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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Filed by a Party other than the Registrant o

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

Ford Motor Company

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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Table of Contents

Notice of 2016 Annual Meeting
of Shareholders and Proxy Statement

GRAPHIC

Thursday, May 12, 2016 at 8:30 a.m., Eastern Time
Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801


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GRAPHIC
  Ford Motor Company
One American Road
Dearborn, Michigan 48126-2798

GRAPHIC

Dear Shareholders:

It is our pleasure to inform you that our 2016 Annual Meeting of Shareholders will be conducted at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801, on Thursday, May 12, 2016.

I have always believed that the purpose of every company should be to make people's lives better. Ford Motor Company accomplished that in 2015 by doing well for all of its stakeholders.

Our solid business results included record profits and an increased worldwide market share. Overall, we achieved our sixth consecutive year of both profit and positive operating-related cash flow, which enabled us to distribute $2.5 billion to our shareholders and grow our regular dividend by 20 percent.

Producing great cars, trucks, SUVs, and electrified vehicles that provide our customers with quality, safety, and innovative technologies is at the foundation of everything we do. In 2015, customers rewarded our work on their behalf by increasing our global market share to 7.3 percent.

We made similar progress on our efforts to serve communities. Our Ford Volunteer Corps, which encourages employees to serve as volunteers in their communities, celebrated its 10th anniversary. Since it began in 2005 this program has enabled Ford volunteers to work on more than 9,000 projects in 40 countries and donate more than one million hours of service.

Our achievements as a good corporate citizen were recognized once again when we were named to the Ethisphere Institute's list of the World's Most Ethical Companies for the sixth year in a row, the only automaker to be honored in all of those years.

And while we always will be an auto company, we recognize that our business model will have to adapt to the changing world around us. Our vehicles today already are using wireless connectivity, infotainment systems, and assisted driving and parking technologies to make driving safer and more efficient. In the next few years, this evolution to smart mobility will become a revolution, and automobiles will be doing things we only are imagining today.

The auto industry and the way people move will see more degrees of change in the next 10 years than in the last 100 years. At Ford, we are embracing and helping lead this change. The opportunities before us are very different, but providing mobility is nothing new to us.

We have accelerated our efforts to position ourselves as leaders in smart mobility, tripling our autonomous vehicle test fleet and launching a number of pilot programs around the globe from innovations in car sharing to pay-as-you-go ownership models. We are using technology to solve society's biggest transportation challenges and finding new ways to preserve mobility worldwide.

As we adapt to this changing world, we remain steadfast in our commitment to deliver vehicles that are better for the environment, made in plants that are increasingly energy efficient and, consequently, less costly to operate.

Our Board of Directors and entire leadership team are focused not only on delivering our business results today, but ensuring we have a long-term focus on the strategic direction of the company.

We look forward to doing well for all of our stakeholders in the coming year and beyond. Our employees continue to work together as a single global team to serve our customers, reward our shareholders, and help build a better world. I am proud of what they have accomplished and excited about our future.

Thank you for your continued support.

April 1, 2016

/s/ William Clay Ford, Jr.


William Clay Ford, Jr.
Chairman of the Board


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Notice of Annual Meeting of
Shareholders of Ford Motor Company

Thursday, May 12, 2016
8:30 a.m., Eastern Time
Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801

The annual meeting will begin promptly at 8:30 a.m., Eastern Time. If you plan to attend the meeting, please see the instructions on pages 77-79 of the attached Proxy Statement.

ITEMS OF BUSINESS:

1.
The election of the 14 director nominees named in the Proxy Statement.

2.
The ratification of the selection of PricewaterhouseCoopers LLP as Ford's independent registered public accounting firm for 2016.

3.
A non-binding shareholder advisory vote to approve the compensation of the Named Executives.

4.
Approval of the Tax Benefit Preservation Plan.

5.
Consideration of the two shareholder proposals set forth in the Proxy Statement.

You can vote if you were a shareholder at the close of business on March 16, 2016.

Please read these materials so that you'll know what we plan to do at the meeting. Also, please either sign and return the accompanying proxy card in the postage-paid envelope or instruct us by telephone or online as to how you would like your shares voted. This way, your shares will be voted as you direct even if you can't attend the meeting. Instructions on how to vote your shares by telephone or online are on the proxy card enclosed with the Proxy Statement.

Please see Other Items and the Questions and Answers section beginning on page 75 for important information about the proxy materials, voting, the annual meeting, Company documents, communications, and the deadline to submit shareholder proposals for the 2017 Annual Meeting of Shareowners.

Shareholders are being notified of the Proxy Statement and the form of proxy beginning April 1, 2016.

April 1, 2016

Dearborn, Michigan

/s/ Jonathan E. Osgood


Jonathan E. Osgood
Secretary

We urge each shareowner to promptly sign and return the enclosed proxy card or to use telephone or online voting. See our Questions and Answers beginning on page 76 about the meeting and voting section for information about voting by telephone or online, how to revoke a proxy, and how to vote shares in person.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS  GRAPHIC  2016 Proxy Statement    i

Proxy Summary

  1

Corporate Governance

 
9

Corporate Governance Principles

  9

Our Governance Practices

  9

Leadership Structure

  10

Board Meetings, Composition, and Committees

  10

Board's Role in Risk Management

  12

Independence of Directors and Relevant Facts and Circumstances

  15

Codes of Ethics

  17

Communications with the Board and Annual Meeting Attendance

  17

Beneficial Stock Ownership

  18

Section 16(a) Beneficial Ownership Reporting Compliance

  20

Certain Relationships and Related Party Transactions

  20

Proposal 1. Election of Directors

 
22

Director Compensation in 2015

  30

Proposal 2. Ratification of Independent Registered Public Accounting Firm

 
32

Audit Committee Report

  32

Proposal 3. Approval of the Compensation of the Named Executives

 
34

Compensation Discussion and Analysis (CD&A) Roadmap

 
35

Executive Compensation

 
36

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

  36

Performance

  36

Compensation Determination

  39

Risk and Governance

  43

NEO Compensation

  45

2016 Plan Changes

  54

Say on Pay Approval

  55

COMPENSATION COMMITTEE REPORT

  55

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

  55

COMPENSATION OF EXECUTIVE OFFICERS

  56

Summary Compensation Table

  56

Grants of Plan-Based Awards in 2015

  58

Outstanding Equity Awards at 2015 Fiscal Year-End

  59

Option Exercises and Stock Vested in 2015

  61

Pension Benefits in 2015

  61

Nonqualified Deferred Compensation in 2015

  63

Potential Payments Upon Termination or Change in Control

  64

Equity Compensation Plan Information

  67

Proposal 4. Approval of the Tax Benefit Preservation Plan

 
68

Shareholder Proposals

 
71

Proposal 5. Shareholder Proposal

  71

Proposal 6. Shareholder Proposal

  74

Other Items

 
75

Questions and Answers About the Proxy Materials

 
76

Directions to the Annual Meeting Site

 
79

Appendix I

 
I-1

Appendix II

 
II-1

Appendix III

 
III-1
ii    TABLE OF CONTENTS  GRAPHIC  2016 Proxy Statement

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Proxy Summary

This summary highlights information contained in this Proxy Statement. It does not contain all of the information you should consider. You should read the entire Proxy Statement carefully before voting. Please see the Questions and Answers section beginning on page 76 for important information about proxy materials, voting, the annual meeting, Company documents, and communications.

TIME AND PLACE OF ANNUAL MEETING

Thursday, May 12, 2016    
8:30 a.m., Eastern Time   Corporate Website:
www.corporate.ford.com
Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801   Annual Report:
www.annualreport.ford.com

MEETING AGENDA

VOTING MATTERS
  Board
Recommendations

  Pages
 

Election of the 14 Director Nominees Named in the Proxy Statement

  FOR     22-31  

Ratification of Independent Registered Public Accounting Firm

 
FOR
   
32-33
 

Approval of the Compensation of the Named Executives

 
FOR
   
34-67
 

Approval of the Tax Benefit Preservation Plan

 
FOR
   
68-70
 

Shareholder Proposal — Recapitalization Plan to Give Each Share an Equal Vote

 
AGAINST
   
71-73
 

Shareholder Proposal — Special Shareholder Meetings

 
AGAINST
   
74
 

CORPORATE GOVERNANCE HIGHLIGHTS

Presiding Independent Director

Independent Board Committees — Audit, Compensation, and Nominating and Governance

Committee Charters

Independent Directors Meet Regularly Without Management and Non-Independent Directors

Regular Board and Committee Self-Evaluation Process

Separate Chairman of the Board and CEO


Confidential Voting


Shareholders Have the Right to Call Special Meetings


Shareholders May Take Action by Written Consent


Strong Code of Ethics


Annual Election of All Directors

Majority Vote Standard — No Supermajority Voting Requirement

Board Meetings in 2015: 8

Standing Board Committees (Meetings in 2015): Audit (10), Compensation (6), Finance (4), Nominating and Governance (5), Sustainability (4)

79% of the Director Nominees are Independent
PROXY SUMMARY  GRAPHIC  2016 Proxy Statement    1

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DIRECTOR NOMINEES  
GRAPHIC

                                                 
                                                 
      AGE
DIRECTOR SINCE
PRINCIPAL OCCUPATION



    QUALIFICATIONS
    COMMITTEES
    OTHER BOARDS
 
                                                 
  
    
                                               
Stephen G. Butler
Independent
     
68
2004
Retired Chairman and Chief Executive Officer, KPMG, LLP and retired Chairman of KPMG International
 
         
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          Audit (Chair)
Nominating & Governance
          ConAgra Foods, Inc    
                                                    
Kimberly A. Casiano
Independent
     
58
2003
President, Kimberly Casiano & Associates, San Juan, Puerto Rico
 
         
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          Audit
Nominating & Governance
Sustainability & Innovation
          Mead Johnson Nutrition Company
Mutual of America
   
                                                    
Anthony F. Earley, Jr.
Independent
     
66
2009
Chairman, Chief Executive Officer & President, PG&E Corporation
 
         
LOGO
          Compensation (Chair)
Nominating & Governance
Sustainability & Innovation
          PG&E Corporation    
                                                    
Mark Fields      
55
2014
President and Chief Executive Officer, Ford Motor Company
 
         
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          Finance           International Business Machines Corporation    
                                                    
Edsel B. Ford II      
67
1988
Consultant, Ford Motor Company
 
         
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          Finance
Sustainability & Innovation
               
                                                    
William Clay Ford, Jr.      
58
1988
Executive Chairman and Chairman of the Board of Directors, Ford Motor Company
 
         
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          Finance (Chair)
Sustainability & Innovation
               
                                                    
James H. Hance, Jr.
Independent
     
71
2010
Operating Executive, The Carlyle Group
 
         
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          Audit
Finance
Nominating & Governance
          Acuity Brands, Inc.
Cousins Properties Inc.
Duke Energy Corporation
The Carlyle Group
   
                                                    
William W. Helman IV
Independent
     
57
2011
General Partner, Greylock Partners
 
         
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          Finance
Nominating & Governance
Sustainability & Innovation (Chair)
               
                                                    
Jon M. Huntsman, Jr.
Independent
     
56
2012
Chairman, Atlantic Council and Chairman, Huntsman Cancer Foundation
 
         
GRAPHIC
          Compensation
Nominating & Governance
Sustainability & Innovation
          Caterpillar, Inc.
Chevron Corporation
Hilton Worldwide Inc.
   
