The largely non-working Ford family remains in control of Ford Motor Company via Class B stock voting rights.
The Ray T. and Veronica G. Chevedden Family Trust of Los Angeles, California will present a proposal at the Ford Motor Company Annual Meeting that seeks to end the Ford family control of the automaker via their special voting rights of Class B stock. “It is time that the 57-year practice (1956-2013) of disenfranchising Ford public shareholders be changed for the common benefit of all shareholders,” the proposal says.
While a grand total of only 63 people bothered to attend the Ford Motor Company annual meeting of shareholders last year in Delaware, 29.5% of all Ford investors voted against Ford family control of the company through their holdings of Class B stock. The Ford family gets 16 votes per share of B. Common stockholders get one vote per share. The disparity allows the Ford family to retain control of the publicly held automaker. (Read AutoInformed on Thirty Percent of Ford Shareholders Vote against Family Control)
This proposal topic previously earned the highest support for any Ford shareholder proposal — more than 1.4 billion votes. In fact, it appears to have received more than 50% of the independent vote of the non-family stock.
Not surprisingly, the Ford Motor Company Board of Directors, vetted by the Ford family, is opposed to what will be proposal 7 on the ballot. In the proxy statement just filed with the U.S. Security and Exchange Commission, the Board said it is not in the best interests of Ford or common stockholders.
The Board said, “The Company’s founding family has over a 100-year history of significant involvement in the affairs of Ford Motor Company. During that time, all shareholders have benefited from this involvement. Through their actions over the past century, the Ford family has proven that the long-term success of the Company for the benefit of all shareholders has been, and continues to be, the primary purpose of their involvement. Never has this been more evident than during the recent financial crisis, which resulted in the bankruptcies of our two major domestic competitors.”
Ford Motor’s share capital structure, with both common and Class B stock outstanding, has been in place since Ford became a public company in 1956. The Board says that each shareholder purchasing a share of Ford stock is aware of this capital structure, and “many are attracted to Ford stock by the long-term stability the Class B shareholders provide to the Company.”
The company also claims that a “substantial majority” of the members of the Company’s Board of Directors are independent and all of the directors act in the best interests of all shareholders, in accordance with their fiduciary duties under Delaware law and the Company’s Restated Certificate of Incorporation.
