Ford (F) has announced it will buy back some $1.8 billion of F stock to reduce share dilution — a move that could help reduce its debt by $883 million.
The reasons for the decision comes from a need to cut into potential stock dilution that stems from recent executive stock grants to executives as well as to offset shares issued to convertible debt holders.
“These actions are consistent with our overall capital strategy to take anti-dilutive actions and position ourselves to further reduce automotive debt,” Chief Financial Officer Bob Shanks said in the statement.
The buyback totals 116 million shares that will be purchased this year.
As part of Chief Executive Officer Alan Mulally’s retirement package, Ford gave him 882,352 in restricted shares worth $13.8 million.
Via BusinessWeek:
The second-largest U.S. automaker, which restored its dividend in 2012 after a five-year hiatus, is rewarding shareholders after issuing stock to its executives for turning around the automaker. Ford has earned $42.3 billion in the last five years after losing $30.1 billion from 2006 through 2008.
…Ford is buying back an additional 12.6 million shares to offset the dilutive effect of stock issued through its employee incentive compensation this year, which includes the shares awarded to Mulally. Ford said it took similar action in 2012 and 2013 to repurchase shares to offset executive awards.
F stock is up 1.5% in morning trading.