                                                    
William E. Kennard
Independent
     
59
2015
Chairman, Velocitas Partners LLC
 
         
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          Finance
Nominating & Governance
Sustainability & Innovation
          AT&T Inc.
MetLife, Inc.
Duke Energy Corporation
   
                                                    
John C. Lechleiter
Independent
     
62
2013
Chairman, President and Chief Executive Officer, Eli Lilly and Company
 
         
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          Compensation
Nominating & Governance
          Eli Lilly and Company
Nike, Inc.
   
                                                    
Ellen R. Marram
Presiding Independent Director
     
69
1988
President, The Barnegat Group, LLC
 
         
GRAPHIC
          Compensation
Nominating & Governance
Sustainability & Innovation
          The New York Times Company
Eli Lilly and Company
   
                                                    
Gerald L. Shaheen
Independent
     
71
2007
Retired Group President, Caterpillar, Inc.
 
         
GRAPHIC
          Audit
Nominating & Governance
(Chair)
          AGCO Corporation    
                                                    
John L. Thornton
Independent
     
62
1996
Chairman, Barrick Gold Corporation
 
         
GRAPHIC
          Compensation
Finance
Nominating & Governance
          Barrick Gold Corporation    
                                                    
2    PROXY SUMMARY  GRAPHIC  2016 Proxy Statement

Table of Contents


CD&A Roadmap

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PROXY SUMMARY  GRAPHIC  2016 Proxy Statement    3

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LOGO

LOGO

2015 — OUR BREAKTHROUGH YEAR


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  COMPANY PRE-TAX PROFIT* -- $10.8 billion
(excluding special items)
All-time record
 
GRAPHIC
  GLOBAL MARKET SHARE
Ford global market share at 7.3% up 0.2 percentage points

GRAPHIC
  VOLUME -- 6.635 million
Wholesale volume highest since 2005
 
GRAPHIC
  AUTOMOTIVE OPERATING MARGIN -- 6.8%
Highest since at least the 1990s

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  TOTAL REVENUE -- $149.6 billion
Automotive revenue highest since 2007
 
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  AUTOMOTIVE OPERATING-RELATED CASH FLOW** -- $7.3 billion
Best level since at least 2001
(excluding special items)

*   For reconciliation of our total profits-before-taxes to U.S. generally accepted accounting principles ("GAAP"), please refer to Appendix II.   **   For reconciliation of our Automotive Operating-Related Cash Flow to GAAP, please refer to Appendix III.

STRONG FOUNDATION IN PLACE TO GROW BUSINESS

CORE BUSINESS   EMERGING BUSINESS

GRAPHIC
  Successfully launched 16 global products  
GRAPHIC
  Opened last of 10 new plants to support growth in Asia Pacific

GRAPHIC
  Quality and customer satisfaction to best-ever levels in all regions  
GRAPHIC
  Investing $4.5 billion in electrified vehicles by 2020

GRAPHIC
  Ford Credit recognized as highest in consumer satisfaction in the U.S.  
GRAPHIC
  More than 15 million vehicles with SYNC on the road globally

GRAPHIC
  Achieved four-year agreement with UAW  
GRAPHIC
  Announced Ford Smart Mobility Plan
4    PROXY SUMMARY  GRAPHIC  2016 Proxy Statement

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GRAPHIC

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Underlying our compensation programs is an emphasis on sound governance practices. These practices include:

WE DO

GRAPHIC   Perform annual say-on-pay advisory vote for stockholders
GRAPHIC   Pay for performance
GRAPHIC   Use appropriate peer group when establishing compensation
GRAPHIC   Balance short- and long-term incentives
GRAPHIC   Align executive compensation with stockholder returns through long-term incentives
GRAPHIC   Cap individual payouts in incentive plans
GRAPHIC   Include clawback policy in our incentive plans
GRAPHIC   Maintain robust stock ownership goals for executives
GRAPHIC   Condition grants of long-term incentive awards on non-competition and non-disclosure restrictions
GRAPHIC   Mitigate undue risk taking in compensation programs
GRAPHIC   Include criteria in incentive plans to maximize tax deductibility
GRAPHIC   Retain a fully independent external compensation consultant whose independence is reviewed annually by the Committee (see Corporate Governance — Compensation Committee Operations on pp. 14-15)
GRAPHIC   Include a double-trigger provision for equity grants that contemplates a change-in-control (see Compensation Discussion and Analysis — 2016 Plan Changes on p. 54)

WE DO NOT

GRAPHIC   Provide tax gross-ups for perquisites
GRAPHIC   Provide evergreen employment contracts
GRAPHIC   Provide dividend equivalents on unvested equity awards for executive officers
GRAPHIC   Maintain individual change-in-control agreements for Named Executives
GRAPHIC   Reprice options
PROXY SUMMARY  GRAPHIC  2016 Proxy Statement    5

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GRAPHIC

                                                             
                                                             
  
Element
    
    BASE SALARY
    ANNUAL CASH
INCENTIVE AWARDS


    LONG-TERM
INCENTIVE AWARDS


    BENEFITS AND
PERQUISITES


    RETIREMENT
PLANS


 
                                                             
                                                                
 
Purpose
    
      Base Level of
Compensation
          Incentive to Drive
Near-Term Performance
          Incentive to Drive Long-
Term Performance and
Stock Price Growth
          Enhance Productivity
and Development
          Income Certainty and
Security
   
                                                                
 
Target
    
      Fixed $           Fixed % of Salary           Fixed Equity
Opportunity
          Fixed $           % of Salary    
                                                                
 
Form of Delivery
    
      Cash           Cash           Performance Units
and
Time-Based Units
          Various           Cash    
                                                                
Company
Performance/
Award
      NA           0-200%           Performance Units*
0-200%
          NA           NA    
*
An award of the right to earn up to a certain number of shares of common stock, Restricted Stock Units, or cash, or a combination of cash and shares of common stock or Restricted Stock Units, based on performance against specified goals established by the Compensation Committee under the Long-Term Incentive Plan. A Time-Based Restricted Stock Unit ("Time-Based Unit") means the right to receive a share of common stock, or cash equivalent to the value of a share of common stock, when the restriction period ends, under the Long-Term Incentive Plan, as determined by the Compensation Committee.

GRAPHIC

We met with institutional investors in the autumn of 2015 to discuss corporate governance topics and any executive compensation related concerns. In general, investors were pleased with the changes we made to our compensation programs in 2015 and did not note any additional concerns. As we noted in our 2015 Compensation Discussion and Analysis, the Compensation Committee decided to adopt double-trigger change-in-control provisions for our equity awards to bring our practices more in line with market practice and shareholder interests. Beginning in 2016, the Committee modified the terms and conditions applicable to equity-based awards so that upon a change-in-control of the Company where Ford is not the surviving entity, unvested awards will terminate if such awards have been replaced by comparable awards from the acquiring corporation, unless any recipient is terminated or there is a reduction in an executive's responsibilities as of the date of the change-in-control. In those cases, or in the event awards are not replaced with comparable awards, such unvested awards will vest immediately prior to the change-in-control.

6    PROXY SUMMARY  GRAPHIC  2016 Proxy Statement

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Named Executives' compensation is tied to our 2015 performance

80% of our executive officers' target compensation is performance-based

Executive pay practices are tied to robust risk and control features

Executive stock ownership guidelines continue to align the interests of executives with shareholders

We continued a share buyback program to offset the dilutive effect of our equity compensation plans

We listened to shareholder feedback and made significant changes to our 2015 Performance Unit program that addressed investor concerns

GRAPHIC

PROXY SUMMARY  GRAPHIC  2016 Proxy Statement    7

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SHAREHOLDER ENGAGEMENT

Ford has a philosophy of engagement, communication, and transparency with shareholders, which includes:

Meeting with equity and fixed income investors — during 2015, we met with equity investors at twenty-seven conferences and fourteen roadshows, and we met with fixed income investors at eight conferences and nine roadshows.

Continuing our philosophy of promoting greater communications with our institutional shareholders on corporate governance issues.

Meeting with a number of our largest investors since our 2015 Annual Meeting to discuss our corporate governance and executive compensation practices. We found these meetings to be informative, and we have incorporated many of their disclosure suggestions into this Proxy Statement.

GRAPHIC

The Board of Directors is soliciting proxies to be used at the annual meeting of shareholders. This Proxy Statement and the enclosed proxy are being made available to shareholders beginning April 1, 2016.

8    PROXY SUMMARY  GRAPHIC  2016 Proxy Statement

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Corporate Governance

Corporate Governance Principles

The Nominating and Governance Committee developed and recommended to the Board a set of corporate governance principles, which the Board adopted. Ford's Corporate Governance Principles may be found on its website at www.corporate.ford.com. These principles include: a limitation on the number of boards on which a director may serve, qualifications for directors (including a requirement that directors be prepared to resign from the Board in the event of any significant change in their personal circumstances that could affect the discharge of their responsibilities), director orientation and continuing education, and a requirement that the Board and each of its Committees perform an annual self-evaluation. Shareholders may obtain a printed copy of the Company's Corporate Governance Principles by writing to our Shareholder Relations Department, Ford Motor Company, One American Road, Suite 1026, Dearborn, MI 48126.

Our Governance Practices

GRAPHIC

Ford has a long history of operating under sound corporate governance practices, which is a critical element of our success in delivering our One Ford Plan and creating profitable growth for all. These practices include the following:

GRAPHIC   Annual Election of All Directors.

GRAPHIC

 

Majority Vote Standard. Each director must be elected by a majority of votes cast.

GRAPHIC

 

Independent Board. Our Board is comprised of 79% independent directors.

GRAPHIC

 

Presiding Independent Director. Ensures management is adequately addressing the matters identified by the Board.

GRAPHIC

 

Independent Board Committees. Each of the Audit, Compensation, and Nominating and Governance committees is comprised entirely of independent directors.

GRAPHIC

 

Committee Charters. Each standing committee operates under a written charter that has been approved by the Board.

GRAPHIC

 

Independent Directors Meet Regularly Without Management and Non-Independent Directors.

GRAPHIC

 

Regular Board and Committee Self-Evaluation Process. The Board and each committee evaluates its performance each year.

GRAPHIC

 

Mandatory Deferral of Compensation for Directors. 60% of annual director fees are mandatorily deferred into Ford restricted stock units until retirement, which strongly links the interests of the Board with those of shareholders.

