CEO Jim Farley, to implement Farley’s Ford + turnaround plan with a focus on electric and connected vehicles. He received $ 16 million in total compensation from Ford in 2020, which consisted of a mix of benefits, cash and stock rewards.

Ford acquired an additional 412,500 Class B shares last month which are held in a family trust. The move came about a week after acquiring nearly 2 million common shares of the company through the exercise of stock options, some of which were due to expire.

Instead of cashing in the $ 18 million in proceeds he would have earned from exercising options like most executives do, Ford paid $ 20.5 million in cash plus taxes on earnings to keep on shares.

“I just feel like we’re in a very good position to deliver superior returns to shareholders and I for one wanted to be a big part of that,” Ford told CNBC. “I think in many ways we have the potential to create the most shareholder value since scaling the Model T.”

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Unlike his predecessor, Farley has gained investor confidence since taking office in October 2020. The automaker’s shares have jumped about 270% since then, pushing its market value above $ 100 billion on Thursday. for the very first time. 2020 marked the first year since 2001 that Ford’s stock has surpassed $ 20 per share.

The stock closed at $ 25.02 per share on Wednesday, with a market value of $ 99.99 billion. Ford is now worth more than its crosstown rival General Motors, which is valued at around $ 90 billion.

As part of Farley’s Ford + plan, the company is turning to electric vehicles, including the all-electric Mustang Mach E and Ford F-150, as well as connected services to generate recurring revenue. The company expects an adjusted profit margin of 8% before interest and taxes in 2023, ahead of many analysts’ expectations.

“The Mach-E and the Lightning, their two banks of controls just overwhelmed us,” said Ford. “We are on this electrification journey, but it’s more than that. It’s connecting to the customer, it’s all the services that will be developed around electrification.”

Family sharing

Ford directly owns about 20.3 million shares, including Restricted, Common and Class B shares. The holdings, which may exclude certain trusts, are worth more than $ 500 million at Thursday’s closing price.

There are 71 million Class B shares worth about $ 1.8 billion held by the descendants of company founder Henry Ford. The Ford family’s voting rights decline once their Class B shares fall below approximately $ 60.8 million.

Some have criticized the double-share system for unfairly allowing the family to retain control of the automaker. Ford has repeatedly championed the dual-action structure as allowing the automaker to focus more on the long term and not be another “nameless, faceless company”.

“I think it’s really important that the family legacy continues,” he said. “It gives us a face and maybe a humanity that a lot of other companies don’t have.”

The dual class share structure, which has been in place since the company’s IPO in 1956, has faced many challenges for shareholders. At last year’s shareholders’ meeting, 36.3% of voters supported a system that gave every share an equal vote, slightly above the average of 35.3% since 2013.

Ford believes its shareholders support its defense of the family’s shares and voting rights. Ford said he had no, if ever, recollection of selling Ford stock on the open market. This does not include the exercise of options, the transfer of shares to trusts or the conversion of common shares into Class B shares.

“I’m here for the long haul. It’s my life and I love the business,” he said. “I truly believe we are headed for an incredible future.”

– CNBC Robert frank contributed to this report.

Bill Ford Doubles Ford Stocks, Gains More Control Over Company

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