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DEARBORN - On Nov. 7, 1955, Ford Motor Company announced it would become a public company. Ford declared shares would be available for purchase shortly after the first of the year. Public sale of the company began on Jan. 7, 1956.
The following is the story of the stock announcement as it appeared in the company’s Nov. 11, 1955 Ford Rouge News.
Ford Foundation Announces Plan for Stock Sale
The Ford Foundation has announced that about 15 percent of its holdings of Ford Motor Company stock, some 7 million shares, will be offered for sale to the public shortly after the first of the year.
Under a plan worked out by the Trustees of the Foundation with members of the Ford family, the family will give up its exclusive right to vote in the affairs of management and will transfer 60 percent of the voting rights to a new common stock.
Three new classes of stock are to be issued – a new voting Common Stock, a new voting “B” Stock and a new non-voting “A” Stock. The three classes of stock will have the same interests per share in earnings and assets, but will vary as to voting rights.
The Foundation plans to make the offering “in order to diversity its investment portfolio,” according to the announcement. (The complete statement by Trustees of the Ford Foundation is found on page 7. * Printed below)
Statement by Trustees of the Ford Foundation
The capital funds of the Ford Foundation consist largely of Ford Motor Company stock and for several years the Trustees of the Foundation have considered offering some of this stock for public sale and substituting other types of investment in order to diversity its investment portfolio.
The foundation owns more than 88 percent of all the outstanding stock of Ford Motor Company, but the 3,089,908 shares it holds are the shares of non-voting “A” Stock.
The right to vote in the affairs of management rests solely in the 172,645 outstanding shares of “B” Stock, all of which are owned by members of the Ford family and their interests.
The Trustees have thought that any shares sold to the public should have voting rights because of considerations in the public interest. Furthermore, voting rights would substantially increase the marketability of the shares.
For more than a year, members of the Finance Committee of the Trustees of the Ford Foundation have explored with representative of the Ford family ways in which these voting rights might be acquired.
Members of this Committee are Charles E. Wilson, chairman; James F. Brownlee, H. Rowan Gaither, Jr., and John J. McCloy.
The Committee retained Eli Whitney Debevoise as legal counsel, George J. Leness and A. M. White as financial advisors and Lionel Edie as economic adviser.
Advisors to the Ford family have been Frederick M. Eaton, legal counsel, and Sidney J. Weinberg Financial advisor.
Henry Ford II and Bensen Ford are both Trustees of the Foundation, but of course, took no part in the study and consideration given this matter by the Trustees or any committee of the Trustees.
As a result of the long study and negotiation, a plan has now been worked out and approved by the Trustees and the members of the Ford family under which the family will give up its exclusive right to vote in the affairs of management and will transfer 60 percent of the voting stock to a new Common Stock.
The plan involves a reclassification of the stock of Ford Motor Company. Three types of stock are to be issued – a new voting Common Stock, a new voting “B” Stock and a new non-voting “A” Stock.
The three types of stock will have the same interests per share in earnings and assets, but will vary as to voting rights.
There are now outstanding 3,322,395 shares of non-voting “A” Stock. Of these, 3,089,908 shares are owned by the Ford Foundation, 190,347 shares are owned by the Ford family and family interests, and 42,140 are owned by 108 key employees of Ford Motor Company as a result of their exercise of employee stock options. (These employees have options to buy in installments over the next three years some 101,000 additional shares.)
Under the plan, each share of this “A” Stock will be exchanged for 15 new shares. The shares owned by the Foundation will become new non-voting “A” shares, but as any of these shares are sold to the public it is planned to convert them into shares of the new voting Common Stock.
The “A” shares owned by company employees will become shares of new voting Common Stock. The “A” shares owned by members of the Ford family and their interests will become shares of new voting “B” Stock.
These are now 172,645 shares of voting “B” Stock, all owned by member of the Ford family and their interest. Each of these shares will be exchanged for 21 shares of the new voting “B” Stock an exchange ratio differing from the 15-for-1 ratio applicable to the shares of “A” Stock.
Holders of the old “B” shares will thus acquire a 1.74 percent additional equity in the company. This increased equity reflects, in addition to the other terms of the plan, the relinquishment of the exclusive right to vote in the affairs of management.
In transferring 60 percent of the voting rights of the new Common Stock, holders of old “B” shares accept an immediate drop in their voting rights from 100 percent to 40 percent for all family interests.
There will then be 53,461,470 shares of stock in Ford Motor Company outstanding after the stock
The Ford Foundation plans to make a public offering of about 15 percent of its holdings. While no date has been fixed, it is hoped that this offering can be made shortly after the first of the year.
Prior to the offering, a statement as to Ford Motor Company’s history, business and operations, earnings and financial position will be filed with the Securities and Exchange Commission and made public.
Assuming such a sale, company stock then outstanding would include 14,064,143 voting shares and 39,396,327 non-voting shares. Of these totals:
1. Public investors would own 6,952,293 shares of new voting Common Stock and Ford Motor Company employees on the basis of options thus far exercised would have received on the reclassification 632,100 shares of new voting Common Stock.
The new Common Stock will have one vote per share. The total share of new Common Stock will hold 60 percent of the voting power, although they would represent initially only about 14 percent of the total outstanding stock of the company.
As additional “A” shares are sold in the future and converted to the new Common Stock, these shares will also participate in the 60 percent of the voting power, which attaches to all this Common Stock in the aggregate.
2. Members of the Ford family and family interests will own 6,480,750 shares of new voting “B” Stock. Whenever any of these shares are sold or transferred outside the family, they must first be converted into shares of new Common Stock with one vote per share.
So long as there are at least 2,700,000 shares of the new “B” Stock outstanding, these shares will carry sufficient votes per share to give the outstanding “B” Stock in the aggregate a maximum of 40 percent of voting rights.
This percentage will be reduced to 30 percent when the outstanding shares of the new “B” Stock fall below 2,700,000 shares.
When the outstanding shares of the new “B” Stock fall below 1,500,000 shares, the new “B” Stock will no longer carry any specified percentage of voting rights, but will carry only one vote per share – just like the new Common Stock.
3. The Ford Foundation would own 39,396,327 shares of new non-voting “A” Stock. If any of these shares are sold to the public, it is planned to convert them into shares of new Common Stock with one vote per share.
The Trustees wish to express publicly their appreciation of the willingness of members of the Ford family to consider relinquishing their exclusive voting rights in order to facilitate the efforts of the Foundation to diversify its investment portfolio and for their fine spirit in long negotiations toward a satisfactory plan for doing so.