Ford Motor Co.’s $2 billion loss in the first quarter is no deterrent to its COO Jim Farley.
Farley, 57, paid about $1 million to buy 194,950 shares of Ford stock Thursday at about $5.13 a share, Ford said in documents filed with the Securities and Exchange Commission on Monday. Farley now owns 828,922 Ford shares.
The purchase is significant given that Farley’s base salary in 2019 was about $1.1 million. In 2019, he was paid $8.4 million in total compensation, up from 2018 when he earned $5.9 million.
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Ford spokesman T.R. Reid added, “Aside from Bill Ford, this is the largest open-market share purchase by a Ford executive in at least the past 10 years.”
Last August, Executive Chairman Bill Ford paid $8 million for 840,962 shares of Ford stock at an average price per share of $9.51. He owns 1.1 million shares in a personal account and an additional 146,096 shares through a company plan, according to the SEC.
While Reid could not speak to Farley’s reasons for making the purchase, typically when an executive makes a large share purchase in the open market — meaning they do it on their own, not to meet a certain company-required stock ownership threshold — it reflects confidence in the company.
In a similar show of management putting its money where its mouth is, in mid-February Tesla CEO Elon Musk and board member Larry Ellison bought $10 million and $1 million, respectively, in Tesla stock. Their move supported the electric-carmaker’s move to raise cash by selling shares.
Farley has repeatedly stated his confidence that Ford’s future business model and increased investment in technology will pay off.
On Feb. 7, after being named Ford’s new COO, Farley said, “Our vision (is) to design increasingly intelligent vehicles and connect them to the world around us, all to make life better for our customers and communities.”
On April 28, during Ford’s first-quarter analyst call, Farley said Ford’s future lies within the people working there.
“We (have) empowered a talented and diverse group of leaders — from inside and outside the company — to drive transformation into higher-growth, higher-margin business(es),” Farley said.
Ford needs the vote of confidence. It reported a dramatic decline in profits last year. Then for the first three months of this year, the automaker reported its first quarterly earnings net loss since April 2009.
Ford’s first-quarter earnings before interest and taxes — adjusted EBIT — was negative $632 million, down from a positive $2.4 billion in the first quarter of 2019. Net income was negative $2 billion, down from a positive $1.1 billion in the same quarter last year.
“I know we’ll come out of this a lot stronger,” Farley said at the time of the results. “We need to be agile and have a bias toward action and be very transparent.”
One action Ford took was to halt its plans to jointly develop a Lincoln-branded electric vehicle with Rivian.
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Contact Jamie L. LaReau: 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.
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