MANIPAL INSTITUTE OF MANAGEMENT
FINANCIAL REPORTING AND STATEMENT ANALYSIS
REPORT ON
CORPORATE GOVERNANCE ANALYSIS
Submitted To:
Dr. Nandan Prabhu
Professor, MIM
Submitted by:
Ravisha Verma
20120100
MBA general – section B
Introduction to the company
Ford Motor Company is an American multinational automobile manufacturer headquartered in
Dearborn, Michigan, United States. It was founded by Henry Ford and incorporated on June
16, 1903. The company sells automobiles and commercial vehicles under the Ford brand, and
luxury cars under its Lincoln luxury brand. It’s headquarters are located in Dearborn, Michigan,
United States. Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston
Martin of the United Kingdom and a 32% stake in Jiangling Motors. It also has joint-ventures
in China (Changan Ford), Taiwan (Ford Lio Ho), Thailand (AutoAlliance Thailand), Turkey
(Ford Otosan), and Russia (Ford Sollers). The company is listed on the New York Stock
Exchange and is controlled by the Ford family; they have minority ownership but the majority
of the voting power.
Corporate Governance analysis
Objectives:
Ford's vision statement is “people working together as a lean, global enterprise for automotive
leadership.” The company also explains, “Automotive leadership is measured by the
satisfaction of our customers, employees, investors, dealers, suppliers and communities.”
•
Drive human progress by providing mobility and accessibility for all
•
Become the most inclusive and diverse enterprise globally
•
Reach zero air emissions from our manufacturing plants globally
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Responsibly source all raw materials used in all vehicles globally
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Use only recycled and renewable plastics in all vehicles globally
•
Use only freshwater for human consumption only
Framework for analysis
James “Jim” D. Farley, Jr., is president and chief executive officer, Ford Motor Company,
effective October 1, 2020. He also serves as a member of the company's board of directors.
Owning Family: The Ford family didn’t invent the automobile, but they can claim ownership
of the concept of automobile mass production.
Before joining Ford in November 2007, Farley was group vice president and general manager
of Lexus, responsible for all sales, marketing, and customer satisfaction activities for Toyota’s
luxury auto brand.[5] From May 2019 to February 2020, Farley served at President, New
Business, Technology and Strategy. From June 2017 to May 2019, he served as Executive Vice
President and president of Global Markets. From 2015 to 2017, he was CEO and Chairman
of Ford Europe.
On August 4, 2020, Ford announced that Farley would succeed Jim Hackett as the CEO of
Ford on October 1, 2020. At the same time, it was announced that Hackett would retire and
become a special advisor. In July 2021, Farley was nominated to join the board of directors
for Harley-Davidson by the company's CEO Jochen Zeitz in an effort to revitalize the
motorcycle maker and prepare it for an electric future.
CEO Jim Farley, who assumed the helm on Oct. 1, earned $11,802,054 in executive
compensation for the whole year. That's up from $8,361,479 in 2019. Farley held multiple
leadership roles in 2020, including president of new business, technology and strategy as well
as chief operating officer. Ford reported Farley's CEO pay as $12,491,540 when annualized,
or 202 times more than the median compensation for all its employees, excluding the CEO.
Jim Farley's total compensation from Ford Motor Co. jumped 41 percent to $11.8 million in
2020, when he took over as CEO. Farley's pay included a $1.4 million base salary, $5.1 million
in stock awards and nearly $4.2 million in other awards, according to the company's annual
proxy statement filed Thursday.
While the pace of change is breath taking, Ford stock (ticker: F) has kept up, making investors
happy. Ford shares were $6.75 on Farley’s first day. Now they’re approaching $15, a gain of
around 120%.
There are 16 members on the board of directors of Ford Motor Company. Stephen G.
Butler Age: 62 — Director Since: 2004, Kimberly A. Casiano Age: 52 — Director Since: 2003,
Anthony F. Earley, Jr. Age: 60 —Director Since: 2009, Edsel B. Ford II Age: 61 — Director
Since: 1988, William Clay Ford, Jr. Age: 52 — Director Since: 1988, Richard A. Gephardt
Age: 69 — Director Since: 2009, James H. Hance, Jr. Age: 65 — Director Since: 2010,
William W. Helman IV Age: 53 — Director Since: September 2011, Irvine O. Hockaday, Jr.
Age: 73 — Director Since: 1987, Richard A. Manoogian Age: 73 — Director Since: 2001,
Ellen R. Marram Age: 62 — Director Since: 1988, Alan Mulally Age: 64 — Director Since:
2006, Homer A. Neal Age: 67 — Director Since: 1997, Gerald L. Shaheen Age: 65 — Director
Since: 2007, John L. Thornton Age: 56 — Director Since: 1996, William Clay Ford, Director
Emeritus.
