Since 1919. when Henry Ford bought out his minority stockholders, Ford Motor Co. has been steered only by Ford and his family. This week, Ford Foundation trustees announced that the Ford family will give up sole control of the company, turning the last family-managed industrial colossus in the U.S. into a public corporation. Early next year, when the Foundation puts on sale the first blocks of stock (nearly 7,000,000 voting shares), the family will yield 60% of the voting rights in Ford management to investors.
The Ford Foundation, the independent philanthropic giant created by the Ford family, has long been anxious to sell at least 15% of its immense Ford stock holdings to diversify its investments. When the Government last week decided that the Foundation, as a tax-exempt organization, would not have to pay a 26% capital-gains tax on the sale, one of the last barriers to the stock sale was removed. However, the Foundation's 3,089,908 Ford shares (88% of all Ford stock) do not include voting shares, which are owned exclusively by the Ford family. Foundation trustees thought that investors who bought its shares "should have voting rights. Furthermore, voting rights would substantially increase the marketability of the shares." Henry Ford's heirs and the Foundation's trustees agreed to a sweeping reclassification of Ford stock, which will give investors technical control over Ford's future, although the family will retain working control. But the change will bring royal returns to Henry
Ford's surviving heirs and members of their families.
Apart from the Foundation, the only other present Ford stockholders are 1) the family, which owns all the 172,645 Class B voting shares, plus 190,347 Class A non-voting shares, and 2) 108 key Ford executives, who own 42,140 non-voting A shares.
Three Classes of Stock. Under the reorganization plan each share of the present non-voting A stock owned by the Foundation will be exchanged for 15 new non-voting A shares. The Foundation will thus have 46,348,620 A shares. When the first block of 6,952.293 shares is sold to investors, the shares will become voting shares. Thus, non-family common stockholders (and Ford executives) will own only 14% of Ford stock at first but will exercise 60% of the voting rights.
The old non-voting A shares held by the family will be converted into a new Class B voting stock which will be entirely owned by the family: it will arbitrarily control 40% of the voting rights. Each share of the old voting B stock held by the family will be exchanged for 21 shares of the new B stock. Thus the family will get a 1.74% bigger stock equity in the company in exchange for relinquishing sole control. When and if the new B shares pass out of Ford family hands, they will be converted share-for-share into voting stock.