GRAPHIC

 

Separate Chairman of the Board and CEO. The Board of Directors has chosen to separate the roles of CEO and Chairman of the Board of Directors.

GRAPHIC

 

Confidential Voting.

GRAPHIC

 

Special Meetings. Shareholders have the right to call a special meeting.

GRAPHIC

 

Shareholders May Take Action by Written Consent.

GRAPHIC

 

Strong Codes of Ethics. Ford is committed to operating its business with the highest level of integrity and has adopted codes of ethics that apply to all directors and senior financial personnel, and a code of conduct that applies to all employees.
CORPORATE GOVERNANCE  GRAPHIC  2016 Proxy Statement    9

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Leadership Structure

GRAPHIC

Ford determines the most suitable leadership structure from time to time. At present, the Board of Directors has chosen to separate the roles of CEO and Chairman of the Board of Directors. Mark Fields is our President and CEO, and William Clay Ford, Jr., is Chairman of the Board of Directors as well as our Executive Chairman. We believe this structure is optimal for Ford at this time because it allows Mr. Fields to focus on the acceleration of our One Ford Plan while allowing Mr. Ford to focus on leadership of the Board of Directors. Furthermore, the Board has appointed Ellen R. Marram as our Presiding Independent Director. We believe having a Presiding Independent Director is an important governance practice given that the Chairman of the Board, Mr. Ford, is not an independent director under our Corporate Governance Principles. The duties of the Presiding Independent Director include:

chairing the executive sessions of our independent directors;

advising on the selection of Board Committee Chairs; and

working with Mr. Ford and Mr. Fields to ensure management is adequately addressing the matters identified by the Board.

This structure optimizes the roles of CEO, Chairman, and the Presiding Independent Director and provides Ford with sound corporate governance in the management of its business.

Board Meetings, Composition, and Committees

GRAPHIC

COMPOSITION OF BOARD OF DIRECTORS/NOMINEES

The Nominating and Governance Committee recommends the nominees for all directorships. The Committee also reviews and makes recommendations to the Board on matters such as the size and composition of the Board in order to ensure the Board has the requisite expertise and its membership consists of persons with sufficiently diverse and independent backgrounds. Between annual shareholder meetings, the Board may elect directors to vacant Board positions to serve until the next annual meeting.

In consideration of Mr. Gephardt not standing for election at the 2015 Annual Meeting and Mr. Hackett's resignation from the Board on March 10, 2016, the Committee recommended that the size of the Board be reduced to 14 directors.

The Board believes that it has an appropriate mix of short- and medium-tenured directors as well as long-tenured directors that provide a balance that enables the Board to benefit from fresh insights and historical perspective during its deliberations. In addition, the Board has managed succession planning effectively with strategic waivers of the mandatory retirement age where appropriate to maintain certain expertise while new directors supplement the Board structure.

The Board proposes to you a slate of nominees for election to the Board at the annual meeting. You may propose nominees (other than self-nominations) for consideration by the Committee by submitting the names, qualifications, and other supporting information to: Secretary, Ford Motor Company, One American Road, Dearborn, MI 48126. Properly submitted recommendations must be received no later than December 1, 2016, to be considered by the Committee for inclusion in the following year's nominations for election to the Board. Your properly submitted candidates are evaluated in the same manner as those candidates recommended by other sources. All candidates are considered in light of the needs of the Board with due consideration given to the qualifications described on p. 22 under Election of Directors.

EXECUTIVE SESSIONS OF NON-EMPLOYEE DIRECTORS

Non-employee directors ordinarily meet in executive session without management present at most regularly scheduled Board meetings and may meet at other times at the discretion of the Presiding Independent Director or at the request of any non-employee director. Additionally, all of the independent directors meet

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periodically (at least annually) without management or non-independent directors present.

BOARD COMMITTEES

Only independent directors serve on the Audit, Compensation, and Nominating and Governance Committees, in accordance with the independence standards of the New York Stock Exchange LLC ("NYSE") Listed Company rules and the Company's Corporate Governance Principles. The Board, and each committee of the Board, has the authority to engage independent consultants and advisors at the Company's expense.

The Company has published on its website (www.corporate.ford.com) the charter of each of the Audit, Compensation, Finance, Nominating and Governance, and Sustainability and Innovation Committees of the Board. Printed copies of each of the committee charters are available by writing to our Shareholder Relations Department, Ford Motor Company, One American Road, Suite 1026, Dearborn, MI 48126.

BOARD COMMITTEE FUNCTIONS

Audit Committee: Selects the independent registered public accounting firm, subject to shareholder ratification, and determines the compensation of the independent registered public accounting firm.

At least annually, reviews a report by the independent registered public accounting firm describing: internal quality control procedures, any issues raised by an internal or peer quality control review, any issues raised by a governmental or professional authority investigation in the past five years and any steps taken to deal with such issues, and (to assess the independence of the independent registered public accounting firm) all relationships between the independent registered public accounting firm and the Company.

Consults with the independent registered public accounting firm, reviews and approves the scope of their audit, and reviews their independence and performance. Also, annually approves of categories of services to be performed by the independent registered public accounting firm and reviews and, if appropriate, approves in advance any new proposed engagement greater than $250,000.

Reviews internal controls, accounting practices, and financial reporting, including the results of the annual audit and the review of the interim financial statements with management and the independent registered public accounting firm.

Reviews activities, organization structure, and qualifications of the General Auditor's Office, and participates in the appointment, dismissal, evaluation, and the determination of the compensation of the General Auditor.

Discusses earnings releases and guidance provided to the public and rating agencies.

Reviews, at least annually, policies with respect to risk assessment and risk management.

Exercises reasonable oversight with respect to the implementation and effectiveness of the Company's compliance and ethics program, including being knowledgeable about the content and operation of such compliance and ethics program.

Reviews, with the Office of the General Counsel, any legal or regulatory matter that could have a significant impact on the financial statements.

As appropriate, obtains advice and assistance from outside legal, accounting, or other advisors.

Prepares an annual report of the Audit Committee to be included in the Company's proxy statement.

Assesses annually the adequacy of the Audit Committee Charter.

Reports to the Board of Directors about these matters.

Compensation Committee: Establishes and reviews the overall executive compensation philosophy and strategy of the Company.

Reviews and approves Company goals and objectives related to the Executive Chairman and the President and CEO and other executive officer compensation, including annual performance objectives.

Evaluates the performance of the Executive Chairman, the President and CEO, and other executive officers in light of established goals and objectives and, based on such evaluation, reviews and approves the annual salary, bonus, stock options, Performance Units, other stock-based awards, other incentive awards, and other benefits, direct and indirect, of the Executive Chairman, the President and CEO, and other executive officers.

Conducts a risk assessment of the Company's compensation policies and practices.

Considers and makes recommendations on Ford's executive compensation plans and programs.

Reviews the Compensation Discussion and Analysis to be included in the Company's proxy statement.

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Prepares an annual report of the Compensation Committee to be included in the Company's proxy statement.

Assesses annually the adequacy of the Compensation Committee Charter.

Reports to the Board of Directors about these matters.

Finance Committee: Reviews all aspects of the Company's policies and practices that relate to the management of the Company's financial affairs, consistent with law and specific instructions given by the Board of Directors.

Reviews with management, at least annually, the annual report from the Treasurer of the Company's cash and funding plans and other Treasury matters.

Reviews the strategy and performance of the Company's pension and other retirement and savings plans.

Performs such other functions and exercises such other powers as may be delegated to it by the Board of Directors from time to time.

Reviews, at least annually, policies with respect to financial risk assessment and financial risk management.

Assesses annually the adequacy of the Finance Committee Charter.

Reports to the Board of Directors about these matters.

Nominating and Governance Committee: Reviews and makes recommendations on: (i) the nominations or elections of directors; and (ii) the size, composition, and compensation of the Board.

Establishes criteria for selecting new directors and the evaluation of the Board. Develops and recommends to the Board corporate governance principles and guidelines. Reviews the charter and composition of each committee of the Board and makes recommendations to the Board for the adoption of or revisions to the committee charters, the creation of additional committees, or the elimination of committees.

Considers the adequacy of the By-Laws and the Restated Certificate of Incorporation of the Company and recommends to the Board, as appropriate, that the Board: (i) adopt amendments to the By-Laws, and (ii) propose, for consideration by the shareholders, amendments to the Restated Certificate of Incorporation.

Considers shareholder suggestions for nominees for director (other than self-nominations). See Composition of Board of Directors/Nominees on p. 10.

Assesses annually the adequacy of the Nominating and Governance Committee Charter.

Reports to the Board of Directors about these matters.

Sustainability and Innovation Committee: Evaluates and advises on the Company's pursuit of innovative practices and technologies that improve environmental and social sustainability, enrich our customers' experiences, and increase shareholder value.

Discusses and advises on the innovation strategies and practices used to develop and commercialize technologies.

Annually reviews the Company's Sustainability Report Summary and initiatives related to innovation.

Assesses annually the adequacy of the Sustainability and Innovation Committee Charter.

Reports to the Board of Directors about these matters.

Board's Role in Risk Management

GRAPHIC

The oversight responsibility of the Board and its Committees is supported by Company management and the risk management processes that are currently in place. Ford has extensive and effective risk management processes, relating specifically to compliance, reporting, operating, and strategic risks. Compliance Risk encompasses matters such as legal and regulatory compliance (e.g., Foreign Corrupt Practices Act, environmental, OSHA/safety, etc.). Reporting Risk covers Sarbanes-Oxley compliance, disclosure controls and procedures, and accounting compliance. Operating Risk addresses the myriad of matters related to the operation of a complex company such as Ford (e.g., quality, supply chain, sales and service, financing and liquidity, product development and engineering, labor, etc.). Strategic Risk encompasses somewhat broader and longer-term matters, including, but not limited to, technology development, sustainability, capital allocation, management development, retention and compensation, competitive developments, and geopolitical developments.

We believe that key success factors in the risk management at Ford include a strong risk analysis tone set by the Board and senior management, which is shown through their commitment to effective top-down

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and bottom-up communication (including communication between management and the Board and Committees), and active cross-functional participation among the Business Units and Functional Skill Teams. More specifically, we have institutionalized the Creating Value Roadmap Process, which includes a Business Plan Review and Special Attention Review process where, on a weekly basis (and more often where circumstances dictate), the senior leadership of the Company from each of the Business Units and the Functional Skill Teams reviews the status of the business, the risks and opportunities presented to the business (once again in the areas of compliance, reporting, operating, and strategic risks), and develops specific plans to address those risks and opportunities. The Company has adopted a formal policy that requires the Creating Value Roadmap Process to be implemented by all Business Units and Functional Skill Teams. Our General Auditor's Office audits against the policies and procedures that have been adopted to support the Creating Value Roadmap Process. The Board of Directors recognizes the Creating Value Roadmap Process as the Company's primary risk management tool, and the Audit Committee and the Board review annually the Creating Value Roadmap Process, the Company's adherence to it, and its effectiveness.

