Ford Motor Company announced today that its board of directors has approved a move to repurchase up to 116 million shares of Ford common stock. Ford says this move is intended to offset share dilution and help improve shareholder returns.
Ford said up to 103 million shares will be repurchased to offset the dilutive effect of potential conversions of its 4.25% Senior Convertible Notes due November 15, 2016. In addition, up to 12.6 million shares will be repurchased to offset the dilutive effect of share-based employee incentive compensation granted in 2014.
“These actions are consistent with our overall capital strategy to take anti-dilutive actions and position ourselves to further reduce Automotive debt,” said Bob Shanks, executive vice president and chief financial officer. “The strength of our cash generation gives us confidence to take these actions to enhance shareholder returns. With these actions, we will reduce our diluted shares by about 3 percent.”
According to The Detroit News, as of April 30, there were 3.88 billion shares of Ford common stock and 70.8 million shares of Ford’s Class B stock. According to Automotive News, the Ford family owns all 70 million shares of the Class B stock. Class B shares make up less than 2 percent of outstanding Ford shares, but hold 40 percent of the voting power.