<PAGE> 1
FORD LOGO
Ford Motor Company The American Road
Dearborn, Michigan 48121-1899
April 7, 1997
TO OUR STOCKHOLDERS:
The 1997 annual meeting will be held on May 8, 1997 at 10:00 a.m., eastern
daylight savings time, at Cleary International Centre, 201 Riverside Drive West,
Windsor, Ontario, Canada.
We're holding this year's annual meeting in Windsor in recognition of our
substantial and long-standing presence in both Windsor and Canada. We first
began business in Canada in 1904. Today in Windsor we produce the Triton family
of engines and other products. The engines power the vehicle that has been the
most popular vehicle in North America for the last 15 years - Ford's F-Series
pickup truck - as well as Ford's new full-size sport utility vehicles -
Expedition and Navigator.
Please read these materials so that you'll know what we plan to do at the
meeting. Also, please sign and return the accompanying proxy card in the
postage-paid envelope. This way, your shares will be voted as you direct even if
you can't attend the meeting. If you would like to attend, please see the
instructions on p. 43.
/s/ ALEX TROTMAN
ALEX TROTMAN
Chairman of the Board
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN,
SIGN, DATE, AND PROMPTLY MAIL THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED ENVELOPE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Notice of Annual Meeting of Stockholders.................... i
Defined Terms............................................... ii
Proxy Statement............................................. 1
Election of Directors....................................... 2
Committees of the Board of Directors........................ 9
Management Stock Ownership.................................. 12
Section 16(a) Beneficial Ownership Reporting Compliance..... 14
Compensation of Directors................................... 14
Certain Relationships and Related Transactions.............. 15
Compensation and Option Committee Report on Executive
Compensation
(How Ford Determines Executive Compensation).............. 16
Compensation of Executive Officers.......................... 23
Stock Options............................................... 25
Contingent Stock Rights and Restricted Stock Units.......... 27
Stock Performance Graphs.................................... 30
Retirement Plans............................................ 32
Proposals Requiring Your Vote............................... 33
Stockholder Proposals for 1998.............................. 42
Annual Report and Other Matters............................. 42
Expenses of Solicitation.................................... 42
How to Attend the Annual Meeting............................ 43
Directions to the Annual Meeting Site....................... 43
</TABLE>
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of Ford Motor Company will be held at Cleary
International Centre, 201 Riverside Drive West, Windsor, Ontario, Canada, on
Thursday, May 8, 1997, at 10:00 a.m., eastern daylight savings time. The purpose
of the meeting is to elect directors and to vote on the following proposals (in
the case of the stockholder proposals, if presented at the meeting):
PROPOSAL 1. The approval of Coopers & Lybrand L.L.P. as Ford's independent
public accountants for 1997.
PROPOSAL 2. A stockholder proposal relating to term limits for outside
directors.
PROPOSAL 3. A stockholder proposal relating to the discontinuance of stock
options, rights, and stock appreciation rights for management and
the Board of Directors.
PROPOSAL 4. A stockholder proposal relating to salary increases and stock option
grants for executive officers and directors in the event the
dividend is cut.
PROPOSAL 5. A stockholder proposal relating to a review of executive
compensation.
PROPOSAL 6. A stockholder proposal relating to independent directors.
The record date for the annual meeting is March 10, 1997. Only stockholders of
record at the close of business on that date can vote at the meeting.
/s/ JOHN M. RINTAMAKI
JOHN M. RINTAMAKI
Secretary
April 7, 1997
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<PAGE> 4
DEFINED TERMS
"CLASS B STOCK" means Ford's Class B Stock.
"FORD" or "WE" or "COMPANY" means Ford Motor Company.
"CONTINGENT STOCK RIGHT" means, under the Long-Term Incentive Plan, an award of
the right to earn up to a certain number of shares of common stock based on
performance against specified goals created by the Compensation Committee.
"DIVIDEND EQUIVALENT" means cash or shares of common stock (or common stock
units) equal in value to dividends that would have been paid on shares of common
stock.
"FINAL AWARD" means shares of common stock awarded by the Compensation Committee
under a Contingent Stock Right.
"LONG-TERM INCENTIVE PLAN" means Ford's 1986 or 1990 Long-Term Incentive Plan.
"NAMED EXECUTIVES" means the executives named in the Summary Compensation Table
on p. 23.
"RESTRICTED STOCK UNIT" or "UNIT" means the right to receive cash equal to the
then-current value of one share of common stock if specified goals set by the
Compensation Committee are met.
"SERIES A PREFERRED STOCK" means Ford's Series A Cumulative Convertible
Preferred Stock.
"SERIES B PREFERRED STOCK" means Ford's Series B Cumulative Preferred Stock.
ii
<PAGE> 5
PROXY STATEMENT
FORD MOTOR COMPANY April 7, 1997
THE AMERICAN ROAD
DEARBORN, MICHIGAN 48121-1899
The Board of Directors is soliciting proxies to be used at the 1997 annual
meeting. This proxy statement and the form of proxy will be mailed to
stockholders beginning April 7, 1997.
Definitions of capitalized terms in this Proxy Statement are on the facing page.
WHO CAN VOTE
Record holders of common stock and record holders of Class B Stock at the close
of business on March 10, 1997 may vote at the meeting. Holders of Series A
Preferred Stock or of Series B Preferred Stock cannot vote at this meeting.
On March 10, 1997, 1,119,199,541 shares of common stock and 70,852,076 shares of
Class B Stock were outstanding. Each stockholder has one vote for each share of
common stock and 10.531 votes for each share of Class B Stock.
Holders of common stock have 60% of the general voting power; holders of Class B
Stock have the remaining 40% of the general voting power. Holders of common
stock and holders of Class B Stock will vote together, without regard to class,
on the matters to be voted upon at the meeting.
HOW YOU CAN VOTE
If you return your signed proxy to us before the annual meeting, we will vote
your shares as you direct. You can specify on your proxy whether your shares
should be voted for all, some, or none of the nominees for director. You can
also specify whether you approve, disapprove, or abstain from each of six
proposals. Proposal 1 will be presented at the meeting by management, and the
rest may be presented by stockholders. The proposals are described in this proxy
statement at pp. 34-42.
IF YOU DO NOT SPECIFY ON YOUR PROXY CARD HOW YOU WANT TO VOTE YOUR SHARES, WE
WILL VOTE THEM "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR AS SET FORTH
UNDER "ELECTION OF DIRECTORS" BELOW; "FOR" PROPOSAL 1; AND "AGAINST" PROPOSALS 2
THROUGH 6.
1
<PAGE> 6
REVOCATION OF PROXIES
You can revoke your proxy at any time before it is exercised in any of three
ways:
(1) by submitting written notice of revocation to the Secretary;
(2) by submitting another proxy that is properly signed and later
dated; or
(3) by voting in person at the meeting.
REQUIRED VOTES
A majority of the votes that could be cast in the election or on a proposal by
stockholders who are either present in person or represented by proxy at the
meeting is required to elect the nominees for director and to approve each
proposal. The votes are computed for each share as described on p. 1.
The total number of votes that could be cast at the meeting is the number of
votes actually cast plus the number of abstentions. Abstentions are counted as
"shares present" at the meeting for purposes of determining whether a quorum
exists and have the effect of a vote "against" any matter as to which they are
specified. Proxies submitted by brokers that do not indicate a vote for some or
all of the proposals because they don't have discretionary voting authority and
haven't received instructions as to how to vote on those proposals (so-called
"broker nonvotes") are not considered "shares present" and will not affect the
outcome of the vote.
OTHER MATTERS TO BE ACTED UPON AT THE MEETING
We do not know of any other matters to be presented or acted upon at the
meeting. Under our By-Laws, no business besides that stated in the meeting
notice may be transacted at any meeting of stockholders. If any other matter is
presented at the meeting on which a vote may properly be taken, the shares
represented by proxies in the accompanying form will be voted in accordance with
the judgment of the person or persons voting those shares.
ELECTION OF DIRECTORS
Twelve directors will be elected at this year's annual meeting. Each director
will serve until the next annual meeting or until he or she is succeeded by
another qualified director who has been elected.
We will vote your shares as you specify on the enclosed proxy form. If you sign,
date, and return the proxy form but don't specify how you want your shares
voted, we will vote them for the election of all the nominees listed below. If
unforeseen circumstances (such as death or disability) make it necessary for the
Board of Directors to substitute another person for any of the nominees, we will
vote your shares for that other person.
Each of the nominees for director is now a member of the Board of Directors,
which met nine times during 1996. The following information about the nominees
was provided by the nominees.
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<PAGE> 7
NOMINEES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
MICHAEL D. DINGMAN PHOTO
Age: 65
Director Since: 1981
Principal Occupation: President and CEO, Shipston Group Ltd., Nassau,
Bahamas
Recent Business Experience: Mr. Dingman is the President and CEO of Shipston
Group Ltd., a diversified international holding
company. He is also Chairman of the Board of Fisher
Scientific International, a leader in serving
science and providing products and services to
research, health care, industry, education, and
governments worldwide.
Other Directorships: Teekay Shipping Corporation
- -----------------------------------------------------------------------------------------------------------
EDSEL B. FORD II PHOTO
Age: 48
Director Since: 1988
Principal Occupation: Vice President, Ford Motor Company and President
and Chief Operating Officer, Ford Motor Credit
Company
Recent Business Experience: Mr. Ford has been President and Chief Operating
Officer of Ford Motor Credit Company since May 1991
and a Vice President of the Company since 1993.
Prior to 1991, he held numerous senior executive
positions at Ford and Lincoln-Mercury, both
domestic and abroad.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 8
<TABLE>
<S><C>
- -----------------------------------------------------------------------------------------------------------
WILLIAM CLAY FORD PHOTO
Age: 72
Director Since: 1948
Principal Occupation: Retired Chairman of the Finance Committee, Ford
Motor Company
Recent Business Mr. Ford served as Chairman of the Finance
Experience: Committee of Ford's Board of Directors from
November 1987 to January 1995. He was elected a
Vice Chairman of Ford in 1980, retiring from that
position in 1989. He also owns and is President of
The Detroit Lions, Inc.
- -----------------------------------------------------------------------------------------------------------
WILLIAM CLAY FORD, JR. PHOTO
Age: 39
Director Since: 1988
Principal Occupation: Chairman of the Finance Committee, Ford Motor
Company
Recent Business Mr. Ford has held a number of management positions
Experience: within Ford, including Vice President -- Commercial
Truck Vehicle Center, until January 1, 1995, when
he resigned as an employee of the Company. He has
been Chairman of the Finance Committee of the Board
of Directors of the Company since January 1, 1995.