4 members are CEO of other companies - Stephen G. Butler: Retired Chairman and Chief
Executive Officer, KPMG, LLP, Anthony F. Earley, Jr.: Chairman and Chief Executive
Officer, DTE Energy, Detroit, Michigan, Richard A. Manoogian: President and Chief
Executive Officer, Gephardt Group, Atlanta, Georgia, Irvine O. Hockaday, Jr.: Retired
President and Chief Executive Officer, Hallmark Cards, Inc., Kansas City, Missouri.
William Clay Ford owns a total of 8,078,227 Ford shares, representing 0.20% of the company's
total shares outstanding.5 The great grandson of company founder Henry Ford, Mr. Ford has
led the board of directors as executive chair since 2006 and as chair from 1999 to 2006.
James D. Farley owns a total of 1,103,833 Ford shares, representing 0.03% of the company's
total shares outstanding.5 Mr. Farley joined Ford in 2007 and now is Chief Operating Officer
(COO).
James P. Hackett owns a total of 564,586 Ford shares, representing 0.01% of the company's
total shares outstanding.5 Mr. Hackett has served as Ford's President and CEO since 2017 and
as a member of the Board of Directors since 2013.
The Ford Motor Company reported total debt between 161 and 162 billion U.S. dollars in 2020.
However, because it has a cash reserve of US$30.8b, its net debt is less, at about US$130.5b.
The Bond issued by Ford Motor Co (United States), in USD, with the ISIN code
US345370CW84, pays a coupon of 9% per year. The coupons are paid 2 times per year and
the Bond maturity is 22/04/2025
The data available on the bond issuances indicate that Ford primarily relies on its domestic
market when issuing new debt. As can be seen in figure 1 most of Ford’s debt, 77.83% to be
exact, is issued in the U.S. The remaining 22.17% is issued in foreign markets, with Canada
and the U.K. being the most prominent markets accounting for 5.3% and 4.6% of the total
foreign debt issues respectively. Japan, Mexico and Germany account for approximately
2.96%, 2.5% and 0.18% of Ford’s foreign debt issues respectively. Amongst the countries
which Ford has issued foreign debt in are India, the Netherlands, Sweden, Turkey, South Korea
and Brazil. However, these countries can be ignored as they account for a very small percentage
of Ford’s total foreign debt issues.
19 Analysts follow the firm. For equity the firm and analyst are namely: Argus Research Selesky, Bill, Bank of America -- Merrill Lynch, Barclays - Johnson, Brian, Benchmark
Company - Ward, Michael, Buckingham Research - Amaturo, Joe, Citi Group - Michaeli, Itay,
Credit Suisse - Levy, Dan, Daiwa - Nathan, Jairam, Deutsche Bank Research - Rosner,
Emmanuel, Evercore ISI - McNally, Chris, Goldman Sachs - Delaney, Mark, Jefferies Houchois, Philippe, JP Morgan - Brinkman, Ryan, Morgan Stanley - Jonas, Adam, Morningstar
- Whiston, David, Nomura - Das, Anindya, RBC Capital Markets - Spak, Joseph, UBS Hummel, Patrick, Wolfe Research - Lache, Rod.
For fixed income Bank of America -- Merrill Lynch - Karson, Doug, Barclays - Troisi, Peter,
Citi Group - Stark, Scott, JP Morgan - Rau, Jonathan, SMBC Nikko Securities - Conn, Doug,
SunTrust Robinson Humphrey - Selle, Eric, Wells Fargo Securities, LLC - Dunn, James.
P/E Ratio 7.24, Shares Outstanding 3.92B, Price to Book Ratio 1.5880, Price to Sales Ratio
0.4021, 1 Year Return 111.67%.
The trading volume of Ford on a 30-Day Average Volume is 60,089,756 and EPS is 1.90
In the area of sustainability and social responsibility, Ford's objectives include increasing the
fuel-efficiency of its entire fleet of vehicles and decreasing carbon dioxide emissions from its
manufacturing processes, with a target of 25 percent reduction between 2011 and 2016. It has
set numerous sustainability goals, which include increasing its use of recycled and renewable
materials in its vehicle interiors, decreasing the amount of volatile organic compound emissions
from vehicle painting, and reducing water use and manufacturing waste.
Ford's commitment to ethics is evident in programs aimed at monitoring human rights and safe
working conditions, sourcing conflict-free minerals, to programs such as the Partnership for
a Cleaner Environment, which is aimed at encouraging sustainability through Ford's supply
chain. Ford also fosters long-term relationships with suppliers through active engagement,
which includes sharing best practices, as well as providing training and evaluations to ensure
suppliers meet both legal requirements and Ford standards.
Reference: https://shareholder.ford.com/investors/esg/default.aspx#management