As noted above, the full Board of Directors has overall responsibility for the oversight of risk management at Ford and oversees operating risk management with reviews at each of its regular Board meetings. The Board of Directors has delegated responsibility for the oversight of specific areas of risk management to certain Committees of the Board, with each Board Committee reporting to the full Board following each Committee meeting. The Audit Committee assists the Board of Directors in overseeing compliance and reporting risk. The Board, the Sustainability and Innovation Committee, the Compensation Committee, and the Finance Committee all play a role in overseeing strategic risk management.

OVERSIGHT OF RISK MANAGEMENT

 

 

COMPLIANCE & REPORTING

 

OPERATING & STRATEGIC
FORD BOARD
Oversight
  Audit Committee   Sustainability Committee
Compensation Committee
Finance Committee
FORD MANAGEMENT
Day-to-Day
  Compliance Reviews
Sarbanes-Oxley Compliance
Internal Controls
Disclosure Committee
  Business Units & Skill Teams
Business Plan Review
Special Attention Review
Quality, Product, and People Forums

RISK ASSESSMENT REGARDING COMPENSATION POLICIES AND PRACTICES

We conducted an assessment of our compensation policies and practices, including our executive compensation programs, to evaluate the potential risks associated with these policies and practices. We reviewed and discussed the findings of the assessment with the Compensation Committee and concluded that our compensation programs are designed with an appropriate balance of risk and reward in relation to our One Ford Plan and do not encourage excessive or unnecessary risk-taking behavior. As a result, we do not believe that risks relating to our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the Company.

In conducting this review, we considered the following attributes of our programs:

mix of base salary, annual bonus opportunities, and long-term equity compensation, with performance-based equity compensation opportunities for officers;

alignment of annual and long-term incentives to ensure that the awards encourage consistent behaviors and incentivize performance results;

inclusion of non-financial metrics, such as quality, and other quantitative and qualitative performance factors in determining actual compensation payouts;

capped payout levels for both the Incentive Bonus Plan and performance-based stock awards for Named Executives — the Committee has negative discretion over incentive program payouts;

use of Time-Based Units and Performance Units that have a three-year performance period with performance measured against internal financial metrics (75% weighting) and relative Total Shareholder Return ("TSR") (25% weighting);

generally providing senior executives with long-term equity-based compensation on an annual basis — we believe that accumulating equity over a period of time
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    encourages executives to take actions that promote the long-term sustainability of our business;

adopted a double-trigger change-in-control provision for equity grants starting in 2016; and

stock ownership goals that are reasonable and align the interests of the executive officers with those of our shareholders — this discourages executive officers from focusing on short-term results without regard for longer-term consequences.

Recoupment Policy. The Committee formally adopted a policy of recoupment of compensation in certain circumstances. The purpose of this policy is to help ensure executives act in the best interests of the Company. The policy requires any Company officer to repay or return cash bonuses and equity awards in the event: (i) the Company issues a material restatement of its financial statements, and the restatement was caused by such officer's intentional misconduct; (ii) such officer was found to be in violation of non-compete provisions of any plan or agreement; or (iii) such officer has committed ethical or criminal violations. The Committee will consider all relevant factors and exercise business judgment in determining any appropriate amounts to recoup up to 100% of any awards.

Our Compensation Committee considered compensation risk implications during its deliberations on the design of our executive compensation programs with the goal of appropriately balancing short-term incentives and long-term performance.

COMPENSATION COMMITTEE OPERATIONS

The Compensation Committee establishes and reviews our executive compensation philosophy and strategy and oversees our various executive compensation programs. The Committee is responsible for evaluating the performance of and determining the compensation for our Executive Chairman, the President and CEO, and other executive officers and approving the compensation structure for senior management, including officers. The Committee is comprised of five directors who are considered independent under the NYSE Listed Company rules and our Corporate Governance Principles. The Committee's membership is determined by our Board of Directors. The Committee operates under a written charter adopted by our Board of Directors. The Committee annually reviews the charter. A copy of the charter may be found on our website at www.corporate.ford.com.

The Committee makes decisions regarding the compensation of our officers that are Vice Presidents and above, including the Named Executives. The Committee has delegated authority, within prescribed share limits, to a Long-Term Incentive Compensation Award Committee (comprised of William Clay Ford, Jr., and Mark Fields) to approve grants of options, Performance Units, Time-Based Units, and other stock-based awards, and to the Annual Incentive Compensation Award Committee to determine bonuses for other employees.

The Board of Directors makes decisions relating to non-employee director compensation. Any proposed changes are reviewed in advance and recommended to the Board by the Nominating and Governance Committee (see Director Compensation on pp. 30-31).

The Compensation Committee considers recommendations from Mr. Ford, Mr. Fields, and the Group Vice President — Human Resources and Corporate Services, in developing compensation plans and evaluating performance of other executive officers. The Committee's consultant also provides advice and analysis on the structure and level of executive compensation. Final decisions on any major element of compensation, however, as well as total compensation for executive officers, are made by the Compensation Committee.

As in prior years, in 2015 the Committee engaged Semler Brossy Consulting Group, LLC, an independent compensation consulting firm, to advise the Committee on executive compensation and benefits matters. Semler Brossy is retained directly by the Committee, and it has the sole authority to review and approve the budget of the independent consultant. Semler Brossy does not advise our management and receives no other compensation from us. The same Semler Brossy principal attended all six of the Committee meetings in 2015.

The Committee has analyzed whether the work of Semler Brossy as a compensation consultant has raised any conflict of interest, taking into consideration the following factors: (i) the provision of other services to the Company by Semler Brossy; (ii) the amount of fees from the Company paid to Semler Brossy as a percentage of the firm's total revenue; (iii) Semler Brossy's policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Semler Brossy or the individual compensation advisor employed by the firm with an executive officer of the Company; (v) any business or personal relationship of the individual compensation advisor with any member of the Committee; and (vi) any stock of the Company owned by Semler Brossy or the individual compensation advisor employed by the firm. The Committee has determined, based on its analysis of the above factors, that the work of Semler

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Brossy and the individual compensation advisor employed by Semler Brossy as compensation consultant to the Committee has not created any conflict of interest.

In addition, the Committee reviewed survey data provided by the Willis Towers Watson Executive Compensation Database (see Competitive Survey on pp. 41-42). Willis Towers Watson does not assist the Committee in determining or recommending compensation of executive officers. Willis Towers Watson is retained by Ford management, not the Committee.

Committee meetings typically occur prior to the meetings of the full Board of Directors. Bonus targets, bonus awards, Performance Unit grants, Time-Based Units, and cash awarded typically are decided at the February Committee meeting (see Timing of Awards on pp. 43-44). Officer salaries are reviewed in February each year.

See the Compensation Discussion and Analysis on pp. 36-55 for more detail on the factors considered by the Committee in making executive compensation decisions.

The Committee reviews our talent and executive development program with senior management. These reviews are conducted periodically and focus on executive development and succession planning throughout the organization, at the Vice President level and above.

Our policy, approved by the Compensation Committee, to limit outside board participation by our officers, is:

no more than 15% of the officers should be on for-profit boards at any given point in time; and

no officer should be a member of more than one for-profit board.

AUDIT COMMITTEE FINANCIAL EXPERT AND AUDITOR ROTATION

The Charter of the Audit Committee provides that a member of the Audit Committee generally may not serve on the audit committee of more than two other public companies. The Board has designated Stephen G. Butler as an Audit Committee financial expert. Mr. Butler meets the independence standards for audit committee members under the NYSE Listed Company and United States Securities and Exchange Commission ("SEC") rules. The lead partner of the Company's independent registered public accounting firm is rotated at least every five years.

Independence of Directors and Relevant Facts and Circumstances

GRAPHIC

DIRECTOR INDEPENDENCE

A majority of the directors must be independent directors under the NYSE Listed Company rules. The NYSE rules provide that no director can qualify as independent unless the Board affirmatively determines that the director has no material relationship with the listed company. The Board has adopted the following standards in determining whether or not a director has a material relationship with the Company. These standards are contained in Ford's Corporate Governance Principles and may be found at the Company's website, www.corporate.ford.com.

Employee or Former Employee. No director who is an employee or a former employee of the Company can be independent until three years after termination of such employment.

Independent Auditor Affiliation. No director who is, or in the past three years has been, affiliated with or employed by the Company's present or former independent auditor can be independent until three years after the end of the affiliation, employment, or auditing relationship.

Interlocking Directorship. No director can be independent if he or she is, or in the past three years has been, part of an interlocking directorship in which an executive officer of the Company serves on the compensation committee of another company that employs the director.

Additional Compensation. No director can be independent if he or she is receiving, or in the last three years has received, more than $100,000 during any 12-month period in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).

Immediate Family Members. Directors with immediate family members in the foregoing categories are subject to the same three-year restriction.
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Other Relationships. The following commercial, charitable, and educational relationships will not be considered to be material relationships that would impair a director's independence:

(i)
Sales and Purchases of Products/Services. if within the preceding three years a Ford director was an executive officer or employee of another company (or an immediate family member of the director was an executive officer of such company) that did business with Ford and either: (a) the annual sales to Ford were less than the greater of $1 million or two percent of the total annual revenues of such company, or (b) the annual purchases from Ford were less than the greater of $1 million or two percent of the total annual revenues of Ford, in each case for any of the three most recently completed fiscal years;

(ii)
Indebtedness. if within the preceding three years a Ford director was an executive officer of another company which was indebted to Ford, or to which Ford was indebted, and either: (a) the total amount of such other company's indebtedness to Ford was less than two percent of the total consolidated assets of Ford, or (b) the total amount of Ford's indebtedness to such other company was less than two percent of the total consolidated assets of such other company, in each case for any of the three most recently completed fiscal years; and

(iii)
Charitable Contributions. if within the preceding three years a Ford director served as an executive officer, director, or trustee of a charitable or educational organization, and Ford's discretionary contributions to the organization were less than the greater of $1 million or two percent of that organization's total annual discretionary receipts for any of the three most recently completed fiscal years. (Any matching of charitable contributions will not be included in the amount of Ford's contributions for this purpose.)

Based on these independence standards and all of the relevant facts and circumstances, the Board determined that none of the following directors had any material relationship with the Company and, thus, are independent: Stephen G. Butler, Kimberly A. Casiano, Anthony F. Earley, Jr., James H. Hance, Jr., William W. Helman IV, Jon M. Huntsman, Jr., William E. Kennard, John C. Lechleiter, Ellen R. Marram, Gerald L. Shaheen, and John L. Thornton. Additionally, Richard A. Gephardt, who did not stand for election at the 2015 Annual Meeting, and James P. Hackett, who resigned from the Board of Directors on March 10, 2016, were determined by the Board to have had no material relationships with the Company during the time of their service and, thus, were independent.