Mr. Ford also is Vice Chairman of The Detroit
Lions, Inc.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 9
<TABLE>
<S><C>
- -----------------------------------------------------------------------------------------------------------
ROBERTO C. GOIZUETA PHOTO
Age: 65
Director Since: 1983
Principal Occupation: Chairman and CEO, The Coca-Cola Company, Atlanta,
Georgia
Recent Business Mr. Goizueta has been Chairman and CEO of The
Experience: Coca-Cola Company since 1981.
Other Directorships: Eastman Kodak Company; SONAT Inc.; SunTrust Banks,
Inc.
- -----------------------------------------------------------------------------------------------------------
IRVINE O. HOCKADAY, JR. PHOTO
Age: 60
Director Since: 1987
Principal Occupation: President and CEO, Hallmark Cards, Inc., Kansas
City, Missouri
Recent Business Experience: Mr. Hockaday has been President and CEO of Hallmark
Cards, Inc. since January 1, 1986, and a director
since 1978.
Other Directorships: Dow Jones, Inc.; UtiliCorp United, Inc.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 10
<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------------------
MARIE-JOSEE KRAVIS PHOTO
Age: 47
Director Since: 1995
Principal Occupation: Senior Fellow, Hudson Institute Inc., Indianapolis,
Indiana
Recent Business Mrs. Kravis was appointed a senior fellow of the
Experience: Hudson Institute Inc. in 1994. Prior to that time,
and since 1978, she served as Executive Director of
the Hudson Institute of Canada.
Other Directorships: Canadian Imperial Bank of Commerce; Hasbro Inc.;
Hollinger International Inc.; The Seagram Co. Ltd.;
Unimedia Inc.
- -----------------------------------------------------------------------------------------------------------
ELLEN R. MARRAM PHOTO
Age: 50
Director Since: 1988
Principal Occupation: President, The Seagram Beverage Group, New York,
New York
Recent Business Experience: Ms. Marram has been President of The Seagram
Beverage Group and Executive Vice President of The
Seagram Company Ltd. and Joseph E. Seagram & Sons
Inc. since May 1993. She served as Senior Vice
President of the Nabisco Foods Group and President
of Nabisco Biscuit Company from June 1988 until
April 1993.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------------------
HOMER A. NEAL PHOTO
Age: 54
Director Since: 1997
Principal Occupation: Vice President of Research and Professor of
Physics, The University of Michigan, Ann Arbor,
Michigan
Recent Business Experience: Dr. Neal is Vice President for Research and a
Professor of Physics at the University of Michigan.
He also served as Interim President of the
University of Michigan from July 1, 1996 to
February 1, 1997. From 1987 to 1993, Dr. Neal was
Chair of the University of Michigan's Physics
Department.
Other Directorships: Ogden Corporation; Center for Strategic and
International Studies; Smithsonian Institute
- -----------------------------------------------------------------------------------------------------------
CARL E. REICHARDT PHOTO
Age: 65
Director Since: 1986
Principal Occupation: Retired Chairman and CEO, Wells Fargo & Company,
San Francisco, California
Recent Business Mr. Reichardt served as Chairman and CEO of Wells
Experience: Fargo & Company from 1983 until his retirement on
December 31, 1994.
Other Directorships: Wells Fargo & Company; Wells Fargo Bank, N.A.;
Columbia/HCA Healthcare Corporation; ConAgra, Inc.;
McKesson Corporation; Newhall Management
Corporation; Pacific Gas and Electric Company;
SunAmerica Inc.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 12
<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------------------
JOHN L. THORNTON PHOTO
Age: 43
Director Since: 1996
Principal Occupation: Managing Director, Goldman Sachs International,
London, England
Recent Business Experience: Mr. Thornton is a member of the executive committee
of Goldman, Sachs & Co. and Chairman of Goldman
Sachs Asia. He was previously co-chief executive of
Goldman Sachs in Europe, the Middle East and
Africa. Mr. Thornton joined Goldman Sachs in 1980
and was named a partner in 1988.
Other Directorships: British Sky Broadcasting Group PLC; Laura Ashley
PLC; Pacific Century Group
- -----------------------------------------------------------------------------------------------------------
ALEX TROTMAN PHOTO
Age: 63
Director Since: 1993
Principal Occupation: Chairman, President, and CEO, Ford Motor Company
Recent Business Experience: Mr. Trotman has been Chairman of the Board of
Directors, President and CEO of the Company since
November 1, 1993. Prior to that time, Mr. Trotman
held a number of senior management positions within
Ford, including President, Ford Automotive Group;
Executive Vice President -- North American
Automotive Operations; President and Chairman of
Ford of Europe; and President of Ford-Asia Pacific.
Other Directorships: International Business Machines, Inc.; New York
Stock Exchange, Inc.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 13
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE
Number of Members: 5
Members: Irvine O. Hockaday, Jr. (Chairman)
Ellen R. Marram
Homer A. Neal
John L. Thornton
Clifton R. Wharton, Jr.
Number of Meetings in 1996: 3
Functions: Selects independent public accountants to audit
Ford's books and records, subject to stockholder
approval.
Consults with these accountants and reviews and
approves the scope of their audit.
Reviews internal controls, accounting practices,
financial structure, and financial reporting.
Reports to the Board of Directors about these
matters.
COMPENSATION AND OPTION COMMITTEE
Number of Members: 3
Members: Michael D. Dingman (Chairman)
Roberto C. Goizueta
Drew Lewis
Number of Meetings in 1996: 8
Functions: Establishes the salaries and determines any bonus
awards for Ford's executive officers.
Considers and makes recommendations on Ford's
executive compensation plans.
Makes recommendations on grants of stock options
and makes grants of Contingent Stock Rights and
Restricted Stock Units.
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<PAGE> 14
ORGANIZATION REVIEW AND NOMINATING COMMITTEE
Number of Members: 13
Members: Michael D. Dingman
William Clay Ford
William Clay Ford, Jr.
Roberto C. Goizueta
Irvine O. Hockaday, Jr.
Marie-Josee Kravis
Drew Lewis
Ellen R. Marram
Homer A. Neal
Carl E. Reichardt
John L. Thornton
Alex Trotman (Chairman)
Clifton R. Wharton, Jr.
Number of Meetings in 1996: 8
Functions: Makes recommendations on:
- Ford's management organization;
- the nominations or elections of directors and
officers;
- the size and composition of the Board; and
- the appointments of other Company employees
referred to the Committee.
Considers stockholder suggestions for nominees
for director (other than self-nominations).
Suggestions should be submitted to the Secretary
of the Company, The American Road, Dearborn,
Michigan 48121. Suggestions received by the
Secretary's office before December 31 will be
considered by the Committee at a regular meeting
in the following year, before the proxy materials
are mailed to stockholders.
10
<PAGE> 15
FINANCE COMMITTEE
Number of Members: 7
Members: Michael D. Dingman
Edsel B. Ford II
William Clay Ford
William Clay Ford, Jr. (Chairman)
Marie-Josee Kravis
Carl E. Reichardt
Alex Trotman
Number of Meetings in 1996: 8
Functions: Between meetings of the Board of Directors,
exercises all Board powers concerning Ford's
financial policies and financial management
(except matters within the powers of the Audit
Committee or the Compensation and Option
Committee).
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<PAGE> 16
MANAGEMENT STOCK OWNERSHIP
The table below shows how much stock of Ford and of its majority-owned
subsidiary, Associates First Capital Corporation ("The Associates"), each
director, nominee, and Named Executive beneficially owned as of March 7, 1997.
No director, nominee, or Named Executive beneficially owned any Ford preferred
stock except Clifton R. Wharton, Jr., who owned 1,000 depositary shares (less
than 0.1%) of Series A Preferred Stock. No director, nominee or executive
officer, including Named Executives, beneficially owned more than 0.2% of Ford's
total outstanding common stock or of The Associates' total outstanding Class A
Common Stock. Present directors and executive officers as a group, including the
Named Executives, beneficially owned 0.4% of Ford common stock and 0.3% of The
Associates' Class A Common Stock. In addition, these persons held options
exercisable within 60 days after March 7, 1997 to buy 4,515,124 shares of Ford
common stock under stock option plans.(2)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Ford Percent of The Associates
Ford Common Ford Outstanding Class A
Common Stock Class B Ford Class Common
Name Stock(1)(2) Units(3) Stock(4) B Stock Stock
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
W. Wayne Booker 131,871 0 0 0 3,476
- --------------------------------------------------------------------------------------------------------------
Michael D. Dingman* 13,000 49,645 0 0 0
- --------------------------------------------------------------------------------------------------------------
Edsel B. Ford II* 173,074 0 5,433,696 7.7 36,000
- --------------------------------------------------------------------------------------------------------------
William Clay Ford* 1,718,351 316 16,615,252 23.5 77,800
- --------------------------------------------------------------------------------------------------------------
William Clay Ford, Jr.* 95,974 316 3,167,351 4.5 40,000
- --------------------------------------------------------------------------------------------------------------
Roberto C. Goizueta* 8,500 316 0 0 0
- --------------------------------------------------------------------------------------------------------------
Edward E. Hagenlocker 147,448 0 0 0 0
- --------------------------------------------------------------------------------------------------------------
Irvine O. Hockaday, Jr.* 8,000 3,583 0 0 0
- --------------------------------------------------------------------------------------------------------------
Marie-Josee Kravis* 4,600 2,231 0 0 0
- --------------------------------------------------------------------------------------------------------------
Drew Lewis(5)* 21,200 316 0 0 0
- --------------------------------------------------------------------------------------------------------------
Ellen R. Marram* 6,000 6,513 0 0 0
- --------------------------------------------------------------------------------------------------------------
Jacques A. Nasser 29,347 0 0 0 0
- --------------------------------------------------------------------------------------------------------------
Homer A. Neal* 500 0 0 0 0
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Carl E. Reichardt* 20,000 316 0 0 0
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John L. Thornton(6)* 12,000 1,190 0 0 0
- --------------------------------------------------------------------------------------------------------------
Alex Trotman* 472,987 0 0 0 20,000
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Clifton R. Wharton, Jr.(5)* 2,000 316 0 0 0
- --------------------------------------------------------------------------------------------------------------
Kenneth Whipple 253,446 0 0 0 15,000
- --------------------------------------------------------------------------------------------------------------
All Directors and Executive Officers
as a group (55 persons) 4,315,072 65,058 25,216,299 35.7 272,244
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Indicates Directors
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<PAGE> 17
NOTES
(1)Includes restricted shares of common stock issued under the Restricted Stock
Plan for Nonemployee Directors, as follows: 1,600 shares each for William Clay
Ford, Jr. and Marie-Josee Kravis; 1,200 shares each for the other eligible
nonemployee directors, except John L. Thornton, for whom the number includes
2,000 restricted common stock equivalents under that plan. For nominees who are
Ford employees, this includes shares of common stock contingently credited that
may be delivered after termination of employment under the bonus plan.
