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Ford Family Gets More Control

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Ford Family Gets More Control
Ford Family Gets More Control

Ford Motor Co.'s $10 billion recapitalization plan to increase shareholder value does little to increase the value of the company, but does cement the Ford family's power base, according to critics of the plan.

TIAA-CREF, a New York City financial services firm, owns 8.4 million shares of Ford stock, and the California Public Employees' Retirement System (Calpers), which has 6.5 million shares, have already said they will vote against the plan. Ford has about 1.2 billion shares outstanding.

Both claim the company's Value Enhancement Plan (VEP) allows the Ford family to retain its 40 percent voting share in the company, while decreasing its overall ownership in the company or just the opposite: To increase its ownership in the company without having to make any real investment in it.

"We are disappointed that the board of directors of Ford Motor Co. has structured the plan in a way that benefits Ford family interests at the expense of public shareholders," said Peter Clapman, TIAA-CREF senior vice president and chief counsel of investments, in a released statement.

Institutional Shareholder Services (ISS), an adviser to large investors, came out against the value enhancement plan on July 19. The ISS statement emerged one day after New York State Comptroller Carl McCall sent Ford chairman William Clay Ford Jr. a letter registering his opposition. The state's retirement fund has 3.7 million Ford shares worth some $170 million, according to a report in Reuters.

Ford calls VEP kosher

Ford CFO Henry Wallace said he felt the VEP "provides the greatest benefit and the greatest flexibility to the greatest number of Ford stockholders in a manner that is fair to all."

He expounded upon the opposition to the plan later: "From our standpoint, it's a very tax-efficient, good program for our shareholders," Wallace said at a July 19 news conference for the company's second-quarter earnings release. "It's disappointing that some

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