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WILMINGTON — Ford Motor Co. shareholders on Thursday approved the company's request to issue shares of common stock to help pay some of its health care obligations to retired autoworkers.
At the automaker's annual meeting in Delaware, more than 95 percent of shareholders voted to authorize the issuance of stock that Ford could use to pay up to 50 percent of its future cash obligations to its Voluntary Employee Beneficiary Association, or VEBA, the health care trust for retired autoworkers and their families.
Shareholders also granted Ford authority to issue stock to new VEBA, which would be considered an affiliate of the company, to satisfy a 2008 agreement with the United Auto Workers regarding funding of retiree health. Under the agreement, the new VEBA would be responsible for providing retiree health benefits to current and former UAW-represented workers.
Neither proposal received any comment from shareholders, who in other balloting soundly rejected a "say on pay" proposal giving shareholders an advisory vote on executive compensation.
The company owes $13.1 billion to its VEBA by 2022, of which $6.5 billion can be paid in stock, cash or a combination. In March, UAW members approved a new contract that, besides freezing wages and cutting benefits, allows Ford to use stock to make payments to the retiree health care trust.
On Monday, Ford disclosed a public offering of 300 million shares of common stock that will help it fund the VEBA, which is owed $6.3 billion by the end of this year.
The offer, which Ford said netted $1.6 billion, was a first for the 105-year-old company, which went public in 1956. Ford also granted the underwriters a 30-day option to purchase another 45 million shares, which they exercised.
"It's another 200-plus million dollars of additional capital," Ford chief financial officer Lewis Booth noted Thursday.
Ford executives told shareholders they are confident that the company, the only U.S. automaker that has not accepted government aid, is on track to weather the current economic environment and return to profitability.
"In all my years with the company, I've never seen market conditions as difficult as they are right now," said Chairman William Ford Jr., part of the founding family of the automaker.
He said his successor as CEO, Alan Mulally, "is not only making a difference, he's making us different."
Mulally said Ford is continuing an aggressive restructuring plan, accelerating the development of safe, fuel-efficient vehicles desired by consumers, and improving its balance sheet.
"We have sufficient liquidity to make it through this global downturn while maintaining our product plans without the need for government bridge loans," he said.
In response to a shareholder who wondered how Ford might be affected by government aid provided to its competitors, Ford said he likes how the company is positioned.
"I like the fact that we're the masters of our destiny, ... and we intend to keep it that way," he said.
But Ford and Mulally agreed with civil rights activist Jesse Jackson Jr., who said the U.S. needs to work to ensure a level playing field with foreign competitors, who take advantage of trade restrictions and currency manipulation to the detriment of American manufacturing.
"I really believe we're fighting for the soul of American manufacturing," Mulally said.
Ford shares rose 34 cents, or 6.9 percent, to $5.30 in midday trading Thursday.
