New Ford CEO Jim Farley (left) and Ford Chairman Bill Ford Jr. pose with a 2021 F-150 during an event September 17, 2020 at the Michigan plant of the company that makes the pickup truck.
Michael Wayland | CNBC
DETROIT – Ford engine Chairman Bill Ford has slowly amassed more shares and control of the automaker founded by his great-grandfather in 1903.
not how Elon Musk and other CEOs who recently cashed out a portion of their company stock as prices soared, Ford has doubled its namesake company over the past decade.
The 64-year-old is the company’s largest single shareholder with 2.3 million shares of Ford common stock. More importantly, he’s also the largest holder of the automaker’s Class B stock, which has super voting rights that have allowed the Ford family to retain control of the company. While the Class B shares make up 2% of Ford’s outstanding shares, they control 40% of the voting power.
Bill Ford directly owns 16.1 million, or 23%, of Class B shares available only to family members. That’s four times 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 many other companies don’t have.”
from Satya Nadella at the Microsoft to jeff bezos and musk, CEOs, founders and other company insiders have cashed in at the fastest pace ever $69 billion in shares in 2021, as looming tax hikes and soaring stock prices encouraged many to take profits.
Ford, whose stake has grown through his work as CEO, said he’s holding on to his shares because he has “tremendous confidence” in the company’s management team, led by CEO Jim Farley, to fulfill Farley’s Ford+ turnaround plan Focus on electric and connected vehicles. Bill Ford received $16 million in total compensation from Ford in 2020, which consisted of a mix of benefits, cash and stock awards.
Ford last month acquired 412,500 additional Class B shares held in a family trust. The move came about a week after he acquired nearly 2 million shares of common stock in the company through the exercise of stock options, some of which had expired.
Instead of collecting the $18 million in proceeds he would have received from exercising the options, as most executives do, Ford paid $20.5 million in cash and taxes on the earnings to acquire the shares to keep.
“I just feel like we’re very well positioned to deliver superior shareholder returns, and for my part, I wanted to be a big part of that,” Ford told CNBC. “I think in many ways we have an opportunity to create the greatest value for shareholders since the Model T has scaled.”
Unlike his predecessor, Farley has gained investor confidence since taking the helm October 2020. The automaker’s shares are up about 270% since then, taking its market value above $100 billion for the first time Thursday. 2020 was the first year for Ford since 2001 The stock has crossed the $20 mark.
Read more about electric vehicles from CNBC Pro
The stock closed Thursday at $25.02 per share, with the company’s market value at $99.99 billion. Ford is now worth more than its crosstown rival General Motors, which is estimated at around 90 billion dollars.
As part of Farley’s Ford+ plan, the company is heavily focused on electric vehicles, including the Mustang Mach E and all-electric Ford F-150, and connected services to generate recurring revenue. The company expects an 8% adjusted profit margin before interest and taxes in 2023 — earlier than many analysts expected.
“The Mach-E and the Lightning, both of their order banks just blew us away,” said Ford. “We’re on this electrification journey, but it’s more than that. It’s about the connection to the customer, it’s all services that are being developed around electrification.”
Ford directly owns about 20.3 million shares of stock, including restricted shares, common shares and Class B shares. The holdings, which may exclude some trusts, were worth more than $500 million at Thursday’s close.
There are 71 million class B shares, worth approximately $1.8 billion, held by descendants of company founder Henry Ford. The Ford family’s voting power will diminish once their Class B shares fall below about 60.8 million.
Some have criticized the dual-share system for unfairly allowing the family to remain in control of the automaker. Ford has repeatedly defended the dual-share structure so the automaker could 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 many other companies don’t have.”
The two-tier share structure that has existed since the company’s IPO in 1956 has faced numerous challenges from shareholders. At last year’s AGM, 36.3% of voters supported a system that gave each share an equal vote, slightly above the 35.3% average since 2013.
Ford believes his stock ownership supports his defense of the family’s stock and voting rights. Ford said he had no recollection of selling Ford stock on the open market. This does not include the exercise of options, the transfer of stock to trusts, or the conversion of common stock into Class B stock.
“I’m in for the long haul. This is my life and I love the company,” he said. “I really believe we’re heading for an incredible future.”
– CNBC’s Robert Frank contributed to this report.
Correction: Henry Ford was Bill Ford’s great-grandfather. A previous version’s headline misrepresented the relationship. Ford shares closed at $25.02 on Thursday. A previous version incorrectly specified the day.