Bill Ford exercises stock options to buy nearly 2 million Ford shares

Ford Motor Co. Executive Chair Bill Ford this week exercised stock options to buy nearly 2 million shares of the automaker's common stock for approximately $20.5 million, a move the company characterized as a signal of his belief in where the business is headed.

“The decision to exercise these options to purchase almost 2 million shares of common stock reflects Bill’s confidence in the future of the company and our plan to create tremendous value for all of our stakeholders," Ford spokesperson Mark Truby said in a statement. "In this transaction, Bill is paying the exercise price for these options in cash to hold the entirety of the almost 2 million resulting shares of common stock without any shares sold to cover the exercise price, taxes, or associated costs.”

The alternative would have been to sell the shares for roughly $18 million before taxes, according to the company.

The move puts Bill Ford's stock holdings — not including restricted stock and other derivatives — at about 2.3 million common shares and 15 million shares of the controlling Class B stock held by Ford family members that has greater voting power.

Bill Ford exercised options on four tranches in which the exercise price per share was $12.46, $12.75, $15.37 and $6.19, respectively, according to a regulatory filing Wednesday. At market's close Wednesday, Ford's common stock was priced at $19.81 per share.

Ford shares have been on the rise over the last year under CEO Jim Farley. He assumed the top job in October 2020 and has since implemented a turnaround plan that aims to transform the 118-year-old company into an electric vehicle, software and commercial vehicle powerhouse.

In the past year, Ford's stock price has risen more than 100%. 

"Investors often interpret buying by an insider as a vote of confidence," Erik Gordon, a professor at the University of Michigan's Ross School of Business, said in an email.

"If he (Bill Ford) is paying $10 a share when he exercises his option, he makes money even if the stock price takes a long fall from its current $18 price, so he is not taking the same risk that anyone buying stock at the market price is taking," Gordon added. "Many Ford executives seem confident in the company's near-term future and its longer-term EV future."

jgrzelewski@detroitnews.com

Twitter: @JGrzelewski