Ford’s new CEO Jim Farley (left) and Ford executive chairman Bill Ford Jr. pose with a 2021 F-150 during an event on Sept. 17, 2020 at the company’s Michigan pickup plant.
Michael Wayland | CNBC
DETROIT. Ford Motor Chairman Bill Ford gradually accumulated shares and control of the automaker, founded by his great-grandfather in 1903.
Unlike Elon Musk and other CEOs who recently cashed out some of their company’s stock due to price spikes, Ford has doubled down on his eponymous company over the past decade.
The 64-year-old is the company’s largest individual shareholder, owning 2.3 million Ford shares of common stock. More importantly, he is also the largest owner of the Class B automaker’s super-voting power, which has allowed the Ford family to retain control of the company. Although class B shares account for 2% of Ford’s issued shares, they control 40% of the vote.
Bill Ford directly owns 16.1 million, or 23%, of Class B shares, which are available only to family members. That’s four times the roughly 4 million, or 5.7%, he owned in 2012, according to FactSet.
From Microsoft’s Satya Nadella to Jeff Bezos and Elon Musk, CEOs, founders and other company insiders are cashing in at the fastest pace ever. Ford’s rising stake in the company is at odds with a recent trend of CEOs and corporate insiders selling a record $69 billion worth of shares in 2021 as looming tax hikes and high share prices spurred many to turn a profit.
Ford, whose stake has grown thanks to his tenure as chairman of the board, said he is holding his shares because of his “tremendous confidence” that the company’s management team, led by CEO Jim Farley, will deliver on Farley’s plan to reorganize Ford+ with focusing on electric and connected vehicles. In 2020, he received a total compensation of $16 million from Ford, which was a combination of benefits, cash and stock awards.
Last month, Ford purchased 412,500 additional Class B shares held in family trust. The move came about a week after he purchased nearly 2 million shares of the company’s common stock by exercising stock options, some of which were expiring.
Instead of cashing out the $18 million in income he would have received from exercising the options, as most executives do, Ford paid $20.5 million in cash, plus income taxes, to keep the stock.
“I just feel like we’re very well positioned to deliver high shareholder returns, and I, for my part, wanted to be a big part of that,” Ford told CNBC. “I think in many ways we have the opportunity to create the most value for shareholders since the Model T scaled.”
Unlike his predecessor, Farley has gained investor confidence since taking over October 2020. Since then, the automaker’s shares have risen about 270%, and on Thursday its market value topped $100 billion for the first time. 2020 marked the first year since 2001 that Ford shares topped $20 a share.
Shares closed on Wednesday at $25.02 per share and the company’s market value was $99.99 billion. Ford is now worth more than competitor General Motors, which is valued at about $90 billion.
Under Farley’s Ford+ plan, the company is actively switching to electric vehicles, including the Mustang Mach E and the all-electric Ford F-150, as well as connected services to generate recurring revenue. The company expects its adjusted earnings margin before interest and taxes to be 8% in 2023, earlier than many analysts expected.
“Mach-E and Lightning, both of their order banks just overwhelmed us,” Ford said. “We are on our way to electrification, but it is more than that. This is a connection to the client, these are all services that will be developed on the basis of electrification.”
Ford holds approximately 20.3 million shares directly, including restricted, common and class B shares. The investment, which may exclude some trusts, is worth more than $500 million at Thursday’s closing price.
71 million Class B shares, worth about $1.8 billion, are owned by the descendants of the company’s founder, Henry Ford. The Ford family’s voting power is reduced when their Class B shares fall below approximately $60.8 million.
The dual share system was criticized by some for unfairly allowing the family to retain control of the automaker. Ford has repeatedly defended the two-share structure because it allows the automaker to focus more on the long term and not be another “nameless, faceless corporation.”
“I think it’s very 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 that has existed since the company went public in 1956 has run into numerous shareholder issues. At last year’s shareholders’ meeting, 36.3% of voters supported a system that gave every share equal voting rights, up slightly from the 35.3% average since 2013.
Ford believes that his shareholding supports his defense of family shares and voting rights. Ford said he could not recall ever selling Ford shares on the open market. This does not include exercising options, transferring shares to trusts, or converting ordinary shares to class B shares.
“I’m in this for the long haul. This is my life and I love the company,” he said. “I really believe we have an incredible future ahead of us.”