DISCLOSURE OF RELEVANT FACTS AND CIRCUMSTANCES

With respect to the independent directors listed above, the Board considered the following relevant facts and circumstances in making the independence determinations:

From time to time during the past three years, Ford purchased goods and services from, sold goods and services to, or financing arrangements were provided by, various companies with which certain directors were or are affiliated either as members of such companies' boards of directors or, in the case of Messrs. Earley and Hackett, as an officer of such a company or, in the case of Gov. Huntsman, where an immediate family member serves as an officer of such a company. In addition to Messrs. Earley and Hackett, and Gov. Huntsman, these directors included Mr. Gephardt, Mr. Kennard, Mr. Hance, Mr. Helman, Ms. Marram, and Mr. Thornton. The Company also made donations to certain institutions with which certain directors are affiliated. These included Ms. Casiano, Mr. Earley, Mr. Gephardt, Mr. Hackett, Dr. Lechleiter, Mr. Shaheen, and Mr. Thornton. None of the relationships described above was material under the independence standards contained in our Corporate Governance Principles.

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Codes of Ethics

GRAPHIC

The Company has published on its website (www.corporate.ford.com) its code of conduct handbook, which applies to all officers and employees, a code of ethics for directors, and a code of ethics for the Company's chief executive officer as well as senior financial and accounting personnel. Any waiver of, or amendments to, the codes of ethics for directors or executive officers, including the chief executive officer, the chief financial officer, and the principal accounting officer, may be approved only by the Nominating and Governance Committee, and any such waivers or amendments will be disclosed promptly by the Company by posting such waivers or amendments to its website. The Nominating and Governance Committee also reviews management's monitoring of compliance with the Company's Code of Conduct. Printed copies of each of the codes of ethics referred to above are also available by writing to our Shareholder Relations Department, Ford Motor Company, One American Road, Suite 1026, Dearborn, MI 48126.

Communications with the Board and Annual Meeting Attendance

GRAPHIC

The Board has established a process by which you may send communications to the Board as a whole, the non-employee Directors as a group, or the Presiding Independent Director. You may send communications to our Directors, including any concerns regarding Ford's accounting, internal controls, auditing, or other matters, to the following address: Board of Directors (or Presiding Independent Director or non-employee Directors as a group, as appropriate), Ford Motor Company, P.O. Box 685, Dearborn, MI 48126-0685. You may submit your concern anonymously or confidentially. You may also indicate whether you are a shareholder, customer, supplier, or other interested party. Communications relating to the Company's accounting, internal controls, or auditing matters will be relayed to the Audit Committee. Communications relating to governance will be relayed to the Nominating and Governance Committee. All other communications will be referred to other areas of the Company for handling as appropriate under the facts and circumstances outlined in the communications. Responses will be sent to those that include a return address, as appropriate. You may also find a description of the manner in which you can send communications to the Board on the Company's website (www.corporate.ford.com).

All members of the Board are expected to attend the annual meeting, unless unusual circumstances would prevent such attendance. Last year, of the fifteen then current members of the Board, fourteen attended the annual meeting.

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Beneficial Stock Ownership

FIVE PERCENT BENEFICIAL OWNERS OF COMMON STOCK

Pursuant to SEC filings, the Company was notified that as of December 31, 2015, the entities included in the table below had more than a 5% ownership interest of Ford common stock, or owned securities convertible into more than 5% ownership of Ford common stock, or owned a combination of Ford common stock and securities convertible into Ford common stock that could result in more than 5% ownership of Ford common stock.

 
   
   
   
   
   

 

Name of Beneficial Owner

  Address of Beneficial Owner   Ford
Common Stock
  Percent of
Outstanding Ford
Common Stock
   

 

State Street Corporation and certain of
its affiliates*

  State Street Financial Center
One Lincoln Street
Boston, MA 02111
  370,509,854   9.5%    

 

The Vanguard Group and
certain of its affiliates

  The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
  227,824,907   5.8%    

 

Evercore Trust Company, N.A.

  55 East 52nd Street
36th Floor
New York, NY 10055
  218,261,585   5.6%    

 

BlackRock, Inc. and certain of its
affiliates

  BlackRock, Inc.
55 East 52nd Street
New York, NY 10022
  211,050,584   5.4%    
*
State Street Bank and Trust Company is the trustee for Ford common stock in the Ford defined contribution plans master trust, which beneficially owns 5.6% of the common stock of Ford. In this capacity, State Street Bank and Trust Company has voting power over the shares in certain circumstances.

FIVE PERCENT BENEFICIAL OWNERS OF CLASS B STOCK

As of February 1, 2016, the persons included in the table below beneficially owned more than 5% of the outstanding Class B Stock.

 
   
   
   
   
   
    Name   Address   Ford
Class B Stock
  Percent of
Outstanding Ford
Class B Stock
   
    Lynn F. Alandt   Ford Estates, 2000 Brush, Detroit, MI 48226   6,615,159   9.34%    
    Sheila F. Hamp   Ford Estates, 2000 Brush, Detroit, MI 48226   4,698,363   6.63%    
    David M. Hempstead, as
trustee of various trusts*
  Ford Estates, 2000 Brush, Detroit, MI 48226   10,059,120   14.20%    
    Voting Trust**   Ford Estates, 2000 Brush, Detroit, MI 48226   69,004,451   97.40%    
*
Mr. Hempstead disclaims beneficial ownership of these shares.

**
These Class B Stock shares are held in a voting trust of which Edsel B. Ford II, William Clay Ford, Jr., Benson Ford, Jr., and Alfred B. Ford are the trustees. The trust is of perpetual duration until terminated by the vote of shares representing over 50% of the participants and requires the trustees to vote the shares as directed by a plurality of the shares in the trust.
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DIRECTOR AND EXECUTIVE OFFICER BENEFICIAL OWNERSHIP

The following table shows how much Ford stock each current director, nominee, and Named Executive beneficially owned as of February 1, 2016. No director, nominee, or executive officer, including Named Executives, beneficially owned more than 0.21% of Ford's total outstanding common stock nor did any such person beneficially own more than 0.01% of Ford common stock units as of February 1, 2016. Executive officers held options exercisable on or within 60 days after February 1, 2016 to buy 14,264,368 shares of Ford common stock.

 

Name

  Ford
Common
Stock1,2
  Ford
Common
Stock
Units3
   

 

Stephen G. Butler*

  42,623   129,434    

 

Kimberly A. Casiano*

  27,289   121,226    

 

Anthony F. Earley, Jr.*

  59,193   54,550    

 

James D. Farley, Jr.

  900,987   0    

 

Mark Fields*

  5,002,795   8,564    

 

James H. Hance, Jr.*

  69,972   41,834    

 

William W. Helman IV*

  39,481   32,358    

 

Joseph R. Hinrichs

  1,114,493   854    

 

Jon M. Huntsman, Jr.*

  19,976   25,787    

 

William E. Kennard*

  9,877   0    

 

John C. Lechleiter*

  53,293   4,371    

 

Ellen R. Marram*

  40,272   209,994    

 

Gerald L. Shaheen*

  35,291   118,999    

 

Robert L. Shanks

  1,076,073   0    

 

John L. Thornton*

  71,191   250,720    

 

 

Name

  Ford
Common
Stock1,2
  Ford
Common
Stock
Units3
  Ford
Class B
Stock
  Percent of
Outstanding
Ford
Class B
Stock
   

 

Edsel B. Ford II*

  2,616,500   132,585   5,521,710   7.79%    

 

William Clay Ford, Jr.*

  8,370,231   78,931   10,745,926   15.17%    

 

All Directors and Executive Officers as a group
30 persons beneficially owned 0.668% of Ford common stock or securities convertible into Ford common stock as of February 1, 2016

  26,466,260   1,216,084   16,267,636   22.96%    
*
Indicates Director Nominees

1
For executive officers, included in the amounts for "All Directors and Executive Officers as a group" are Restricted Stock Units issued under the 2008 Long-Term Incentive Plan ("2008 Plan") as long-term incentive grants in 2015 and prior years for retention and other incentive purposes.

    In addition, amounts shown include Restricted Stock Units issued under the 2008 Plan as follows: 703,288 units for Mr. Fields; 337,855 units for Mr. Shanks; 831,766 units for William Clay Ford, Jr.; 340,974 units Mr. Hinrichs; and 321,415 units for Mr. Farley.

    In addition, amounts shown include Restricted Stock Units issued under the 2014 Stock Plan for Non-Employee Directors of Ford Motor Company ("2014 Plan") as follows: 36,623 units for Mr. Butler; 19,976 units for Ms. Casiano; 23,193 units for Mr. Earley; 9,877 units for Mr. Kennard; 10,098 for Mr. Hance; 19,976 for Mr. Huntsman; 33,293 units for Dr. Lechleiter; 19,976 units for Ms. Marram; and 35,291 units for Mr. Shaheen.

    Included in the stock ownership shown in the table above: Edsel B. Ford II has disclaimed beneficial ownership of 61,401 shares of common stock and 32,508 shares of Class B Stock that are either held directly by his immediate family or by charitable funds which he controls. William Clay Ford, Jr., has disclaimed beneficial ownership of 327,092 shares of common stock and 2,106,777 shares of Class B Stock that are either held directly by members of his immediate family or indirectly by members of his immediate family in trusts in which Mr. Ford has no interest. Present directors and executive officers as a group have disclaimed beneficial ownership of a total of 388,493 shares of common stock and 2,139,285 shares of Class B Stock.

    No director or officer had pledged shares of common stock as security.

2
Also, on February 1, 2016 (or within 60 days after that date), the Named Executives and directors listed below have rights to acquire shares of common stock through the exercise of stock options under Ford's stock option plans (which amounts are included in the "Ford Common Stock" column), as follows:

 

 

Person

  Number of Shares    

 

 

James D. Farley, Jr.

  231,673    

 

Mark Fields

  3,351,533    

 

William Clay Ford, Jr.

  6,715,475    

 

Joseph R. Hinrichs

  298,147    

 

Robert L. Shanks

  424,119    
3
In general, these are common stock units credited under a deferred compensation plan and payable in cash and in the cases of William Clay Ford, Jr., Mark Fields, and Joseph R. Hinrichs, include stock units under a benefit equalization plan.
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Section 16(a) Beneficial Ownership Reporting Compliance

Based on Company records and other information, Ford believes that all SEC filing requirements applicable to its directors and executive officers were complied with for 2015 and prior years, except that due to administrative error, David L. Schoch had one late report of one transaction and Hau Thai-Tang had one late report of two transactions.

