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Date Submitted: 06/13/2010 05:04 AM
VEP: “Value Enhancement Plan” or “Vote/Cash Enforcement Plot”?
A case study report on “Ford Motor Company’s Value Enhancement Plan” Presented to Prof. Fei Yiwen In partial fulfillment of the course “Corporate Finance”
Prepared by 袁明捷、许欣、戴家齐、吴甲春、张恃雷、黄玉凤、李润雅 M0912094, May 18
t h
2010
Abstract
This report analyses, with know‐how derived from Corporate Finance and other related subjects, the intension, substance and impact of the “Value Enhancement Plan (VEP)” launched in April 2000 by Ford Motor Company, the world’s largest producer of trucks, and second‐largest producer of cars and trucks combined then, next to General Motor. Ford announced this plan with a claimed purpose to provide value, flexibility, liquidity, and alignment for its shareholders, whose interests are more tightly knotted with Ford management during the recapitalization. It was proposed as a shareholder‐friendly plan by Ford since diversified options indicative of a cash or ownership increase were left with shareholders, as well as a most effective and efficient way to achieve the above‐mentioned goals. VEP was in the end consummated as planned. However, different interpretations regarding the rationale underlying VEP surfed up, resonating with ever‐strongest confidence in the future of Ford, or skeptical voices revealing the managements’ attempts in disguise. The twilight realm in VEP between black and white, being the tier upon which Ford tried to make a leap forward is not merely decorative. And it serves as the very advantage point of this report to weigh the gains and losses VEP had exerted on different roles involved, e.g. Ford family versus common shareholders, and what matters more, to delve deeper into the buried motivation of Ford’s family ...