Essay on Ford value enhacement plan

In the open market share repurchase, the firm may or may not declare the repurchase. Depending on the market condition and the firm’s position in the industry, the firm can decide when and how many

Management considering share repurchase program should weigh its benefit of financial discipline, efficient corporate strategy implementation and utilization of tax shield against the downside of cost of financial distress. It’s not the possibility of bankruptcy that causes concerns among equity holders regarding extent of leverage but the direct costs (legal, liquidation, administrative etc.) and indirect costs (deteriorated corporate image, management time and attention, agency costs of value-destructing investment, distress asset sales etc.). Exhibit 4 lists the key assumption inputs of approximating quantitative firm value/ equity value accretion. Levering UST to a larger extent by adding $1,000m does increase firm value.

Under the circumstance of an IPO, tranches C, D and E will convert to common at their negotiated prices while A & B will be redeemed.

If Ms. Jameson chooses stock options for her compensation, she will not need to pay taxes until she actually exercises them and sells the shares. At that point, gains on the shares will be taxed at either ordinary tax rate[3] or at capital gain tax rate[4], depending on whether she has held the stock for less than or more than one year after exercising the options. If taxes are considered, the value of option after tax will decrease. In the case that Ms. Jameson holds stocks for less than 1 year, she risks to her income tax rate that could be changed at the fifth year. While there will be no risk regarding tax rate, if she hold the stocks for more than 1 year. The latter case, however, increases risk regarding the share price in the future, in which it will have an effect on her capital gain or loss.

earnings per share will increase and it can increase the overall demand for Ford's share,

Phyllis and Freddie can redeem the preferred shares at any time; the preferred shareholder still has control over the assets. If they qualify as a qualified Small Business Corporation, one can multiply the number of capital gains exemptions by increasing the number of taxpayers who are shareholders. In addition, Phyllis and Freddie can transfer the asset to the children to who they would like to appoint from their company. The growth in value of which will not be subject to a challenge of their Will under the Wills Variation Act. It can prevent future family disputes and help the estate equalization. When Phyllis and Freddie transfers the preferred shares to their children, it creates the commitment for the children to take over the ownership of the company. Phyllis and Freddie can also maintain control of the

1) Section 351: Since Individual will be in control (80%+ ownership) of future corporation, he will not incur a taxable event

Ford Motor Company, American automotive corporation founded in 1903 by Henry Ford and 11 associate investors. (htt28) It is the multinational corporation and the world's third largest automaker based on worldwide vehicle sales. The Company operates in two segments: Automotive and Financial Services. Automotive includes Ford North America, Ford South America, Ford Europe, and Ford Asia Pacific Africa region. Financial services include Ford Motor Credit Company and Other Financial Service. The Company manufactures or distributes automobiles across six continents. Its automotive brands include Ford and Lincoln. Other Financial Services includes a range of businesses, including holding companies and real

The repurchase program increases the shareholder’s value. This is because of a rise in the price of the shares of the original shareholders.

The market shares and stock prices of Ford have been declined in recent years. No further steps have been taken by the Ford

Hampton decided to buy back their stock because they were confronting many dissident stockholders at the moment. Besides, the company had always maintained a conservative financial policy. Having to spend 3 million on the repurchase affected their cash balance, as well as their payable accounts, that in turn it increases creditors and suppliers claims against the company.

Ford Motor Company is America's one of the largest car manufacturer and seller. In year 1987 it faces an external business environment change in the form of new warranty policy announcement by its major competitors General Motor, which changes the current philosophy of warranty in U.S car market. This policy change may have implications not only on Ford’s sales and market share but also on various departments within organization (such as manufacturing, quality assurance, parts and service, and extended service plans) and their dealer network. In answer, Ford executives have to respond through a best suitable course of action by carefully analyzing the current market variables.

There are situations where once the 351(a) factors are met, a transferor will transfer stock received to someone outside of the control group, and then the requirement after might not be met. A transferor might distribute some of the control received to the shareholders after the requirement based on 351(c). This type of distribution can be taxable to both the shareholders and the distributing

Since Ford management believe that the share prices were undervalued in the past few years, the implement of VEP is an effective approach to buy back part of its outstanding stocks, which is sim-ilar to share repurchases. For Ford management and family members, they are able to strengthen their control of the company. If all the Class B shareholders retained their stocks and all the $10 billion cash was disbursed to other shareholders, the percentage of Class B share would increase from 5.8% to 7.04%, and their 40% voting power will be further consolidated.

Objectives |Metric |2009 |2010 |2011 |Target | |Revenue Growth |Annual Rate of Growth |-19.02% |10.90% |5.67% |5.5% - 6.0% | |Operating Profit Growth |% EBIT/Sales |0.72% |1.11% |1.13% |= or >1.13% | |Solvency |Net Profit + depreciation/Total Liabilities |1.4% |4% |12.3% |13 -14.5% | |