Incoming Ford CEO Jim Farley (left) and Ford CEO Bill Ford Jr. pose with the 2021 F-150 during an event on September 17, 2020 at the company’s Michigan plant that produces the small car.
Michael Wayland | CNBC
DETROIT – Bill Ford was slowly working to gather more stock and control of the automaker his great-grandfather had founded in 1903.
Unlike Elon Musk and other CEOs who recently cashed out some of their company stock as prices soared, Ford has doubled the size of his namesake company over the past decade.
The 64-year-old is the company’s largest single shareholder with 2.3 million shares of Ford’s common stock. More importantly, he is the largest shareholder of the Class B automaker’s stock with superior voting powers that have allowed the Ford family to retain control of the company. While Class B shares represent 2% of Ford’s shares outstanding, they control 40% of the voting power.
Bill Ford directly owns 16.1 million, or 23%, of Class B stock, which is only available to family members. That’s four times what he had in 2012, which is nearly 4 million, or 5.7%, according to FactSet.
From Microsoft’s Satya Nadella to Jeff Bezos and Musk, CEOs, founders and other company insiders have been cashing in their inventory at an all-time high with $69 billion in stock in 2021, as looming tax increases and soaring stock prices encouraged many to take action. earnings.
Ford, whose stake has grown through his serving as chairman of the board, said he is holding his stock because of his “tremendous confidence” in the company’s management team, led by CEO Jim Farley, to implement Farley’s Ford+ transformation plan focused on electric and connected vehicles. Bill Ford received $16 million in total compensation from Ford in 2020, which came in a combination of benefits, cash and stock awards.
Ford acquired an additional 412,500 family-owned Class B shares last month. The move came nearly a week after he acquired nearly two million company common shares by exercising stock options, some of which were due to expire.
Instead of making the $18 million in proceeds he would have earned from exercising the options like most executives, Ford paid $20.5 million in cash plus taxes on the gains to keep the shares.
“I just feel like we’re in a very good position to deliver excellent returns to shareholders and I personally wanted to be a big part of that,” Ford told CNBC. “I think in many ways we have the opportunity to create the most shareholder value since scaling up the Model T.”
Unlike his predecessor, Farley has won investor confidence since taking office in October 2020. Shares of the automaker have risen nearly 270% since then, taking its market capitalization above $100 billion Thursday for the first time ever. 2020 was the first year since 2001 that Ford’s stock exceeded $20 a share.
The stock closed Thursday at $25.02 per share, and the company’s market capitalization reached $99.99 billion. Ford is now worth more than rival General Motors’ Crosstown, which is estimated to be worth about $90 billion.
Under Farley’s Ford+ plan, the company is focusing heavily on 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 8% adjusted EBIT margin in 2023 — earlier than many analysts had predicted.
“Mach-E and Lightning, both of their demand banks, have overwhelmed us,” Ford said. “We’re on this electrification journey, but it’s more than that. It’s connecting with the customer, it’s all the services to be developed around electrification.”
Ford directly owns approximately 20.3 million shares, including restricted, common, and Class B shares. The value of the holdings, which may exclude some trust funds, was more than $500 million as of Thursday’s closing price.
There are 71 million Class B shares worth about $1.8 billion owned by the grandchildren of company founder Henry Ford. The Ford family’s voting power dwindles once Class B shares drop below $60.8 million.
Some have criticized the dual-share system for unfairly allowing the family to retain control of the automaker. Ford has repeatedly defended the dual-share structure as allowing the automaker to focus more on the long-term and not be another “nameless” 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 equity structure, which has been in place since the company went public in 1956, has faced many challenges for shareholders. At last year’s shareholder meeting, 36.3% of voters supported a system that gives each share an equal vote, just above the 35.3% average since 2013.
Ford believes his stock ownership supports his defense of family stock and voting power. Ford said he can’t remember selling Ford stock on the open market. This does not include exercising options, converting shares into trusts, or converting common shares into class B shares.
“I’m in this for the long haul,” he said. “This is my life and I love the company.” “I really think we’re heading into an incredible future.”
– CNBC channel Robert Frank Contribute to this report.
Correction: Henry Ford was Bill Ford’s great-grandfather. The headline in an earlier version misspelled the relationship. Ford’s stock closed Thursday at $25.02. An earlier version got it wrong today.
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