Certain Relationships and Related Party Transactions

GRAPHIC

POLICY AND PROCEDURE FOR REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS

Business transactions between Ford and its officers or directors, including companies in which a director or officer (or an immediate family member) has a substantial ownership interest or a company where such director or officer (or an immediate family member) serves as an executive officer ("related party transactions") are not prohibited. In fact, certain related party transactions can be beneficial to the Company and its shareholders.

It is important, however, to ensure that any related party transactions are beneficial to the Company. Accordingly, any related party transaction, regardless of amount, is submitted to the Nominating and Governance Committee in advance for review and approval. All existing related party transactions are reviewed at least annually by the Nominating and Governance Committee. The Office of the General Counsel reviews all such related party transactions, existing or proposed, prior to submission to the Nominating and Governance Committee, and our General Counsel opines on the appropriateness of each related party transaction. The Nominating and Governance Committee may, at its discretion, consult with outside legal counsel.

Any director or officer with an interest in a related party transaction is expected to recuse himself or herself from any consideration of the matter.

The Nominating and Governance Committee's approval of a related party transaction may encompass a series of subsequent transactions contemplated by the original approval, i.e., transactions contemplated by an ongoing business relationship occurring over a period of time. Examples include transactions in the normal course of business between the Company and a dealership owned by a director or an executive officer (or an immediate family member thereof), transactions in the normal course of business between the Company and financial institutions with which a director or officer may be associated, and the ongoing issuances of purchase orders or releases against a blanket purchase order made in the normal course of business by the Company to a business with which a director or officer may be associated. In such instances, any such approval shall require that the Company make all decisions with respect to such ongoing business relationship in accordance with existing policies and procedures applicable to non-related party transactions (e.g., Company purchasing policies governing awards of business to suppliers, etc.).

In all cases, a director or officer with an interest in a related party transaction may not attempt to influence Company personnel in making any decision with respect to the transaction.

RELATED PARTY TRANSACTIONS

In February 2002, Ford entered into a Stadium Naming and License Agreement with The Detroit Lions, Inc. (the "Lions"), pursuant to which we acquired for $50 million, paid by us in 2002, the naming rights to a new domed stadium located in downtown Detroit at which the Lions began playing their home games during the 2002 National Football League season. We named the stadium "Ford Field." The term of the naming rights agreement is 25 years, which commenced with the 2002 National Football League season. Benefits to Ford under the naming rights agreement include exclusive exterior entrance signage and predominant interior promotional signage. In June 2005, the naming rights agreement was amended to provide for expanded Ford exposure on and around the exterior of the stadium, including the rooftop, in exchange for approximately $6.65 million to be paid in installments over the following ten years, of which $564,933 was paid during 2015. Beginning in 2005, the Company also agreed to provide to the Lions, at no cost, eight new model year Ford, Lincoln, or Mercury brand vehicles manufactured by Ford in North America for use by the management and staff of Ford Field and the Lions and to replace such vehicles in each second successive year, for the remainder of the naming rights agreement. The cost incurred during 2015 was $62,541. William Clay

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Ford, Jr., is a minority owner and is a director and officer of the Lions.

In October 2014, Ford entered into a Sponsorship Agreement with a wholly-owned subsidiary of the Lions to be the exclusive title sponsor of an NCAA-sanctioned, men's college football "Bowl" game to be played in each of the 2014-2016 seasons at Ford Field. We named the Bowl the "Quick Lane Bowl" for our Quick Lane Tire & Auto Center brand and acquired several broadcast television messages, event signage, and other advertising in exchange for a sponsorship fee. The cost incurred during 2015 was $630,000.

Paul Alandt, Lynn F. Alandt's husband, owns two Ford-franchised dealerships and a Lincoln-franchised dealership. In 2015, the dealerships paid Ford about $155.6 million for products and services in the ordinary course of business. In turn, Ford paid the dealerships about $26.7 million for services in the ordinary course of business. Also in 2015, Ford Motor Credit Company LLC, a wholly-owned entity of Ford, provided about $222.5 million of financing to dealerships owned by Mr. Alandt and paid about $1.6 million to them in the ordinary course of business. The dealerships paid Ford Credit about $224.6 million in the ordinary course of business. Additionally in 2015, Ford Credit purchased retail installment sales contracts and Red Carpet Leases from the dealerships in amounts of about $23.6 million and $95.0 million, respectively.

In March 2001, Marketing Associates, LLC, an entity in which Edsel B. Ford II has a majority interest, acquired all of the assets of the Marketing Associates Division of Lason Systems, Inc. Before the acquisition, the Marketing Associates Division of Lason Systems, Inc. provided various marketing and related services to the Company and this continued following the acquisition. In 2015, the Company paid Marketing Associates, LLC approximately $35.7 million for marketing and related services provided in the ordinary course of business.

During 2015, the Company employed Henry Ford III, son of Edsel B. Ford II, as a manager in our global Marketing and Sales skill team. Henry Ford III received 2015 compensation of approximately $177,000 consisting primarily of salary, bonus, and stock awards.

Ray Day, a Group Vice President, has an immediate family member employed by the Company. His brother received approximately $124,000 in compensation during 2015.

Pursuant to SEC filings, the Company was notified that as of December 31, 2015, State Street Corporation, and its affiliate State Street Bank and Trust Company, State Street Financial Center, One Lincoln Street, Boston, MA 02111, and certain of its affiliates, owned 9.5% of our common stock. During 2015, the Company paid State Street Corporation and its affiliates approximately $8.5 million in the ordinary course of business.

Pursuant to SEC filings, the Company was notified that as of December 31, 2015, Evercore Trust Company, N.A., 55 East 52nd Street, 36th Floor, New York, NY 10055, owned approximately 5.6% of the Company's common stock. During 2015, the Company paid Evercore Trust Company, N.A. approximately $1.1 million in the ordinary course of business.

Pursuant to SEC filings, the Company was notified that as of December 31, 2015, BlackRock, Inc., 55 East 52nd Street, New York, NY 10022, and certain of its affiliates, owned approximately 5.4% of the Company's common stock. During 2015, the Company paid BlackRock, Inc. approximately $6.1 million in the ordinary course of business.

The following chart shows the process for identification and disclosure of related party transactions.

GRAPHIC

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Proposal 1. Election of Directors

IDENTIFICATION OF DIRECTORS

The Charter of the Nominating and Governance Committee provides that the Committee conducts all necessary and appropriate inquiries into the backgrounds and qualifications of possible candidates as directors. The Committee identifies candidates through a variety of means, including search firms, recommendations from members of the Committee and the Board, including the Executive Chairman and the President and CEO, and suggestions from Company management. The Committee has the sole authority to retain and terminate any search firm to be used to assist it in identifying and evaluating candidates to serve as directors of the Company. The Company on behalf of the Committee has paid fees to third-party firms to assist the Committee in the identification and evaluation of potential Board members.

Fourteen directors will be elected at this year's annual meeting. Each director will serve until the next annual meeting or until he or she is succeeded by another qualified director who has been elected.

We will vote your shares as you specify when providing your proxy. If you do not specify how you want your shares voted when you provide your proxy, we will vote them for the election of all of the nominees listed below. If unforeseen circumstances (such as death or disability) make it necessary for the Board of Directors to substitute another person for any of the nominees, we will vote your shares for that other person.

QUALIFICATIONS CONSIDERED FOR NOMINEES

Because Ford is a large and complex company, the Nominating and Governance Committee considers numerous qualifications when considering candidates for the Board. In addition to the qualifications listed below, among the most important qualities directors should possess are the highest personal and professional ethical standards, integrity, and values. They should be committed to representing the long-term interests of all of the shareholders. Directors must also have practical wisdom and mature judgment. Directors must be objective and inquisitive. Ford recognizes the value of diversity, and we endeavor to have a diverse Board, with experience in business, international operations, finance, manufacturing and product development, marketing and sales, government, education, technology, and in areas that are relevant to the Company's global activities. The biographies of the nominees show that, taken as a whole, the current slate of director nominees possesses these qualifications. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, including making themselves available for consultation outside of regularly scheduled Board meetings, and should be committed to serve on the Board for an extended period of time. Directors should also be prepared to offer their resignation in the event of any significant change in their personal circumstances that could affect the discharge of their responsibilities as directors of the Company, including a change in their principal job responsibilities.

Each of the nominees for director is now a member of the Board of Directors, which met eight times during 2015. Each of the nominees for director attended at least 75% of the combined Board and committee meetings held during the periods served by such nominee in 2015. The nominees provided the following information about themselves as of February 1, 2016. Additionally, for each director nominee we have disclosed the particular experience, qualifications, attributes, or skills that led the Board to conclude that the nominee should serve as a director.

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Stephen G. Butler

GRAPHIC  

Age: 68

Independent Director Since: 2004

Committees: Audit (Chair), Nominating and Governance

Experience: Mr. Butler served as Chairman and Chief Executive Officer of KPMG, LLP from 1996 until he retired in 2002. Mr. Butler held a variety of management positions, both in the United States and internationally, during his 33-year career at KPMG.

Reasons for Nomination: Mr. Butler has extensive experience in the accounting profession, both in the United States and internationally, as well as executive leadership experience as chairman and Chief Executive Officer of KPMG. Mr. Butler's financial expertise and risk management skills have been instrumental in guiding Ford through its restructuring, which continues to be important as the Company continues to grow. Mr. Butler brings valuable insight in strategic and client service innovations. He is credited with helping KPMG create a cohesive firm to effectively serve international clients. Mr. Butler's leadership skills, financial expertise, and international business experience add significant value to the goals of improving our balance sheet, fulfilling our financial reporting obligations, and identifying areas throughout the Company where we might create greater cohesiveness.

Current Public Company Directorships: ConAgra Foods, Inc.

Public Company Directorships Within the Past Five Years: Cooper Industries, PLC

Kimberly A. Casiano

GRAPHIC  

Age: 58

Independent Director Since: 2003

Committees: Audit, Nominating and Governance, Sustainability and Innovation

Experience: Ms. Casiano has been the President of Kimberly Casiano & Associates since 2010. Her firm provides advisory services in marketing, recruiting, communications, advocacy, and diversity to target the U.S. Hispanic market, the Caribbean, and Latin America. Ms. Casiano served as President and Chief Operating Officer of Casiano Communications, Inc., a Hispanic publisher of magazines and direct marketing company, from 1994 through 2009. She joined the company in 1987 and held various management positions. Ms. Casiano is a member of the Board of Directors of Scotiabank of Puerto Rico and the Hispanic Scholarship Fund.

Reasons for Nomination: Ms. Casiano has extensive experience in marketing and sales, particularly in the U.S. Hispanic community and Latin America. Ms. Casiano consistently provides Ford with valuable insight in developing communications, marketing, and sales strategies supporting our goal of growing market share profitably.

Current Public Company Directorships: Mead Johnson Nutrition Company and Mutual of America

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Anthony F. Earley, Jr.