(2)Michael D. Dingman has reported and disclaimed beneficial ownership of 1,264
shares of common stock owned by members of his immediate family.
Present directors and executive officers as a group have reported and disclaimed
beneficial ownership of a total of 1,990 shares of common stock.
Also, on March 7, 1997 (or within 60 days after that date), nominees who are
also Ford employees and the Named Executives have rights to acquire shares of
common stock through the exercise of stock options under Ford's stock option
plans as follows:
<TABLE>
<CAPTION>
Person Number of Shares
------ ----------------
<S> <C>
W. Wayne Booker............................................. 170,250
Edsel B. Ford II............................................ 107,200
Edward E. Hagenlocker....................................... 191,750
Jacques A. Nasser........................................... 150,250
Alex Trotman................................................ 469,500
Kenneth Whipple............................................. 331,000
</TABLE>
(3)These are common stock units credited under a deferred compensation plan for
nonemployee directors.
(4)As of March 7, 1997, the following persons owned more than 5% of the
outstanding Class B Stock: Josephine F. Ford, c/o Ford Estates, Dearborn,
Michigan, beneficially owned 14,400,014 shares (20.3%); and Lynn F. Alandt, c/o
Ford Estates, Dearborn, Michigan, beneficially owned 7,833,044 shares (11.1%).
Of the outstanding Class B Stock, 45,608,903 shares are held in a voting trust
of which Edsel B. Ford II, William Clay Ford, and William Clay Ford, Jr. are
among the trustees. The trust, which terminates in 1998, requires the trustees
to vote the shares as directed by a plurality of the shares in the trust. Edsel
B. Ford II is a nephew and William Clay Ford, Jr. is the son of William Clay
Ford.
(5)Drew Lewis and Clifton R. Wharton, Jr. currently are directors but are not
standing for reelection.
(6)Shares reported as beneficially owned by John L. Thornton do not include
shares held by Goldman, Sachs & Co. in the ordinary course of business.
13
<PAGE> 18
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Company records and other information, Ford believes that all SEC
filing requirements applicable to its directors and officers were complied with
for 1996 and prior years.
COMPENSATION OF DIRECTORS
GOAL. Ford wants the directors' compensation to be tied to your interests as
stockholders. Accordingly, 25% ($10,000) of each director's annual fee is
deferred in the form of common stock units. This deferral, together with the
restricted stock given to directors and director stock ownership goals, is part
of Ford's commitment to link director and stockholder interests. These
compensation programs are described below.
FEES. Directors' fees, paid only to directors who are not Ford employees, are as
follows:
<TABLE>
<S> <C>
Annual Board membership fee $40,000
Annual Committee membership fee $10,000
Attendance fee for each Board meeting $ 1,000
</TABLE>
DEFERRED COMPENSATION PLAN. Under this plan, 25% of a director's annual Board
membership fee must be deferred in common stock units. Directors also can choose
to have the payment of all or some of the remainder of their fees deferred in
the form of cash and/or common stock units. Each common stock unit is equal in
value to a share of common stock and is ultimately paid in cash. These common
stock units generate Dividend Equivalents in the form of additional common stock
units. These units are credited to the directors' accounts on the date common
stock cash dividends are paid. Any fees deferred in cash are held in the general
funds of the Company. Interest on fees deferred in cash is credited semiannually
to the directors' accounts at the then-current U.S. Treasury Bill rate plus
0.75%. In general, deferred amounts are not paid until after the director
retires from the Board. The amounts are then paid, at the director's option,
either in a lump sum or in annual installments over a period of up to ten years.
RESTRICTED STOCK PLAN. Nonemployee directors also receive restricted shares of
common stock. Each nonemployee director who has served for at least six months
receives 2,000 shares of common stock subject to restrictions on sale. In
general, the restrictions expire for 20% of the shares each year following the
year of the grant. Each nonemployee director receives an additional 2,000 shares
on the same terms when the restrictions on all of the prior 2,000 shares end.
STOCK OWNERSHIP GOALS. To further link director and stockholder interests, Ford
established stock ownership goals for nonemployee directors in 1995. Each
nonemployee director has a goal to own common stock equal in value to five times
the sum of the director's annual Board and Committee fees within five years.
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<PAGE> 19
LIFE INSURANCE. Ford provides nonemployee directors with $200,000 of life
insurance and $500,000 of accidental death or dismemberment coverage. The life
insurance coverage continues after the director retires from the Board if the
director is at least age 55 and has served for at least five years. A director
who retires from the Board after age 70, or, with Board approval, after age 55,
and who has served for at least five years may elect to have the life insurance
reduced to $100,000 and receive $15,000 a year for life. The accidental death or
dismemberment coverage may, at the director's expense, be supplemented up to an
additional $500,000 and ends when the director retires from the Board.
MATCHING GIFT PROGRAM. Nonemployee directors may give up to $25,000 per year to
certain tax-exempt organizations under the Ford Fund Matching Gift Program. For
each dollar given, the Ford Motor Company Fund contributes two dollars.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1993, Ford has had a consulting agreement with William Clay Ford.
Under this agreement, Mr. Ford is available for consultation, representation,
and other duties (including service as a director). For these services, Ford
pays him $100,000 per year and provides facilities (including office space), an
administrative assistant, and security arrangements. This agreement will
continue until either party ends it with 30 days' notice.
Mrs. Lynn Ford Alandt's husband owns a Ford-franchised dealership. In 1996, the
dealership paid Ford about $43.3 million for products and services in the
ordinary course of business. In turn, Ford paid the dealership about $5 million
for services in the ordinary course of business. Also in 1996, Ford Motor Credit
Company, a wholly-owned subsidiary of Ford, provided about $36.5 million of
financing to the dealership and paid about $280,000 to it in the ordinary course
of business. The dealership paid Ford Credit about $44.5 million in the ordinary
course of business.
John L. Thornton, a Managing Director of Goldman, Sachs & Co., became a Ford
director on March 14, 1996. Goldman, Sachs has provided Ford with investment
banking services for many years. Ford expects Goldman, Sachs to continue
providing similar services in the future.
15
<PAGE> 20
COMPENSATION AND OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
(HOW FORD DETERMINES EXECUTIVE COMPENSATION)
PURPOSES
Ford's executive compensation program aims to:
- Link managers' goals with your interests as stockholders.
- Support business plans and long-term Company goals.
- Tie executive compensation to Company performance.
- Attract and retain talented management.
TYPES OF COMPENSATION
There are two main types of compensation:
(1) Annual compensation. This includes salary and bonus. Ford awards
bonuses only when a year's profits meet a certain level required under
the bonus plan.
(2) Long-term compensation. This includes stock options and other long-term
incentive awards based on common stock. The value of these awards
depends on Company performance and future stock value.
FACTORS CONSIDERED IN DETERMINING COMPENSATION
The Compensation Committee wants the compensation of Ford executives to be
competitive in the worldwide auto industry and with major U.S. companies. Each
year, the Committee reviews a report from an outside consultant on Ford's
compensation program for executives. The report discusses all aspects of
compensation as well as how Ford's program compares with those of other large
companies. Based on this report, its own review of various parts of the program,
and its assessment of the skills, experience, and achievements of individual
executives, the Committee decides the compensation of executives.
The consultant develops compensation data using a survey of several leading
companies picked by the consultant and Ford. General Motors and Chrysler were
included in the survey. Eighteen leading companies in other industries also were
included because the job market for executives goes beyond the auto industry.
Companies were picked based on size, reputation, and business complexity.
The Committee looks at the size and success of the companies and the types of
jobs covered by the survey in determining executive compensation. One goal of
Ford's compensation program is to approximate the survey group's average
compensation, adjusted for company size and performance. In 1996, Ford's
executive salaries and long-term incentive awards generally were a little above
this
16
<PAGE> 21
average. Data on bonuses for the surveyed companies are not yet available, but
the Committee expects Ford's 1996 bonuses to be at about the average of the
survey group.
The Committee also considers the tax deductibility of compensation paid to the
Named Executives. In 1995, you approved changes to the bonus plan and the
Long-Term Incentive Plan so that certain compensation paid to these individuals
would be deductible under federal tax law. These changes limit the amount of
bonuses and stock options that may be granted to any person in any year under
each plan.
Further, in 1994 the Committee created stock ownership goals for executives at
the vice president level and above. The goals are for these executives to own
common stock worth a multiple of salary, ranging from one times salary to up to
five times salary for the CEO, within five years. The CEO applied similar goals
to about 25 other key managers. The CEO and most other key managers have
achieved their stock ownership goals.
ANNUAL COMPENSATION
GENERAL
Annual compensation for Ford executives includes salary and bonus. This is
similar to the compensation programs of most leading companies.
The Committee aims to pay salaries at the average of the survey companies,
adjusted for company size and performance. The Committee also looks at the
specific job duties, the person's achievements, and other criteria.
BONUSES
The total amount of all bonus awards for a given year cannot exceed the amount
set aside under Ford's bonus plan. In general, the amount set aside cannot
exceed 6% of pretax income for the year after subtracting 10% of "capital
employed in the business."
Because Ford's business depends heavily on the economy, there can be large
differences in the bonus amounts from year to year. Awards can be above average
for years when Ford has high profits. But there also are years -- such as
1990-1992 -- when no bonuses are paid because no amount can be set aside under
the plan.
Each year, the Committee determines the total amount of all bonuses for that
year. It also determines the bonus for each officer. No target awards are set
under the bonus plan. The Committee normally sets aside the maximum amount
allowed under the bonus plan, and then decides what bonuses are appropriate. It
does not award bonuses for years when no amount is set aside under the plan.
The total amount set aside for bonuses in a given year depends on Ford's
performance and competitive data. For 1996, the Committee set aside $169
million. Individual awards depend on each person's level
17
<PAGE> 22
of responsibility. For persons other than the Named Executives, the Committee
increases or decreases awards from a formula amount, based on rank and salary,
to reward a person's or group's performance. The highest award for any Named
Executive is limited by a formula that you approved. This limit is 2% of the
highest amount that can be set aside for the year. This limit is not a target
award and all 1996 bonuses to Named Executives were below the limit.
