Question: FORD MOTOR COMPANY’S VALUE ENHANCEMENT PLAN (VEP)

Q1. Vote in Favour or against of Ford Value Enhancement Plan? Vote in favour of ford’s Value enhancement plan for reasons discussed below: 1. Choice to Investor: It clearly gives the choice of investment and possible returns that could be obtained to the investors. They can make the choice for themselves depending future prospect of pay-out that they would prefer. 2. Share Advantage: For example if we take an investor has 100 shares in the company, if he would prefer to receive extra shares instead of a cash pay-out he would now have 174.8 shares in place of the 100 he initially had, an increase of almost 75% of shares owned by him. With the increase in the number of shares an investor owns, even though the share price will fall it gives the investor the advantage of selling a part of their shares for a more profitable investment and still a retain considerable number of the company shares. If the company were to conduct a share repurchase it would take considerable amount of time before all the shares could be bought back as the limit for daily repurchase is set at 25% of their volume. It could take up to almost a year by the time ford can repurchase the shares for $10 billion. So VEP adds value as they provide an option where they can repurchase a lesser percentage of their shares. 3. Pay-out Advantage: For an investor who would prefer to receive cash pay-out in place of receiving more shares, with the VEP he would be getting a total of $4680 [$2680 (100*26.8) plus $2000(100*20)], without the VEP he would have got the same amount $4680 [100*46.8], the price decrease of the share is offset by the cash they receive. This option that ford provides will suit investors who would want Ford to repurchase their stock. If the company distributed the $10 billion in form of dividends, the amount would be taxed