Ford Motor Company Memo
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 years. Ford now incorporates two brands: Ford and Lincoln. Ford once owned 5 other luxury brands which where were Volvo, Land Rover, Jaguar, Aston Martin and Mercury. But over time those brands were sold to other companies and Mercury was discontinued. Nasser was CEO of Ford Motor Company from 1998 to 2001. Todays CEO is Alan Mulally.
Brief Summary of the Article
The article talks about how in April 2000, Ford Motor Co. announced a shareholder Value Enhancement Plan (VEP) to recapitalize the company’s ownership structure. Ford had accumulated $23 billion in cash reserves and under the VEP would return as much as $10 billion of this cash to shareholders. For each share currently held, the plan would give stockholders one new share in addition to choosing either $20 in cash or additional new Ford common shares. Shareholders that would choose to receive cash would be taxed on these distributions at capital gain rates. The plan provided ways for the Ford family to obtain liquidity without having to dilute their 40% voting interest (even though they own only 5% of the shares outstanding).
Discussion
Does Ford have too much cash? Discuss Ford’s rations of cash to equity market capitalization, cash to net income, cash to auto assets,
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 years. Ford now incorporates two brands: Ford and Lincoln. Ford once owned 5 other luxury brands which where were Volvo, Land Rover, Jaguar, Aston Martin and Mercury. But over time those brands were sold to other companies and Mercury was discontinued. Nasser was CEO of Ford Motor Company from 1998 to 2001. Todays CEO is Alan Mulally.
Brief Summary of the Article
The article talks about how in April 2000, Ford Motor Co. announced a shareholder Value Enhancement Plan (VEP) to recapitalize the company’s ownership structure. Ford had accumulated $23 billion in cash reserves and under the VEP would return as much as $10 billion of this cash to shareholders. For each share currently held, the plan would give stockholders one new share in addition to choosing either $20 in cash or additional new Ford common shares. Shareholders that would choose to receive cash would be taxed on these distributions at capital gain rates. The plan provided ways for the Ford family to obtain liquidity without having to dilute their 40% voting interest (even though they own only 5% of the shares outstanding).
Discussion
Does Ford have too much cash? Discuss Ford’s rations of cash to equity market capitalization, cash to net income, cash to auto assets,