In order to more fully tie compensation to Ford's long-term performance, the
Committee delayed payment of 50% of the 1996 bonus for the CEO and 25% of the
1996 bonuses for the other Named Executives until after they retire. The unpaid
amounts are in the form of common stock credits on which Dividend Equivalents
are paid. These credits, as well as credits from Dividend Equivalents, generally
will be paid in common stock. The payout is subject to conditions under the
bonus plan.
LONG-TERM COMPENSATION
GENERAL
Today's business decisions affect Ford over a number of years. This is why the
long-term incentive awards are tied to Ford's performance and the value of
Ford's common stock over several years.
In general, the amount of the long-term incentive awards does not change as much
as the amount of the annual bonus awards.
The charts on pp. 30 and 31 show the long-term performance of Ford's common
stock.
STOCK OPTIONS
Stock options are an important part of Ford's long-term incentive program. The
managers who get them gain only when you gain -- when the common stock value
goes up.
In 1994, 1995 and 1996, the Named Executives and other employees received
ten-year options in amounts similar to prior years. In deciding the size of
individual option grants for 1996, the Committee considered the number of
options granted to the person in prior years, as well as the total number of
options awarded to all employees. A formula approved by you limits the number of
options that may be granted to any Named Executive. This limit, which is not a
target, is 2.5% of the highest number of shares available in any year for grants
under the 1990 Long-Term Incentive Plan. All 1996 stock option grants to the
Named Executives were below this limit.
STOCK AWARDS
Common stock awards are based on performance against goals created by the
Committee over a period of years. The Named Executives generally cannot sell the
stock until 18 months after retirement. This restriction emphasizes the
program's long-term nature as well as the tie between executive compensation and
stockholder interests.
18
<PAGE> 23
In 1996, the Committee granted Contingent Stock Rights to Company officers and
certain other top executives. These Contingent Stock Rights cover the
performance period 1996-1998. Up to 100% of these rights may be awarded in the
form of common stock after this period ends. The awards are made if goals
relating to the following six items are met:
- return on equity compared to the top 50 non-oil Fortune 500 companies;
- selected internal financial measures;
- product programs;
- product quality;
- customer satisfaction; and
- relationships with employees.
The size of a person's Contingent Stock Right award depends on competitive
long-term compensation values determined by the outside consultant, the person's
job, and the person's expected role in Ford's long-term performance. In general,
the Committee grants less than all the shares covered by the Contingent Stock
Right award if one or more of the above goals is only partly met.
During a performance period, persons with Contingent Stock Rights receive
Dividend Equivalents in cash or in common stock of the same value, as decided by
the Committee. For the 1996-1998 period, the Committee decided to pay Dividend
Equivalents in cash on Contingent Stock Rights covering up to 200,000 shares per
executive. Dividend Equivalents on Contingent Stock Rights above that level are
paid in common stock. That stock cannot be sold for a certain period, and it is
subject to conditions under the 1990 Long-Term Incentive Plan.
The Final Awards of common stock in 1996 covered 1991-1995. Using business data,
the Committee reviewed Ford's performance during that period against goals for
product programs (25%), cost reduction (25%), product quality and customer
acceptance worldwide (35%), and relationships with employees (15%). The
Committee decided that Ford partly achieved the product program and product
quality goals, met the cost reduction goals, mostly met the customer acceptance
goals, and met the employee relationships goals. Based on this performance, the
Committee decided to award 83% of the shares covered by the Contingent Stock
Rights and then make adjustments for individual performance. For the Named
Executives, the adjusted awards were 100% of the initial grants. The Final
Awards for the period ending in 1996 will be made in mid-1997 after Company
performance data are available. These amounts will appear in next year's proxy
statement.
RESTRICTED STOCK UNITS
The Committee granted Restricted Stock Units to six executives in 1996. Four of
the six -- Messrs. Trotman, Booker, Hagenlocker, and Nasser -- are Named
Executives.
19
<PAGE> 24
A Restricted Stock Unit is worth one share of common stock. Again, this ties the
executive's interests to your interests as stockholders. If the executive meets
certain goals decided by the Committee, Ford pays the executive cash for each
Restricted Stock Unit equal to the then-current value of a share of common
stock.
The Committee grants the Restricted Stock Units and decides the goals, the
restriction period, and the other terms of each Unit. The Committee also decides
the extent to which the goals have been met and the final number of Units to
award after the restriction period ends. During the restriction period, the
Units cannot be sold or otherwise disposed of, and they are subject to the same
conditions that apply to the Contingent Stock Rights.
The grant of Restricted Stock Units depends on the achievement of several major
Ford goals:
- worldwide product excellence;
- low-cost producer;
- industry leadership in customer satisfaction;
- empowered people;
- nimble through process leadership;
- industry leadership in corporate citizenship; and
- worldwide growth.
The Committee also reviews each person's contribution to meeting these goals.
Restricted Stock Units may not be sold until 18 months after retirement and are
subject to conditions under the 1990 Long-Term Incentive Plan. Dividend
Equivalents are paid in cash until the payout of the Units. The Units have no
voting rights.
SELECT RETIREMENT PROGRAM
To speed up the development of future leaders and reduce the number of top
manager jobs, the Committee supported making offers under the Select Retirement
Program, a voluntary retirement program for certain U.S. management employees,
in 1996. In general, the program adds three years of age and contributory
service for retirement benefits purposes. To be eligible, employees generally
must be at least age 55 with 10 or more years of service credited under Ford's
retirement plans. The Committee reviewed and approved Select Retirement Program
offers for certain executives. More information on the Program is on p. 33.
20
<PAGE> 25
CEO COMPENSATION
ANNUAL COMPENSATION
The Committee increased Mr. Trotman's salary from $1.5 to $2 million in 1996. In
deciding the increase, the Committee considered Mr. Trotman's job duties as well
as the pay practices of the survey companies. It had not increased his salary in
1994 or 1995.
The Committee considered Mr. Trotman's vision and strong leadership in
determining his 1996 bonus. It also considered other factors in applying its
"negative discretion" permitted under the Internal Revenue Code (section
162(m)). It also considered his job as head of a restructured global company
with a wide area of control and broad duties. The Committee and other
nonemployee directors of Ford reviewed his 1996 accomplishments, and the
Committee considered these combined views. Mr. Trotman's bonus for 1996 was
below the formula limit in the bonus plan, partly because of the annuity award
described below.
The Committee decided to defer payment of 50% of Mr. Trotman's bonus in the form
of credits for common stock, as discussed on pp. 17 and 18. This amount is at
risk until after his retirement. The value of the future payout depends on the
value of the common stock when the payout occurs after his retirement.
Further, the Committee awarded a conditional annuity under the Supplemental
Executive Retirement Plan to Mr. Trotman in lieu of a portion of his 1996 bonus.
The annuity provides additional retirement income (see p. 33), and is subject to
the plan's conditions. The present value of the annuity is charged against the
amount set aside for bonuses under the bonus plan. In deciding the amount of the
annuity, the Committee reviewed individual and Company performance as well as
the amount of Mr. Trotman's bonus compared to the bonuses of other executives.
The Committee also considered the relationship of his bonus to those of other
executives in the past. No other annuities were awarded in 1996.
LONG-TERM COMPENSATION
The Final Award of common stock in 1996 for Mr. Trotman was based on Ford's
performance from 1991 to 1995, using the method described above under "Long-Term
Compensation-Stock Awards." (The amount of the Final Award is shown in column
(h) of the Summary Compensation Table on p. 23, under the heading "LTIP
Payouts.") The Committee adjusted the amount based on the factors described
above. The Final Award was in shares of common stock that cannot be sold and
that generally are subject to restrictions until after his retirement. Thus, the
value of the Final Award depends on the future value of Ford's common stock.
The value of the stock options and Contingent Stock Rights granted to Mr.
Trotman in 1996 also depends on Ford's future success -- and whether that
success is reflected in the value of the common stock. For the Contingent Stock
Rights, the value of any Final Award also depends on the level of achievement of
goals created by the Committee for 1996-1998.
21
<PAGE> 26
In applying its "negative discretion" under the Internal Revenue Code in
deciding the number of stock options to grant Mr. Trotman (shown in column (b)
of the Options/SAR Grants Table on p. 26), the Committee considered the value of
his other long-term incentive compensation compared with competitive long-term
compensation values. It also considered the complexity and duties of his job. In
deciding the number of Restricted Stock Units to grant Mr. Trotman (shown in the
Long-Term Incentive Plan Awards Table on p. 28), the Committee also considered
the importance of his contribution to the achievement of major Company goals.
Finally, the Committee considered the deductibility of Mr. Trotman's
compensation under the tax laws. As discussed above, you approved plan
amendments allowing Ford to deduct, for federal income tax purposes, certain
parts of Mr. Trotman's compensation (as well as that of other Named Executives)
for tax years starting with 1995.
Compensation and Option Committee
Michael D. Dingman, Chairman
Roberto C. Goizueta
Drew Lewis
22
<PAGE> 27
COMPENSATION OF EXECUTIVE OFFICERS
The table below shows the before-tax compensation for the last three years for
Alex Trotman, who served as CEO in 1996, and the four next highest paid
executive officers at the end of 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------
Annual Compensation Awards Payouts
- ---------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Other Restricted Underlying
Annual Stock Options/ LTIP All Other
Compensation Award(s) SARs Payouts Compensation
Name and Principal Position Year Salary($) Bonus($)(1) ($) ($)(2) (#)(3) ($)(4) ($)(5)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Alex Trotman 1996 1,916,667 2,500,000 502,884 704,429 300,000 -- 114,996
Chairman, President and 1995 1,500,000 3,000,000 384,910 456,444 350,000 1,260,000 90,000
CEO 1994 1,500,000 6,000,000 232,950 266,991 350,000 2,382,865 90,000
- ---------------------------------------------------------------------------------------------------------------------------------
W. Wayne Booker(6) 1996 650,000 950,000 303,070 -- 75,000 -- 39,000
Vice Chairman 1995 603,750 1,100,000 227,141 -- 90,000 535,000 36,225
1994 600,000 2,200,000 142,546 -- 80,000 583,205 36,000
- --------------------------------------------------------------------------------------------------------------------------------
Edward E. Hagenlocker(7) 1996 758,333 1,050,000 347,730 20,332 150,000 -- 45,499
Vice Chairman 1995 704,167 1,250,000 266,741 -- 175,000 693,000 42,247
1994 675,000 2,500,000 160,773 -- 150,000 669,008 40,498
- --------------------------------------------------------------------------------------------------------------------------------
Jacques A. Nasser(8) 1996 591,667 950,000 231,196 -- 85,000 -- 35,500
Executive Vice President 1995 537,917 850,000 138,469 -- 100,000 189,000 32,273
and President, Ford 1994 477,917 1,500,000 70,958 -- 100,000 168,867 30,045
Automotive Operations
- --------------------------------------------------------------------------------------------------------------------------------
Kenneth Whipple(9) 1996 647,500 950,000 321,700 86,904 75,000 -- 38,850
Executive Vice President; 1995 603,750 1,100,000 273,750 81,795 90,000 1,165,500 36,225
President, Ford Financial 1994 600,000 2,200,000 200,470 69,778 80,000 1,305,000 36,000
Services Group; and
Chairman and CEO, Ford
Motor Credit Company
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES
(1)Payment of 50% of the bonus awarded to the CEO and 25% of the bonuses awarded
to the other Named Executives for 1996 will be deferred until after they retire
or after their employment ends.