GRAPHIC  

Age: 66

Independent Director Since: 2009

Committees: Compensation (Chair), Nominating and Governance, Sustainability and Innovation

Experience: Mr. Earley has been the Chairman, Chief Executive Officer, and President of PG&E Corporation since September 2011. Previously, Mr. Earley served in a number of executive leadership roles at DTE Energy including Executive Chairman, Chairman, Chief Executive Officer, President, and Chief Operating Officer. In addition, Mr. Earley served as President and Chief Operating Officer of Long Island Lighting and Gas Company. Mr. Earley also served as an officer in the United States Navy nuclear submarine program where he was qualified as a chief engineer officer.

Reasons for Nomination: Among other qualifications, Mr. Earley brings a wealth of executive leadership experience to the Board. His expertise in electrical infrastructure complements our One Ford Plan by providing key insight into the development of innovative products such as the development of hybrid and electric vehicles our customers want and value. Mr. Earley's experiences as a senior executive also complement our One Ford Plan by providing valuable insight into ways in which Ford can operate profitably at the current demand, while changing our product mix. Mr. Earley is a uniquely qualified leader who will help Ford continue to accelerate the One Ford Plan goal of driving profitable growth for all.

Current Public Company Directorships: PG&E Corporation

Public Company Directorships Within the Past Five Years: Masco Corporation and DTE Energy

Mark Fields

GRAPHIC  

Age: 55

Director Since: 2014

Committees: Finance

Experience: Mr. Fields is President and Chief Executive Officer of Ford Motor Company, effective July 2014. Mr. Fields joined Ford in 1989 and served in several executive management positions throughout his tenure, including Chief Operating Officer from December 2012 through June 2014; Executive Vice President and President of the Americas; Executive Vice President of Ford Europe; Executive Vice President of Premier Automotive Group (PAG); Chairman and Chief Executive Officer of PAG; and President of Mazda Motor Company.

Reasons for Nomination: As Ford's President and Chief Executive Officer, Mr. Fields provides the strategic and management leadership necessary to lead Ford into the future. Mr. Fields's record at Ford speaks for itself. He led the successful implementation of the One Ford Plan and developed a highly effective and collaborative global leadership team. He continues to deliver product excellence with passion and drive innovation in every part of our business. Mr. Fields is a dynamic leader focused on growing the business, both domestically and globally, moving Ford into the future and delivering profitable growth for all. The Board believes that Mr. Fields's leadership skills will continue to create value for Ford and our stakeholders.

Current Public Company Directorships: International Business Machines Corporation

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Edsel B. Ford II

GRAPHIC  

Age: 67

Director Since: 1988

Committees: Finance, Sustainability and Innovation

Experience: Mr. Ford serves as a consultant to Ford and has served in this capacity since 1999. Previously, Mr. Ford served as a Vice President of Ford Motor Company and as the former President and Chief Operating Officer of Ford Motor Credit Company.

Reasons for Nomination: Mr. Ford has a wealth of valuable experience. As an executive at the Company and as a consultant for the Company, he developed deep knowledge of the Company's business. Mr. Ford's life-long affiliation with the Company provides the Board with a unique historical perspective and a focus on the long-term interests of the Company. Mr. Ford also adds significant value in various stakeholder relationships, both domestically and abroad, including relationships with dealers, non-government organizations, employees, and the communities in which Ford has a significant presence. In addition, Mr. Ford's experience in creative and technology-driven marketing allows him to provide valuable insight in developing marketing strategies supporting the One Ford Plan goal of profitable growth for all.

Public Company Directorships Within the Past Five Years: International Speedway Corporation

William Clay Ford, Jr.

GRAPHIC  

Age: 58

Director Since: 1988

Committees: Finance (Chair), Sustainability and Innovation

Experience: Mr. Ford has held a number of management positions within Ford, including Vice President — Commercial Truck Vehicle Center. Mr. Ford was Chair of the Finance Committee from 1995 until October 2001 and was elected Chairman of the Board of Directors in January 1999. He served as Chief Executive Officer of the Company from October 2001 until September 2006 when he became Executive Chairman. Mr. Ford is also Vice Chairman of the Detroit Lions, Inc., Chairman of the Detroit Economic Club, and trustee of the Henry Ford Museum. He also is a member of the boards of Business Leaders for Michigan and Henry Ford Health System.

Reasons for Nomination: Mr. Ford has served in a variety of key roles at Ford and understands the Company and its various stakeholders. His long-term perspective and lifelong commitment to the Company adds significant value to the Company's stakeholder relationships. Mr. Ford, an early and influential advocate for sustainability at the Company, has long been recognized as a leader in advancing mobility and connectivity in the automobile industry, which adds significant value to Board deliberations.

Public Company Directorships Within the Past Five Years: eBay Inc.

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James H. Hance, Jr.

GRAPHIC  

Age: 71

Independent Director Since: 2010

Committees: Audit, Finance, Nominating and Governance

Experience: Mr. Hance has been an operating executive with The Carlyle Group since 2005. Mr. Hance retired as Chief Financial Officer of Bank of America in 2005, after 18 years of service with the firm. He is also a former Vice Chairman and member of the board of Bank of America. Mr. Hance joined NCNB Corporation, a predecessor to Bank of America, in 1987 and held various executive positions including Chief Financial Officer. From August 1985 until December 1986, he was chairman and co-owner of Consolidated Coin Caterers Corp. A certified public accountant, Mr. Hance spent 17 years with Price Waterhouse, now PricewaterhouseCoopers. Mr. Hance is an emeritus trustee of Washington University in St. Louis, and Chairman of the Board of Trustees of Johnson & Wales University in Providence, Rhode Island. Mr. Hance was the non-executive Chairman of the Board of Sprint Nextel Corp.

Reasons for Nomination: Mr. Hance has extensive experience in the banking industry and brings his financial expertise to deliberations regarding the Company's balance sheet and liquidity. Mr. Hance is credited with identifying key acquisitions to grow the Bank of America brand from a regional bank to an international enterprise. His knowledge is uniquely valuable as Ford identifies new opportunities for profitable growth.

Current Public Company Directorships: Acuity Brands, Inc., Cousins Properties Inc., Duke Energy Corporation, and The Carlyle Group

Public Company Directorships Within the Past Five Years: Rayonier, Inc., Sprint Nextel Corporation, and Morgan Stanley Corporation

William W. Helman IV

GRAPHIC  

Age: 57

Independent Director Since: 2011

Committees: Finance, Nominating and Governance, Sustainability and Innovation (Chair)

Experience: Mr. Helman is a General Partner at Greylock Partners, a venture capital firm focused on early stage investments in technology, consumer Internet, and healthcare. He joined Greylock in 1984 and led the firm's investments in Millennium Pharmaceuticals, Hyperion, Vertex Pharmaceuticals, Zipcar, Inc., and UPromise, among others. Mr. Helman is Chairman of the Board of Trustees of Dartmouth College and is on the board of the Broad Institute.

Reasons for Nomination: Mr. Helman's expertise in investing in new innovations offers the Board valuable insight as Ford continues to invest in connectivity and mobility technologies in order to deliver the innovative products our customers want and value. Mr. Helman's experience with investments, social media marketing, and healthcare issues provides a measured perspective as these issues are becoming increasingly important as the auto industry adopts new technologies, develops solutions to personal mobility challenges, adapts to new social media techniques, and the country fully implements new federal healthcare legislation.

Public Company Directorships Within the Past Five Years: Zipcar, Inc.

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Jon M. Huntsman, Jr.

GRAPHIC  

Age: 56

Independent Director Since: 2012

Committees: Compensation, Nominating and Governance, Sustainability and Innovation

Experience: Governor Huntsman has been the Chairman of the Atlantic Council of the United States and Chairman of the Huntsman Cancer Foundation since 2012. Previously, Gov. Huntsman served as U.S. Ambassador to China from August 2009 through April 2011 and U.S. Trade Ambassador. Governor Huntsman was twice elected Governor of Utah and served from 2005 to 2009. He began his public service career as a White House staff assistant to President Ronald Reagan and has since served appointments as Deputy Assistant Secretary of Commerce for Asia, and U.S. Ambassador to Singapore. Governor Huntsman serves on the boards of the U.S. Naval Academy Foundation and the University of Pennsylvania. In addition, he serves as distinguished fellow at the Brookings Institute, a trustee of the Carnegie Endowment for International Peace, and a trustee of the Reagan Presidential Foundation.

Reasons for Nomination: Governor Huntsman's extensive experience in Asia brings a well-informed and international perspective to Board deliberations. Governor Huntsman's expertise is valuable as the Company plans to significantly increase its presence in Asia. In addition, Governor Huntsman's extensive experience in government service provides the Board with important insight on government relations at the state, federal, and international levels.

Current Public Company Directorships: Caterpillar, Inc., Chevron Corporation, and Hilton Worldwide Inc.

Public Company Directorships Within the Past Five Years: Huntsman Corporation

William E. Kennard

GRAPHIC  

Age: 59

Independent Director Since: January 2015

Committees: Finance, Nominating and Governance, Sustainability and Innovation

Experience: Mr. Kennard is the Chairman and co-founder of Velocitas Partners LLC and a member of the Executive Board of Staple Street Capital since February 2014. Previously, Mr. Kennard served as chairman of the U.S. Federal Communications Commission (FCC) from 1997 to 2001 and served as the FCC's general counsel from 1993 to 1997. As U.S. Ambassador to the European Union from 2009 to 2013, he worked to eliminate regulatory barriers to commerce and to promote transatlantic trade, investment, and job creation. In addition to his public service, Mr. Kennard was a managing director of The Carlyle Group from 2001 to 2009. He also serves as a Fellow of the Yale Corporation.

Reasons for Nomination: Mr. Kennard has extensive experience in the law, telecommunications, and private equity fields. In particular, he has shaped policy and pioneered initiatives to help technology benefit consumers worldwide. Mr. Kennard is regarded as a champion for consumers in the digital age, and we believe this expertise and unique perspective will help guide our strategy as we accelerate our innovative work in the areas of in-car connectivity and mobility.

Current Public Company Directorships: AT&T Inc., MetLife, Inc., and Duke Energy Corporation

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John C. Lechleiter

GRAPHIC  

Age: 62

Independent Director Since: 2013

Committees: Compensation, Nominating and Governance

Experience: Dr. Lechleiter has been the President and Chief Executive Officer of Eli Lilly and Company since April 2008 and Chairman of the Board of Directors since January 2009. Dr. Lechleiter joined Lilly in 1979 and served in several executive management positions throughout his tenure, including President and Chief Operating Officer, Executive Vice President for pharmaceutical operations, Executive Vice President for pharmaceutical products and corporate development, and several executive positions in product development and regulatory affairs. Dr. Lechleiter is a member of the American Chemical Society. He also serves as the chairman of the U.S.-Japan Business Council and of United Way Worldwide, and he is a board member of the Pharmaceutical Research and Manufacturers of America, the Chemical Heritage Foundation, and the Central Indiana Corporate Partnership.

