Yet another family-driven throwback ownership structure – and another one many investors don’t even realize is in place – is that of Ford (F, $12.09).
As of the most recent look, Henry Ford’s family only owns about 6% of the company’s total equity – but claims about 40% of the car company’s voting rights thanks to collective ownership of 70 million class B shares. Moreover, it would be a logistical nightmare to even try to wean control from the family.
That doesn’t mean some people aren’t trying to make it happen anyway.
John Chevedden, of Redondo Beach, California, is one of them. At Ford’s most recent shareholder gathering, he proposed an elimination of the two tiers of stock and the creation of a truly equitable one – just as he has during so many other annual meetings. His thesis? “This dual-class voting stock reduces accountability by allowing corporate control to be retained by insiders disproportionately to their money at risk,” the Detroit Free Press reported.
The proposal was voted down, though a little more than one-third of shareholders in attendance voted in favor of Chevedden’s idea … and support for his suggestion grows every year.
To be fair, Ford’s heavy family ownership hasn’t proven to be a glaring problem, in that the family has been more than willing to put non-family members in the company’s top positions, including that of CEO. So it would be difficult to say the recent weakness in F shares could have been avoided were the family not so involved – because it’s not terribly involved.
All the same, it’s a controlling relationship that always has the potential to sour.
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Source: Kiplinger
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