(2)Amounts shown as Restricted Stock Awards represent Dividend Equivalents paid
in restricted stock under the Long-Term Incentive Plans. Restrictions on this
stock generally lapse 18 months after retirement. Holders of restricted stock
receive the same cash dividends as other stockholders owning common stock.
23
<PAGE> 28
Listed below are the total number of shares of restricted stock owned by the
Named Executives as of December 31, 1996, including shares reported as "LTIP
Payouts" in column (h) of this table and shares of common stock contingently
credited under the bonus plan, as well as the market values of these shares
(determined by the closing price of common stock on the New York Stock Exchange
on December 31, 1996):
<TABLE>
<CAPTION>
Named Executive Number of Shares Market Value
--------------- ---------------- ------------
<S> <C> <C>
Alex Trotman......................................... 433,692 $13,986,567
W. Wayne Booker...................................... 95,465 $ 3,078,746
Edward E. Hagenlocker................................ 123,336 $ 3,977,586
Jacques A. Nasser.................................... 29,467 $ 950,311
Kenneth Whipple...................................... 202,905 $ 6,543,686
</TABLE>
The ultimate worth of the restricted stock depends on the value of common stock
when the restrictions lapse. Under the Long-Term Incentive Plans generally, the
Compensation Committee determines the restriction period for shares included in
each Final Award. For each of the Named Executives, restrictions ended on
January 1, 1997 on up to 18,000 shares awarded for the 1990-94 performance
period. Restrictions are scheduled to end on January 1, 1998 on up to 18,000 of
the shares awarded for the 1991-95 performance period.
(3)In general, under the 1985 Stock Option Plan and the 1990 Long-Term Incentive
Plan, stock appreciation rights may be granted along with the grant of options
to executive officers. Exercise of a stock appreciation right cancels the
related stock option, and vice versa.
(4)These amounts represent Final Awards under the Long-Term Incentive Plans. The
Final Awards are in restricted stock and are based on the attainment of
performance goals and on individual performance. (See note 2 for more details on
restricted stock.) The amounts shown represent Final Awards for performance
periods ending in 1995 and 1994. No amount is shown for the performance period
ending in 1996 because the awards will not be decided until the middle of 1997.
Those amounts will appear in next year's proxy statement.
(5)These amounts are (1) matching contributions by Ford under the Savings and
Stock Investment Plan ("SSIP") and (2) the values of certain credits provided to
the Named Executives under the Benefit Equalization Plan ("BEP"). Under the BEP,
Ford provides benefits substantially equal to benefits that could not be
provided under the SSIP because of limitations under the Internal Revenue Code.
For
24
<PAGE> 29
1996, the amounts shown in column (i) as SSIP matching contributions and BEP
credits, respectively, are as follows:
<TABLE>
<CAPTION>
SSIP
Matching BEP
Person Contributions Credits
------ ------------- -------
<S> <C> <C> <C>
Alex Trotman.......................................... $ 9,000 and $105,996
W. Wayne Booker....................................... $ 9,000 and $ 30,000
Edward E. Hagenlocker................................. $ 9,000 and $ 36,499
Jacques A. Nasser..................................... $ 9,000 and $ 26,500
Kenneth Whipple....................................... $ 9,000 and $ 29,850
</TABLE>
(6)All of Mr. Booker's 1994 and 1995 compensation, and 83% of his 1996
compensation, was for his service as Executive Vice President. The rest of his
1996 compensation was for his service as Vice Chairman.
(7)67% of Mr. Hagenlocker's 1994 compensation, all of his 1995 compensation, and
83% of his 1996 compensation was for his service as President of Ford Automotive
Operations. The rest of his 1996 compensation was for his service as Vice
Chairman. The rest of his 1994 compensation was for his service as Executive
Vice President of North American Automotive Operations.
(8)100% of Mr. Nasser's 1994 and 1995 compensation, and 80% of his 1996
compensation, was for his service as Group Vice President, Product Development.
The rest of his 1996 compensation was for his service as Executive Vice
President and President of Ford Automotive Operations.
(9)100% of Mr. Whipple's compensation for 1994, 1995 and 1996 was for his
service as Executive Vice President of Ford and President, Ford Financial
Services Group.
STOCK OPTIONS
The 1990 Long-Term Incentive Plan allows grants of stock options and other
rights relating to common stock. In general, whether exercising stock options is
profitable depends on the relationship between the common stock's market price
and the options' exercise price, as well as on the grantee's investment
decisions. Options that are "in the money" on a given date can become "out of
the money" if prices change on the stock market. For these reasons, we believe
that placing a current value on outstanding options is highly speculative and
may not represent the true benefit, if any, that may be realized by the grantee.
25
<PAGE> 30
The following two tables give more information on stock options.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Grant Date
Individual-Grants Value(2)
- -------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
% of Total
Number of Options/SARs
Securities Granted to Exercise
Underlying Employees or Base Grant Date
Options/SARs in Fiscal Price Expiration Present
Name Granted(#) Year ($/Sh) Date Value $
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alex Trotman 300,000 3.8% 32.6875 3/14/2006 2,079,000
- -------------------------------------------------------------------------------------------------------------------
W. Wayne Booker 75,000 0.9% 32.6875 3/14/2006 519,750
- -------------------------------------------------------------------------------------------------------------------
Edward E. Hagenlocker 150,000 1.9% 32.6875 3/14/2006 1,039,500
- -------------------------------------------------------------------------------------------------------------------
Jacques A. Nasser 85,000 1.1% 32.6875 3/14/2006 589,050
- -------------------------------------------------------------------------------------------------------------------
Kenneth Whipple 75,000 0.9% 32.6875 3/14/2006 519,750
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES
(1)The exercise price of the stock options is the average of the high and low
selling prices on the New York Stock Exchange on the grant date. Ford did not
grant any stock appreciation rights in 1996.
25% of a stock option grant can be exercised one year after the grant date, 50%
after two years, 75% after three years, and 100% after four years. Any
unexercised options expire after ten years.
If a grantee retires, becomes disabled, or dies, his or her options continue to
be exercisable up to the normal expiration date. In most other instances of
employment termination, all rights end upon termination.
Options are subject to certain conditions, including not engaging in competitive
activity. Options generally cannot be transferred except through inheritance.
In general, each grantee agrees to remain a Ford employee for at least one year
from the grant of the option.
(2)These values were determined using the Black-Scholes methodology and the
assumptions described in Note 11 to Ford's Consolidated Financial Statements
contained in Ford's 1996 Annual Report. The ultimate value of the options, if
any, will depend on the future value of the common stock and the grantee's
investment decisions, neither of which can be accurately predicted.
26
<PAGE> 31
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Securities Value
Underlying Unexercised of Unexercised
Options/SARs at FY-End In-the-Money Options/
(#) SARs at FY-End($)(2)
---------------------------------------------------
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise(#)(1) $ Unexercisable Unexercisable
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Alex Trotman 103,000 1,323,215 394,500/ 2,541,688/
737,500 623,438
- ------------------------------------------------------------------------------------------------------------------------------
W. Wayne Booker 8,500 178,233 151,500/ 1,475,863/
182,500 144,363
- ------------------------------------------------------------------------------------------------------------------------------
Edward E. Hagenlocker 58,000 628,748 154,250/ 766,126/
356,250 271,876
- ------------------------------------------------------------------------------------------------------------------------------
Jacques A. Nasser 0 0 129,000/ 1,053,719/
205,000 162,188
- ------------------------------------------------------------------------------------------------------------------------------
Kenneth Whipple 0 0 312,250/ 3,071,508/
182,500 144,363
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES
(1)This number represents shares of common stock with respect to which stock
appreciation rights were exercised for cash. No shares of common stock were
acquired in connection with the exercise of these stock appreciation rights.
(2)These year-end values represent the difference between the fair market value
of common stock subject to options (based on the stock's closing price on the
New York Stock Exchange on December 31, 1996) and the exercise prices of the
options. "In-the-money" means that the fair market value of the stock is greater
than the option's exercise price on the valuation date.
CONTINGENT STOCK RIGHTS AND RESTRICTED STOCK UNITS
Under the Long-Term Incentive Plans, eligible employees may receive
nontransferable Contingent Stock Rights. A Contingent Stock Right is the right
to receive, after a specified performance period, a Final Award of up to a
specified number of shares of common stock. The number of shares depends on
whether the Contingent Stock Right's performance goals are achieved and on the
employee's individual performance.
Under the Long-Term Incentive Plan, eligible employees also may receive
nontransferable Restricted Stock Units. A Restricted Stock Unit is the right to
receive, after the restriction period expires and subject to the achievement of
certain goals, cash equal in value to one share of common stock. The
27
<PAGE> 32
final number of Restricted Stock Units that can be paid out in cash depends on
whether the goals are achieved and on the employee's individual contribution.
The following table shows information on 1996 grants of Contingent Stock Rights
and Restricted Stock Units to the Named Executives:
LONG-TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Estimated Future Payouts
under Non-Stock Price-Based Plans
---------------------------------------
(a) (b) (c) (d) (e) (f)
Performance
Number of or Other
Shares, Units Period Until
or Other Maturation Threshold Target(2) Maximum
Name Rights(#) or Payout (#) (#) (#)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alex Trotman CSRs 150,000 1996-98 0 120,000 150,000
RSUs 60,000 Ret. + 18 mos. 0 n/a 60,000
- --------------------------------------------------------------------------------------------------------------------------
W. Wayne Booker CSRs 30,000 1996-98 0 24,000 30,000
RSUs 10,000 Ret. + 18 mos. n/a 10,000
- --------------------------------------------------------------------------------------------------------------------------
Edward E. Hagenlocker CSRs 50,000 1996-98 0 40,000 50,000
RSUs 10,000 Ret. + 18 mos. n/a 10,000
- --------------------------------------------------------------------------------------------------------------------------
Jacques A. Nasser CSRs 35,000 1996-98 0 28,000 35,000
RSUs 20,000 Ret. + 18 mos. n/a 20,000
- --------------------------------------------------------------------------------------------------------------------------
Kenneth Whipple CSRs 30,000 1996-98 0 24,000 30,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES
(1)These entries represent the number of shares specified in Contingent Stock
Rights or Restricted Stock Units granted in 1996.
