Ford Motor Co. executives to address shareholders following Kerkorian investment

WASHINGTON DC May 7, 2008; Ken Thomas writinfg for the AP reported that -- Ford's most prominent new shareholder is not expected at the automaker's annual meeting Thursday, but his formidable presence will be felt.

Ford Motor Co. executives are to brief shareholders in Wilmington, Del., on the company's progress more than a week after billionaire investor Kirk Kerkorian disclosed that he had acquired a 4.7 percent stake in the car company.

Kerkorian's Tracinda Corp. has said it hopes to amass a 5.6 percent ownership in Ford, expressing confidence in Chief Executive Officer Alan Mulally's efforts to restore the automaker to profitability by 2009.

Mulally will speak to shareholders on the heels of the Kerkorian buy, a surprise $100 million profit during the first quarter and a new labor pact with auto workers in Canada. Ford is not expected to earn a profit this year and faces a weakened U.S. economy and sluggish auto sales, but the company's fortunes have improved.

"The momentum is on Ford's side at this point," said Mark Warnsman, an analyst with Calyon Securities.

In announcing the stock purchase, Tracinda vouched for Mulally's performance and predicted Ford would "continue to show significant improvements" in the months ahead.

Kerkorian revealed he bought 100 million shares of Ford at about $6.91 a share and has pledged to buy 20 million more shares at $8.50 apiece. Some analysts suggest he may simply view Ford's stock as a good bet capable of providing a hefty return.

Ford shares fell 31 cents, or 3.8 percent, to $7.96 Wednesday, meaning Kerkorian's shares already have made more than $105 million since early April.

The 90-year-old casino mogul rarely has acted passively as a major shareholder. He pressed for significant changes when he invested heavily in Chrysler and General Motors Corp.

Kerkorian's top deputy, former Chrysler Chief Financial Officer Jerry York, recently said Ford should sell its Mercury and Volvo brands, a move that quickly was dismissed by Ford officials. Ford sold its Aston Martin, Land Rover and Jaguar brands, but has said it plans to keep Volvo and work on making the unit more profitable.

Kerkorian also may be interested in advocating for an alignment with Nissan Motor Co. and Renault SA, which he urged to General Motors leaders, or in working with Ford family members, who control a large block of the company's voting power.

"I would expect them to be more interested in seeing if there's an equity position available from one of the Ford family members who might be disgruntled with how things have gone the past few years," said auto industry analyst Pete Hastings with Morgan Keegan & Co.

Ford officials said they were unaware of any Ford family members selling shares of the so-called "Class B" stock to a non-family member. If any of the special shares were sold to someone outside the family, they would be converted into common shares.

During the annual meeting, shareholders are expected to elect 13 members of the board of directors and vote on several proposals opposed by the company, including a measure to give one vote to each share of outstanding stock in an attempt to dilute the Ford family's control. The proposal is being offered by John Chevedden, a Redondo Beach, Calif., shareholder activist, who has said investors should have a proportionate vote to family shareholders.

Descendants of Henry Ford, who make up 40 percent of the combined voting power of all outstanding family stock, are allowed 16 votes each while other shares get one vote apiece. Ford family members collectively own 70.9 million shares of so-called "Class B" Ford stock. Last year, 27.4 percent of shareholders supported a similar measure to undo the family's voting power.

Other proposals under consideration would:

-- Prevent new stock options from being awarded to senior executives or renew current stock options, or require a mandatory review of executive compensation packages.

-- Eliminate any restrictions on shareholders' right to call a special meeting.

-- Provide a report on the company's procedures for making political contributions and expenditures.

-- Adopt principles for comprehensive health care reform.

Ford Motor Co.: http://www.ford.com