Ford Motor Company Memo
To:Retire at Age Fifty Fund (RAFF)
From: Penelope Magouliotis, Jeffery Childs, Marcus Eggleston, Syed AzeemDate:February 15, 2014
Subject:Ford’s Shareholder Value Enhancement Plan (VEP) Evaluation
Ford Motor Company
Ford Motor Company is an American automaker, it is the world's fifth largest automaker based on worldwide vehicle sales. Its headquarters are based in Dearborn, Michigan, which is a suburb in Detroit. Henry Ford founded Ford Motor Company on June 16, 1903 and it became one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. Ford Company is the largest family-controlled company in the world; it has been in continuous family power for over 110 …show more content…
For example, at a pre-distribution share price of $60 for existing common shares, new Ford shares would be worth $40. Stockholders thus would have the choice to receive $20 of cash or half a share of new Ford common. Shareholders also could elect to receive a combination of cash and new Ford common stock with an aggregate value of $20. Shareholders who did not make an election would be treated as if they made a $20 cash profit.
Any cash received for employees who made no election would be invested on their behalf in Ford common shares through open market purchases. Employee stock options to buy Ford common shares would be adjusted as if the employees elected to receive all shares. For example, at an exchange rate of 1.5 new shares for each existing share, an employee who had an option to purchase 100 shares with a current exercise price of $30 would receive a new option to purchase 150 new shares with an exercise price of $20 per share.
If old class B shares are sold to someone outside the Ford family, they will be turned into common stock.
b) With respect to taxation, the company said that since shareholders receiving the cash distribution would suffer a reduction in their percentage ownership of the company, they would be taxed on that amount as a capital gain. Dividends on new Ford shares would be reduced