(2)No payout targets were created for the Restricted Stock Units.
CONTINGENT STOCK RIGHTS
The Compensation Committee decides the number of shares to be included in a
Final Award by determining how completely certain performance goals were
achieved. Usually, Contingent Stock Rights are granted each year. The
performance period is ordinarily five years for grants made before 1994 and
three years for grants made in 1994 or afterward. For 1996, performance goals
for the Contingent Stock Rights reported in column (b) of the table cover the
1996-98 period and include essentially the same performance measures for each of
the Named Executives. The performance goals and the mechanics of receiving a
Final Award are more fully discussed on pp. 18 and 19.
28
<PAGE> 33
Dividend Equivalents paid in 1996 to the Named Executives in cash and in
restricted stock are reported in columns (e) and (f) of the Summary Compensation
Table on p. 23. Final Awards of common stock made to the Named Executives for
the 1991-95 performance period are reported in column (h) of the Summary
Compensation Table.
The amount ultimately realized for a Final Award will depend on the value of the
common stock when the restrictions lapse and on the "earning out conditions."
Under these conditions, if an employee quits, retires without Company approval,
is released in Ford's best interest, is discharged, or engages in competitive
activity after termination, all of the employee's undistributed Final Awards, as
well as outstanding Contingent Stock Rights, will be forfeited and canceled
unless a waiver is granted by the Committee. Further, all of the employee's
rights under any award will be forfeited if the Committee determines that the
employee acted in a manner inimical to Ford's best interests. After the
restriction period ends, however, shares of common stock representing a Final
Award are distributed to the employee free of restrictions and conditions.
RESTRICTED STOCK UNITS
The Committee creates the performance goals for the Restricted Stock Units and
selects the persons who receive the Units. The 1996 grants, reported in column
(b) of the table on p. 28, depend on the achievement of seven major Company
goals described on p. 20. Dividend Equivalents paid to the Named Executives are
included in column (e) of the Summary Compensation Table. No Restricted Stock
Units were paid out in 1996 to any of the Named Executives.
As with Contingent Stock Rights, the amount ultimately realized under a
Restricted Stock Unit depends on the achievement of performance goals, the
compliance with certain conditions, and the value of common stock when the
restrictions end.
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<PAGE> 34
STOCK PERFORMANCE GRAPHS
SEC rules require proxy statements to contain a performance graph comparing,
over a five-year period, the performance of our common stock against Standard &
Poor's 500 Stock Index and against either a published industry or
line-of-business index or a group of peer issuers. Ford chose the other two
principal U.S. auto manufacturers -- Chrysler and General Motors -- as the peer
issuers for the graph. We think this approach is more informative since relevant
line of business indexes merely combine the three U.S. automakers. A similar
performance graph covering a ten-year period shows the relative stock
performance in the context of a period that more closely represents a full
business cycle in the industry. Both graphs assume an initial investment of $100
and quarterly reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURN
FORD, GENERAL MOTORS, CHRYSLER AND S&P 500 STOCK INDEX
[LINE GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD FORD GENERAL CHRYSLER S&P 500
(FISCAL YEAR COVERED) MOTORS
<S> <C> <C> <C> <C>
1991 100 100 100 100
1992 159 116 280 108
1993 246 201 472 118
1994 219 157 444 120
1995 237 201 519 165
1996 277 220 649 201
</TABLE>
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<PAGE> 35
COMPARISON OF TEN-YEAR CUMULATIVE SHAREHOLDER RETURN
FORD, GENERAL MOTORS, CHRYSLER AND S&P 500 STOCK INDEX
[LINE GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD FORD GENERAL CHRYSLER S&P 500
(FISCAL YEAR COVERED) MOTORS
<S> <C> <C> <C> <C>
1986 100 100 100 100
1987 139 99 93 105
1988 195 144 112 123
1989 179 156 87 162
1990 118 136 63 157
1991 133 120 62 204
1992 212 139 173 220
1993 328 241 292 242
1994 292 188 275 245
1995 316 241 321 337
1996 370 263 401 412
</TABLE>
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<PAGE> 36
RETIREMENT PLANS
Ford's General Retirement Plan ("GRP") provides a benefit for each year of
noncontributory participation, and added benefits for those who make additional
contributions. Ford also has two other retirement plans. One is the Supplemental
Executive Retirement Plan ("SERP"), under which certain executives, including
the Named Executives, may receive (1) an additional annual payment after
retirement based on years of credited service and final average base salary,
and/or (2) annuities based on Company earnings, the executive's performance, and
other factors. The other plan is the Benefit Equalization Plan ("BEP"), under
which eligible employees, including the Named Executives, receive benefits
substantially equal to those that would have been provided under the GRP but
that could not be provided because of Internal Revenue Code limitations.
The following table shows the annual retirement benefits that would be payable
at normal retirement (age 65 or later) on January 1, 1997. Benefits are shown
for various rates of final average base salary and assume that employee
contributions were made for the indicated periods. Employees who have completed
at least three months of service, effective January 1, 1996, contribute at the
rate of 1 1/2% of base salary (3 1/2% of base salary over $1,150 a month before
1989). The table shows total annual amounts payable under the GRP, SERP and BEP,
including amounts relating to employee contributions.
ANNUAL CONTRIBUTORY PENSIONS
YEARS OF SERVICE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Final
Average
Base Salary 20 Years 25 Years 30 Years 35 Years 40 Years
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
$ 200,000 $ 83,850 $ 105,110 $ 126,380 $ 147,640 $ 167,090
- -----------------------------------------------------------------------------------------------------------
400,000 194,530 243,840 293,160 342,470 387,690
- -----------------------------------------------------------------------------------------------------------
600,000 305,210 382,570 459,940 537,300 608,290
- -----------------------------------------------------------------------------------------------------------
800,000 423,890 531,300 638,720 746,130 844,890
- -----------------------------------------------------------------------------------------------------------
1,000,000 530,570 665,030 799,500 933,960 1,057,490
- -----------------------------------------------------------------------------------------------------------
1,200,000 637,250 798,760 960,280 1,121,790 1,270,090
- -----------------------------------------------------------------------------------------------------------
1,400,000 743,930 932,490 1,121,060 1,309,620 1,482,690
- -----------------------------------------------------------------------------------------------------------
1,600,000 850,610 1,066,220 1,281,840 1,497,450 1,695,290
- -----------------------------------------------------------------------------------------------------------
1,800,000 957,290 1,199,950 1,442,620 1,685,280 1,907,890
- -----------------------------------------------------------------------------------------------------------
2,000,000 1,063,970 1,333,680 1,603,400 1,873,110 2,120,490
- -----------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 37
GRP and BEP benefits are computed by averaging the employee's highest five
consecutive annual base salaries in the ten years immediately before retirement.
SERP benefits generally are computed by averaging the employee's final five
year-end annual base salaries immediately before retirement. No annuities were
awarded in 1993 or 1994. Mr. Trotman received annuities for 1995 and 1996.
Assuming a retirement age of 65 and satisfaction of all conditions, the
estimated percentage of total annual retirement benefits to be paid to Mr.
Trotman under his annuities is 4%.
As of December 31, 1996, the credited years of service for each of the Named
Executives were as follows: Alex Trotman, 41 years; W. Wayne Booker, 38 years;
Edward E. Hagenlocker, 32 years; Jacques A. Nasser, 3 years (does not include 26
years of credited service under the Ford Australia retirement plan); and Kenneth
Whipple, 38 years.
The GRP and BEP benefits are computed as a joint-and-survivor annuity. The SERP
benefit is computed as a straight-life annuity. Benefits payable under the plans
are not reduced for Social Security or other offsets.
In addition to the GRP and BEP, Ford maintains a voluntary retirement program
for select U.S. management employees called the Select Retirement Program
("SRP"). The SRP adds three years of age and contributory service to the
employee for retirement benefits purposes, with a 15% floor on the increase of
the employee's monthly benefits under any applicable retirement plans. The SRP
calculates average pay on the basis of final pay for three of the five years.
SRP benefits also include continuation of health and life insurance on the same
terms as other retiring employees, as well as predecision counseling and
reemployment assistance. To participate in the SRP, an employee must be selected
by management and generally must be at least age 55 and have ten or more years
of credited service under the retirement plans.
PROPOSALS REQUIRING YOUR VOTE
The following six proposals may be voted on at the meeting. Ford will present
the first proposal; we expect the remaining five to be presented by
stockholders. In accordance with SEC rules, the proposals are printed exactly as
they were submitted.
A majority of the votes that could be cast by stockholders who are either
present in person or represented by proxy at the meeting is required to approve
each proposal. The votes will be computed for each share as described on p. 1.
Spaces are provided in the accompanying proxy form to approve, disapprove, or
abstain from each of the proposals.
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<PAGE> 38
PROPOSAL 1
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors selects and hires independent
public accountants to audit Ford's books of account and other corporate records.
The Audit Committee's selection for 1997 must be approved by you.
The Audit Committee selected Coopers & Lybrand L.L.P. to audit Ford's books of
account and other corporate records for 1997. This firm has audited Ford's books
since 1946 and is well qualified. Representatives of Coopers & Lybrand L.L.P.
will be present at the meeting with the opportunity to make a statement and
answer questions.
For 1996, Ford paid Coopers & Lybrand L.L.P., $28.1 million for world-wide audit
and nonaudit services.
Ford management will present the following resolution to the meeting:
"RESOLVED: That the selection, by the Audit Committee of the Board of Directors,
of Coopers & Lybrand L.L.P. as independent public accountants to audit the books
of account and other corporate records of the Company for 1997 is ratified."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
PROPOSAL 2
ESTABLISHMENT OF TERM LIMITS FOR OUTSIDE DIRECTORS
Mrs. Evelyn Y. Davis, Suite 215, Watergate Office Building, 2600 Virginia Ave.,
NW, Washington, D.C. 20037, and Highlights and Lowlights, who state that they
own 200 shares and two shares, respectively, of common stock, have informed the
Company that they plan to present the following proposal at the meeting:
"RESOLVED: That the stockholders of Ford recommend that the Board take the
necessary steps so that future outside directors shall not serve for more than
six years.
