Ford to buy back $1.8 billion in stock

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DETROIT (Bloomberg) -- Ford Motor Co. said it will repurchase $1.8 billion of its shares to reduce dilution from recent stock grants to executives and to offset shares that may be issued to holders of convertible debt.

The buyback amounts to 116 million shares and will be concluded in 2014, the company said Wednesday in a statement. Ford in March granted 882,352 in restricted shares, worth $13.8 million, to CEO Alan Mulally, who is retiring July 1.

The company, 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 fell 0.6 percent to close at $15.46 today in New York.

“These actions are consistent with our overall capital strategy to take anti-dilutive actions and position ourselves to further reduce Automotive debt,” CFO Bob Shanks said in the statement.

Mulally, 68, said last week that he plans to retire six months earlier than planned, to make way for his successor, COO Mark Fields.

Mulally, who came to Ford from Boeing Co. in 2006, engineered a turnaround at the automaker by globalizing new models, cutting costs, boosting technology and overhauling the lineup with fuel-efficient offerings such as the Fiesta subcompact.

Ford boosted Mulally’s compensation by 11 percent last year to $23.2 million as the automaker posted record earnings in North America and Asia. Mulally’s total payout since coming to Ford exceeds $300 million.

Ford, beset by bad weather and rising recall costs, saw first-quarter net income fall 39 percent to $989 million, less than analysts’ estimates. It has asked investors to be patient as its spends heavily this year to roll out a record 23 new models worldwide, which will lower operating earnings this year to between $7 billion and $8 billion, from $8.8 billion in 2013. Ford has promised the new model investment will payoff in 2015.

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