DETROIT -- Ford Motor Co.'s board of directors said Thursday that they had rejected a shareholder demand that any profits from CEO Bill Ford's purchase of 400,000 shares of Goldman Sachs Group Inc. in its initial public offering should go to the company.
A source close to Bill Ford said he would sell the shares and donate the profits to charity. A sale at today's prices would generate about $4.4 million in profits. But a lawyer representing shareholder Roger Berger said he would continue to pursue the issue.
"We're very interested to gather information to evaluate the board's decision, especially in light of the fact there appears to be a recognition that it was improper for Bill Ford to be purchasing and owning the shares," said lawyer Joel Friedlander of Bouchard, Margules & Friedlander.
Ford's board had formed a committee in December to study the demand. In a statement Thursday, the automaker said the committee, "found this was not a corporate opportunity and that there is no basis for a claim.
"After a full discussion following the presentation, the board accepted the committee's recommendation that the demand be rejected," the statement said.
The dispute stemmed from a Congressional committee report in October that alleged Goldman Sachs had awarded tens of thousands of "hot" shares, including its own IPO shares, to executives at companies like Ford that were also major investment-banking clients of the firm.
Goldman Sachs, one of whose senior executives also serves on Ford's board, has denied those allegations.
Bill Ford bought the Goldman stock at $53 per share in 1999, and it was trading at $63.89 Thursday on the New York Stock Exchange. That was well below a 52-week high of $92.25, but still worth a profit of about $4.4 million.
The demand by Berger alleged Bill Ford had been allocated Goldman's IPO shares only because of his high-profile role at Ford and the $87 million the automaker had paid to Goldman to since 1996, primarily in investment banking fees.
"By taking the (IPO) investment opportunity for himself, Mr. Ford placed himself in a conflicted position relating to his duties as an officer and director of Ford," Berger's lawyers wrote.
"So long as Mr. Ford retains an investment in Goldman that is worth tens of millions of dollars, his financial interest in a vendor or investment banking services could prejudice Mr. Ford's ability ... to make an objective evaluation of competing firms seeking to provide financial services to the company."
Bill Ford, who was chairman of Ford at the time of Goldman's IPO, took on the additional title of CEO in October 2001. The great-grandson of company founder Henry Ford has forgone a salary while he enacts a painful turnaround plan aimed at returning the company to profitability.
The source close to Bill Ford said he decided to sell the shares so the issue would not become a future distraction to the company.
In December, Bill Ford sent an e-mail to employees explaining the share purchase and vowing never to do anything that would harm the company or employees' trust in him.