REASONS: The President of the U.S.A. has a term limit, so do Governors of many
states. Newer directors may bring in fresh outlooks and different approaches
with benefits to all shareholders. No director should be able to feel that his
or her directorship is until retirement. Last year the owners of 64,357,817
shares, representing approximately 4.6% of shares voting, voted FOR this
proposal.
If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 2.
This proposal is similar to a proposal included in last year's Proxy Statement
that was supported by less than 5% of the votes cast at last year's meeting.
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<PAGE> 39
We believe this proposal is not in your interests or those of Ford. Ford's
By-Laws state that a director may not be re-elected after age 70 (unless the
Board annually waives the limitation for specific persons). This provides an
appropriate amount of turnover on the Board. For example, since 1986, ten
outside directors have retired from the Board and seven new outside directors
have joined the Board.
Ford is a large and complex company that competes in diverse and demanding
markets worldwide. It is best served by a balance of continuity of service and
the introduction of new members on its Board. Ford's present policy provides
that balance. More limitations on Board service would deprive the Company of the
experience and knowledge its outside directors have acquired.
We oppose this resolution because term limits curtail the valuable service of
directors while providing no benefit to Ford or its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 2.
PROPOSAL 3
DISCONTINUANCE OF OPTIONS, RIGHTS, AND STOCK APPRECIATION RIGHTS FOR MANAGEMENT
AND THE BOARD OF DIRECTORS
Robert D. Morse of 212 Highland Ave., Moorestown, New Jersey 08057, who states
that he owns $1,000 or more of common stock, has informed the Company that he
plans to present the following proposal at the meeting:
"PROPOSAL: That the directors of the Company consider the discontinuance of all
options, rights, SAR's, etc. after termination of existing agreements with
senior management and directors. This does not include programs for other
employees of the Company.
REASONS: These increased benefits have failed to produce the claim that it adds
to shareholder value and retains qualified personnel, simply because another
firm can offer higher benefits. These programs reduce your equity at every
redemption, increase administration costs of record keeping, and proxy space; as
much as 29 pages were used by one company on these programs of self-benefits.
Officers and directors are compensated enough to buy on the open market, just as
you and I, if they are so inclined. Please vote YES and vote NO on nominees
until they stop this practice. There were 60 million votes cast FOR in 1996,
representing a good many shareholders.
If officers filled out a daily work-sheet, what would the output show? Thank
you!"
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.
This proposal is similar to the proposal included in last year's Proxy Statement
that was supported by less than 5% of the votes cast at last year's meeting.
The use of stock-based awards allows Ford to convert part of the cash
compensation that otherwise would be immediately payable, for example, as
salary, into compensation that is valuable only if Ford is
35
<PAGE> 40
successful. This approach links the interests of the executives with your
interests because all benefit from increases in the value of common stock.
Stock-based awards are an integral part of Ford's compensation program (see the
Compensation and Option Committee Report on Executive Compensation, pp. 16-22.)
These awards assure that the overall compensation of senior executives remains
competitive. More importantly, stock-based awards link executive compensation
directly with the Company's long-term performance. Common stock awards under the
Long-Term Incentive Plan generally cannot be sold until eighteen months after
retirement. In addition, stock options cannot be exercised in full until four
years following the grant. These restrictions emphasize long-term performance
and link executive compensation with your interests as stockholders.
We oppose the proposal because Ford and its stockholders are best served by a
compensation program that includes a stock component whose value is directly
tied to the value of Ford's common stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.
PROPOSAL 4
SALARY INCREASES AND STOCK OPTION GRANTS IN THE EVENT THE DIVIDEND IS CUT
Edward S. George of 89 Corning Hill, Glenmont, New York 12077, who states that
he owns of 9,000 shares of common stock, has informed the Company that he plans
to present the following proposal at the meeting:
"Whereas the dividend is the first casualty in any economic downturn and the
stockholder is the first casualty and the last to benefit from an upturn, be it
RESOLVED: That when a dividend is cut, it is recommended that no salaries will
be increased or any stock options allowed to executives or directors until the
dividend is restored to its original amount before the cut.
The bullet must be large enough to enable the executives and directors as well
as the stockholders to get their teeth on it.
The administration will maintain that the increases in salary and stock options
are necessary to attract and hold good people. This cliche belongs with the one
'The check is in the mail', the New York State Legislature and certain elected
officials to justify an increase in their salaries, and 'I'm from the government
and I'm here to help.' "
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 4.
This proposal is similar to the proposal included in last year's Proxy Statement
that was supported by less than 6% of the votes cast at last year's meeting.
36
<PAGE> 41
The proposal seeks to limit unduly the Board's discretion on executive
compensation by barring salary increases and option grants to senior executives
if the dividend is reduced. We believe that the proposal is not in your or
Ford's best interests.
We note that since the first quarter of 1994, the common stock dividend was
increased five times, representing a cumulative increase of 92.5%. At year-end
1996, the dividend yield on Ford's common stock was the highest of any major
U.S. auto company.
The Compensation and Option Committee Report on Executive Compensation (pp.
16-22) describes the factors considered in deciding executive compensation.
Compensation is based on Ford's performance over a wide range of factors
(including product quality, customer satisfaction, affordable products and
profitability). Compensation must be competitive in order to attract and retain
high quality executives.
The proposal would make the dividend the controlling factor in deciding
executive compensation. This could be counterproductive, particularly in a
cyclical industry, in periods when earnings do not justify a particular dividend
level. During such periods, it is appropriate and desirable to provide
incentives to management to improve performance. As shareholders, you share in
the benefits of management's efforts.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 4.
PROPOSAL 5
PROPOSED REVIEW OF EXECUTIVE COMPENSATION
A number of stockholders have informed the Company that they plan to present the
following proposal at the meeting. The names, addresses and information on the
number of shares owned by them will be provided upon request.
"WHEREAS: We believe financial, social and environmental criteria should all be
taken into account in setting compensation packages for corporate officers.
Public scrutiny of executive compensation is intensifying, with serious concerns
being expressed about the widening chasm between salaries of top corporate
officers, U.S. employees and workers in low wage countries. Concerns include:
- In 1995, Pearl Meyer and Partners reported that CEO compensation
packages at large corporations increased 23%, to an average of $4.37
million. That is $2,100 an hour, or 183 times the average U.S.
worker's 1995 hourly earnings according to the Council on
International and Public Affairs.
- As CEO salaries soared in 1995, U.S. private sector worker pay and
benefits inched up just 2.8%, the lowest increase since the Department
of Labor created the employment cost index in 1980.
37
<PAGE> 42
- Executives of companies with Mexican operations often make several
thousand times the pay of their Mexican employees. For example, Allied
Signal's CEO, Lawrence Bossidy's compensation package of $8.4 million
in 1995 was more than the company's total annual Mexican payroll of
$7.8 million for approximately 3,800 workers. In 1994, Mr. Alex
Trotman made 2,003 times the estimated annual pay of an average Ford
employee in Mexico.
- Our company's Chairman, President and Chief Executive Officer received
a total compensation package of $5,781,354 in 1995, or $111,180 per
week. Mexican maquiladora workers have seen their purchasing power
drop dramatically. In January 1996, a Ford maquiladora worker in Nuevo
Laredo received a weekly salary of 280.46 pesos ($37.20), plus 97.50
pesos worth of food coupons. This salary does not even provide
purchasing power sufficient for workers to meet their families'
immediate needs.
- Our company needs to address the implications of paying high executive
salaries and marginal survival wages to workers in developing nations.
The situation in Mexico is illustrative of conditions at other Ford
plants benefiting from cheap labor. Consequences of paying widely
divergent compensation levels might include decreased worker
commitment, poor labor-management relations, and harm to Ford's public
image. We believe our company should adopt a policy of paying a
sustainable wage, providing enough purchasing power for workers to
support themselves and their families. Bristol-Myers Squibb and
Proctor & Gamble have established a living wage policy for their
global operations.
RESOLVED: Shareholders request the Board institute a special Executive
Compensation Review, and prepare a report available to shareholders by October
1997 summarizing the results and recommended changes. The review shall cover
pay, benefits, perks, stock options, and special arrangements in the
compensation packages for all top officers.
The review will include:
1. Ways to link our company's executive compensation more closely to financial,
social and environmental performance with proposed criteria.
2. Comparison of compensation packages for company officers with the lowest and
average wages for company employees in the U.S. and with three low wage
countries, including Mexico.
3. Whether a cap should be placed on compensation packages for officers to
prevent our company from paying excessive compensation."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 5.
This proposal has aspects substantially similar to earlier proposals that dealt
with working conditions in low wage countries, such as Mexico. There are two
issues raised by this proposal and we believe Ford's current approach to both is
in the best interests of its stockholders. Also, in our view, the proposal would
not produce any significant change in policy or practice or otherwise benefit
the Company or its stockholders.
38
<PAGE> 43
Executive Compensation.
We believe the compensation paid to senior executives is appropriate and
competitive.
The Compensation and Option Committee Report on Executive Compensation (pp.
16-22) describes the factors it considered in deciding executive compensation.
Compensation at Ford is based on Company performance over a wide range of
criteria, including certain of the criteria proposed by the proponents.
In addition, compensation packages for Company officers are reviewed regularly
and compared to compensation packages of officers at companies comparable to
Ford to ensure the Company is not paying "excessive" compensation. Also,
compensation packages must be competitive in order to attract and retain high
quality executives. The Committee decided, and still believes, that placing a
cap on compensation packages could prevent the Company from attracting and
retaining high quality executives.
We do not believe a further study, as requested by the proponents, would produce
any significantly different information or results, and would be costly and
burdensome to undertake.
Compensation Paid in Developing Countries.
Ford needs to be competitive with other global companies in the world market.
That said, Ford recognizes that it must also be a responsible international
citizen. We believe our policies as they relate to employment matters in the
countries where the Company does business adequately protect and properly
provide for employees at all Ford locations throughout the world. While it is
not practical to list all such policies and related practices, a few examples
that address matters raised by the proposal are worth noting:
- Ford policy requires that all of its facilities comply with applicable
laws, including laws dealing with worker health, safety, welfare, wages
and benefits and the environment.
- Ford provides wages and benefits that are fully competitive with and
often exceed compensation paid in the local labor market.
- Ford recognizes the right of workers to organize, to bargain collectively
and to join labor organizations.
- Working conditions at Ford facilities meet or exceed local law
requirements.
- Ford has extensive employee training programs at Company locations.
Training is offered on a non-discriminatory basis.
- Ford does not employ child labor (even where local law might otherwise
permit it). It also does not employ prison or forced labor.
For these reasons, we believe that the proposal is not in the best interests of
Ford or its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 5.
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<PAGE> 44
PROPOSAL 6
INDEPENDENT DIRECTORS
John Chevedden of 2215 Nelson Avenue, Number 205, Redondo Beach, California
90278, on behalf of Ray T. Chevedden and Veronica G. Chevedden, who own $1,000
or more of common stock, has informed the Company that he plans to present the
following proposal at the meeting:
"RESOLVED:
The Ford Directors and Management take all enabling action to require all
outside Ford Directors to be independent.
"All enabling action" includes amending the By-Laws on the day of the 1997
shareholder meeting.
REASON:
Directors formulate corporate policies and monitor management in
implementing those policies. Due to the critical importance of this function, it
is in the best interest of all stockholders, that outside Directors be
independent.
Ford issues that demonstrate the need for Management overview by
independent Directors include:
1400 Fords catch fire. Ford said nothing is wrong.
USA Today April 18, 1996
Ford finally recalled 8.7 Million Fords to replace fire-prone ignition-switches.
Ford waited too long to fix the problem.
USA Today Editorial April 29, 1996 (11 days later)
As money flows in from Ford's lending empire, lawsuits proliferate, charging
Ford with cheating disadvantaged borrowers. Charges include fraud, forgery and
trickery. Verdicts and settlements exceed $40 million for over 10,000 Ford
customers.
The Nation May 20, 1996
Based on CalPERS and the Florida Retirement System Trust Fund criteria (Two
major public pension funds that seek to increase stock values), Independent
Directors are:
- Not employed by Ford or an affiliate, as an executive, within the last
5 years.
- Are not and were not employed by Ford as paid advisors or consultants.
For instance, as lawyers, accountants or professional service
providers.
- Are not employed by a customer, supplier or professional services
vendor to Ford.
- Have no personal services contracts with Ford.
40
<PAGE> 45
- Are not employed by a foundation or university that receives grants or
endowments from Ford or the Ford Foundation.
- Are not a relative of Ford management.
- Are not an Officer or Director of another company, where the Ford
Chairman or CEO is also a Director.
Another factor impacting Director independence is the need for relevant
automotive experience as highlighted in the media:
Board members contribute only when they know the business. The Ford Board is not
much better than GM. One expert figures that 2 GM Directors out of 12 outside GM
Directors are qualified to be GM Directors. Non-employee Directors must oversee
management. They don't have to be car enthusiasts, but they must understand
manufacturing and marketing.
Automotive News May 23, 1994
Automotive News Cartoon:
One voice from auto-maker Boardroom -- "Henceforth, Board members will be
required to know something about the auto industry."
Response from 10 Board members: "GASP!"
Also affecting Director independence is their burden of time-consuming
obligations -- as Directors for a list of other companies.
For instance, Ford Director Roberto C. Goizueta is not only Coca-Cola
Chairman and CEO, but Mr. Goizueta also has a substantial additional workload as
Director for 5 other companies, and no automotive experience.
- - MARK YOUR PROXY "YES" FOR INDEPENDENT DIRECTORS.
- - Vote "yes" for effective Board oversight to ensure Ford's long-term
stock-price increase and growth."
------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 6.
We believe that adoption of this proposal is contrary to the interests of Ford
and you. This proposal is unduly restrictive and would deprive Ford of the
services of highly qualified directors.
Ford is a large and complex company. Its directors come from a wide array of
industries, companies and educational and other institutions, and have a broad
range of experience and knowledge. Ford has been well served by its present
policy on board membership, which selects nominees for election based on
criteria, including overall business experience and specific expertise, and
giving due consideration of any relationships with the Company. Any material
relationships between Ford and any director are disclosed under SEC rules. (See
p. 15 of this Proxy Statement.)
41
<PAGE> 46
We note that there are only two Ford employees on the Board of Directors.
Adoption of this proposal would unduly restrict the candidates available for
service on the Board. It also would exclude from consideration candidates who
have sound judgment, extensive experience, and a thorough knowledge of the
operations of the Company. We believe that Ford's current policies regarding the
independence of directors is appropriate.
For these reasons, we believe that the proposal is unnecessary and not in the
best interests of Ford or you.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 6.
STOCKHOLDER PROPOSALS FOR 1998
Any stockholder proposal intended for inclusion in the proxy material for the
1998 annual meeting must be received no later than December 8, 1997.
ANNUAL REPORT AND OTHER MATTERS
Ford's 1996 Annual Report, including consolidated financial statements, was
recently mailed to you. A list of the stockholders of record entitled to vote at
the annual meeting will be available for review by any stockholder, for any
purpose related to the meeting, between 9:00 a.m. and 5:00 p.m. at Cleary
International Centre, 201 Riverside Drive West, Windsor, Ontario, Canada, for
ten days prior to the meeting.
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be paid by Ford. We
do not expect to pay any fees for the solicitation of proxies, but may pay
brokers, nominees, fiduciaries and other custodians their reasonable fees and
expenses for sending proxy materials to beneficial owners and obtaining their
instructions. In addition to solicitation by mail, proxies may be solicited in
person, or by telephone, facsimile transmission or other means of electronic
communication, by directors, officers and other employees of the Company.
By Order of the Board of Directors,
/s/ JOHN M. RINTAMAKI
John M. Rintamaki
Secretary
April 7, 1997
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<PAGE> 47
HOW TO ATTEND THE ANNUAL MEETING
STOCKHOLDERS OF RECORD
When you complete your proxy, if you plan to attend the annual meeting, please
check the box to let us know. If you check the box on the proxy card indicating
that you plan to attend, we'll mail you a ticket that will admit the named
stockholder(s) and one guest. If your ticket does not arrive in time, we can
issue you a ticket at the door.
"STREET NAME" HOLDERS
Since most brokers don't participate in our advance ticket plan, tell your
broker you're planning to attend the meeting and would like a "legal proxy."
Then simply bring that form to the meeting, and we'll give you a ticket at the
door. If you can't get a legal proxy in time, we can still give you a ticket at
the door if you bring a copy of your most recent brokerage account statement
showing that you own Ford stock.
DIRECTIONS TO THE ANNUAL MEETING SITE
The meeting is being held at Cleary International Centre, 201 Riverside Drive
West, Windsor, Ontario, Canada, Phone: (519) 252-8311. The Centre is located on
Riverside Drive between Ferry and Church Streets (see map below). Ample parking
is available in the Centre's garage on Pitt Street or in the parking lots across
the street along the Detroit River. The doors to the exhibits will open at 8:30
a.m., and the meeting will begin promptly at 10:00 a.m., eastern daylight
savings time.
If you are a citizen or legal resident of the U.S., you do not need a passport
or visa to enter Canada. However, to assist you with entry to Canada and return
to the U.S., you must carry identification papers such as birth, baptismal, or
naturalization certificate, or voter registration or alien registration
("green") card. If you have questions about bringing items (such as cameras,
medical appliances, etc.) into Canada, you may contact Canada Customs at (519)
973-8522.
[MAP]
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<PAGE> 48
NOTICE OF
1997
ANNUAL MEETING
OF STOCKHOLDERS
AND
PROXY STATEMENT
RECYCLED LOGO SOY INK LOGO
This Proxy Statement is printed
entirely on recycled and recyclable
paper. Soy ink, rather than
petroleum-based ink, is used. FORD LOGO
<PAGE> 49
PROXY
[FORD LOGO]
FORD MOTOR COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS
The undersigned hereby appoints JOHN M. DEVINE AND JOHN M. RINTAMAKI, or
either of them, proxies with power of substitution, to vote all the shares of
Common Stock which the undersigned is entitled to vote on all matters, unless
the contrary is indicated on the reverse side hereof, which may come before
Ford Motor Company's Annual Meeting of Stockholders to be held at the Cleary
International Centre, 201 Riverside Drive West, Windsor, Ontario, Canada, at
10:00 a.m., eastern daylight savings time, on May 8, 1997, and any adjournments
thereof.
THE PROXIES SHALL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS
INDICATED, THE PROXIES SHALL VOTE THE SHARES (A) "FOR" THE ELECTION AS
DIRECTORS OF ALL THE NOMINEES NAMED IN THE PROXY STATEMENT AND LISTED BELOW OR
ANY OTHER PERSON SELECTED BY THE BOARD OF DIRECTORS IN SUBSTITUTION FOR ANY OF
THE NOMINEES AND (B) "FOR" PROPOSAL 1 AND "AGAINST" PROPOSALS 2, 3, 4, 5, AND
6, EACH OF WHICH IS SET FORTH IN THE PROXY STATEMENT.
_______________________
Election of Directors, Nominees: Michael D. Dingman; Edsel B. Ford II; William
Clay Ford; William Clay Ford, Jr.; Roberto C. Goizueta; Irvine O. Hockaday,
Jr.; Marie-Josee Kravis; Ellen R. Marram; Homer A. Neal; Carl E. Reichardt;
John L. Thornton and Alex Trotman.
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____________________________________________________________________
ADDRESS CHANGE: PLEASE NOTE CHANGE HERE AND MARK BOX ON REVERSE SIDE
(Continued and to be signed on reverse side)
____________________________________________________________________
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL MANAGEMENT THE BOARD OF DIRECTORS RECOMMENDS A VOTE
NOMINEES AND FOR PROPOSAL 1. AGAINST PROPOSALS 2, 3, 4, 5, AND 6.
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Election of / / / / Proposal 1--Ratification / / / / / / Proposal 2--Relating to Term / / / / / /
Directors of Selection of Limits for Outside Directors
(see reverse) Independent Public
Accountants Proposal 3--Relating to
Discontinuance of Stock Options / / / / / /
For, except vote withheld and Stock Appreciation Rights
from the following Request YES NO
nominee(s): Annual Meeting / / / / Proposal 4--Relating to Salary
________________________ Ticket Increases and Stock Options in / / / / / /
the Event the Dividend is Cut
Proposal 5--Relating to a
Proposed Review of Executive / / / / / /
Compensation
Proposal 6--Relating to / / / / / /
Independent Directors
Address / / Discontinue Annual Report / /
Change mailing for this account
SIGNATURE(S) ______________________________________ DATE _______________
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD
EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
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