Reasons for Nomination: Dr. Lechleiter's experience as a chief executive officer of a multi-national company and his knowledge of science, marketing, management, and international business will aid the Board in its deliberations, especially as Ford seeks to expand its market share in regions outside North America. Dr. Lechleiter's knowledge and experience in research and development in a highly regulated industry also provide the Company with meaningful insight as it accelerates the development of new products. Additionally, Dr. Lechleiter's extensive experience in a highly regulated industry operating in a changing landscape adds significant expertise to the Board and will assist the Board as the Company adapts to an increasingly complex regulatory environment.

Current Public Company Directorships: Eli Lilly and Company and Nike, Inc.

Ellen R. Marram

GRAPHIC  

Age: 69

Presiding Independent Director Since: 1988

Committees: Compensation, Nominating and Governance, Sustainability and Innovation

Experience: Ms. Marram serves as president of the Barnegat Group, LLC, a business advisory firm. She also is a Senior Managing Director at Brock Capital Group LLC. Ms. Marram previously served as the Managing Director of North Castle Partners, LLC from 2000 through 2005, President and Chief Executive Officer of Tropicana Beverage Group from 1997 through 1998, Group President of Tropicana Beverage Group from 1993 through 1997, and President and Chief Executive Officer of the Nabisco Biscuit Company from 1988 through 1993.

Reasons for Nomination: Ms. Marram has extensive management experience and marketing expertise in managing well-known consumer brands. During her 30 year career, she built profitable brands and is recognized for her ability to anticipate market trends and emerging consumer needs. Her expertise complements Ford's desire to meet current customer demand while anticipating the changing demands and needs of our customers. In addition, Ms. Marram's experience in advising companies provides her with multiple perspectives on successful strategies across a variety of businesses.

Current Public Company Directorships: The New York Times Company and Eli Lilly and Company

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Gerald L. Shaheen

GRAPHIC  

Age: 71

Independent Director Since: 2007

Committees: Audit, Nominating and Governance (Chair)

Experience: Mr. Shaheen retired as a Group President of Caterpillar in 2008, where he served in that capacity since November 1998. He joined Caterpillar in 1967 and held a variety of management positions in the United States and Europe. As Group President, Mr. Shaheen was responsible for the design, development, and production of the company's large construction and mining equipment, as well as marketing and sales operations in North America, Caterpillar's components business, and its research and development division. Mr. Shaheen is a board member and past chairman of the U.S. Chamber of Commerce, Chairman of the Illinois Neurological Institute, and former chairman and current member of the Board of Trustees of Bradley University.

Reasons for Nomination: Mr. Shaheen's extensive expertise in manufacturing provides the Board with valuable insight in staying globally competitive. He is recognized for providing Caterpillar with key leadership in global marketing organizations and for building critical relationships with Caterpillar's global network of dealers. Mr. Shaheen's manufacturing, marketing, and general management knowledge provide the Board with expertise helping to further Ford's goal of delivering product excellence with passion. In addition, his experience in research and development, related to the manufacture and sale of products in a capital and labor intensive industry, provide valuable insight into Ford's efforts to build products our customers want and value across multiple markets.

Current Public Company Directorships: AGCO Corporation

John L. Thornton

GRAPHIC  

Age: 62

Independent Director Since: 1996

Committees: Compensation, Finance, Nominating and Governance

Experience: Mr. Thornton has served as Chairman of Barrick Gold Corporation since April 2014. He serves as non-executive Chairman of PineBridge Investments, Co-Chairman of the Board of Trustees of the Brookings Institution, and advisory board member of China Investment Corporation (CIC), and China Securities Regulatory Commission. He is Professor and Director of Global Leadership at Tsinghua University School of Economics and Management in Beijing, China. Mr. Thornton retired as President and Director of the Goldman Sachs Group, Inc. in 2003.

Reasons for Nomination: Mr. Thornton has extensive international business and financial experience. Mr. Thornton brings valuable insight into emerging markets as he expanded the presence of Goldman Sachs Asia, where he served as chairman. Mr. Thornton also served as co-chief executive of Goldman Sachs International, which was responsible for the firm's business in Europe, the Middle East, and Africa. Mr. Thornton's extensive experience in corporate finance and business matters, both domestically and internationally, is critical to achieving the One Ford Plan goals of financing our plan, improving our balance sheet, and creating profitable growth for all. Mr. Thornton's knowledge brings to the Board valuable insight in international business, especially in China, which has become one of the world's most important automotive growth markets.

Current Public Company Directorships: Barrick Gold Corporation

Public Company Directorships Within the Past Five Years: China Unicom (Hong Kong) Limited; Intel, Inc.; News Corporation; and HSBC Holdings plc

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Director Compensation in 2015

                                                     

 

(a)

  (b)       (c)             (d)     (e)    

      Fees Earned or
Paid in Cash 2
      Stock Awards 3     Fees 4   Perquisites/
Evaluation
Vehicles 5


 
Tax
Reimbursement

 
Life
Insurance
Premiums 6


 
All Other
Compensation

 
  Total    

 

Name

  ($)       ($)     ($)   ($)   ($)   ($)   ($)     ($)    
           

 

Stephen G. Butler

  125,000       149,997       37,435   16,699   254   54,388     329,385    

 

Kimberly A. Casiano

  100,000       149,997       30,544   17,306   254   48,104     298,101    

 

Anthony F. Earley, Jr.

  125,000       149,997       22,549   10,689   254   33,492     308,489    

 

Edsel B. Ford II

  100,000       149,997     650,000   14,946   0   666   665,612     915,609    

 

Richard A. Gephardt 1

  33,333       49,989       8,298   15,443   106   23,847     107,169    

 

James P. Hackett 1

  100,000       149,997       22,540   16,785   254   39,579     289,576    

 

James H. Hance, Jr.

  100,000       149,997       18,707   13,696   254   32,657     282,654    

 

William W. Helman IV

  115,000       149,997     12,000   1,132   858   254   14,244     279,241    

 

Jon M. Huntsman, Jr.

  100,000       149,997       29,997   16,719   254   46,970     296,967    

 

William E. Kennard

  100,000       149,997       18,425   8,209   254   26,888     276,885    

 

John C. Lechleiter

  100,000       149,997       25,716   10,241   254   36,211     286,208    

 

Ellen R. Marram

  130,000       149,997       27,699   11,978   64   39,741     319,738    

 

Gerald L. Shaheen

  115,000       149,997       35,021   17,395   254   52,670     317,667    

 

John L. Thornton

  100,000       149,997       14,337   12,639   254   27,230     277,227    
1
Mr. Gephardt did not stand for re-election at the 2015 Annual Meeting, and amounts paid to Mr. Gephardt were prorated in connection with his departure from the Board on May 14, 2015. Mr. Hackett resigned from the Board of Directors on March 10, 2016.

2
Fees.    Effective as of July 1, 2013, the Board of Directors agreed that the following compensation will be paid to non-employee directors of the Company:

Annual Board membership fee

  $ 250,000  

Annual Presiding Director fee

  $ 30,000  

Annual Audit Committee chair fee

  $ 25,000  

Annual Compensation Committee chair fee

  $ 25,000  

Annual other Committee chair fee

  $ 15,000  

The annual Board membership fee of $250,000 has been in place since January 1, 2012. In 2013, a review of director compensation at companies similarly situated to Ford indicated that the Audit Committee and Compensation Committee chair fees were below competitive levels. Consequently, the Board increased the fees paid for those positions from $15,000 to $25,000. The Board also approved an increase in the Presiding Independent Director fee from $25,000 to $30,000. The increases are consistent with Ford's philosophy of paying its directors near the top level of the leading companies in order to permit the Company to continue to attract quality directors.


As discussed in footnote 3 below, certain directors chose to receive all or a portion of their fees in restricted stock units pursuant to the 2014 Plan. Pursuant to SEC rules, the dollar value of any fees any director elected to receive in restricted units in excess of the 60% of the fees mandatorily paid in restricted stock units pursuant to that plan is shown in the "Fees Earned or Paid in Cash" column.

3
2014 Plan. Effective January 1, 2014, the Board adopted the 2014 Stock Plan for Non-Employee Directors of Ford Motor Company. The 2014 Plan was approved by shareholders at the 2014 Annual Meeting. The 2014 Plan is structured so that 60% (the "mandatory portion") of the Annual Board membership fee is mandatorily paid in Restricted Stock Units ("RSUs"). The amounts shown in column (c) are the grant date values of the RSUs relating to the mandatory portion of fees paid under the 2014 Plan. Each Director also had the option of having some or all of his or her remaining fees paid in RSUs pursuant to the 2014 Plan. The RSUs vest immediately upon grant. Each Director had the option to choose when the RSUs settle into shares of Ford common stock as follows: (i) immediately on the grant date; (ii) the earlier of five years from the date of grant and separation from the Board; or (iii) at separation from the Board. The Board adopted the 2014 Plan because the RSUs settle in shares of common stock, thus further aligning the interests of directors and shareholders. Directors are not permitted to sell, hedge, or pledge the 60% mandatory portion of the Annual Board fees until after separation from the Board, even if the RSUs settle into shares of common stock prior to separation from the Board. In light of the requirement that 60% of annual director fees are paid in RSUs, and that directors may not dispose of such RSUs or shares of stock until after separation from the Board, there is no minimum share ownership requirement for members of the Board. If dividends are paid on common stock, Dividend Equivalents are paid in additional RSUs on RSU balances for those directors whose RSUs have not settled into shares of common stock. For any director whose RSUs have settled into shares of common stock, they are required to reinvest those dividends into additional shares of common stock until separation from the Board.

4
The amount shown for Edsel B. Ford II reflects the fees he earned pursuant to a January 1999 consulting agreement between the Company and Mr. Ford. The consulting fee is payable quarterly in arrears in cash. Mr. Ford is available for consultation, representation, and other duties under the agreement. Additionally, the Company provides facilities (including office space) and an administrative assistant to Mr. Ford. This agreement will continue until either party ends it with 30 days' notice. The amount shown for Mr. Helman reflects fees paid
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    to him as a member of the Board of Managers of Ford Global Technologies, LLC, a wholly-owned entity that manages the Company's intellectual property. As a non-employee manager of such board, Mr. Helman received the customary fees paid to non-employee managers. Currently, the fees are: Annual Fee: $10,000, Attendance Fee: $1,000 per meeting. Mr. Helman attended both meetings of the Board of Managers of Ford Global Technologies, LLC, during 2015.

5
Perquisites and Evaluation Vehicle Program. All amounts shown in this column reflect the cost of: (i) evaluation vehicles provided to Directors; (ii) the actual cost incurred for holiday gifts; (iii) healthcare insurance premiums for certain directors; and (iv) the value of Dividend Equivalents credited to the following directors: Mr. Butler, Ms. Casiano, Messrs. Earley and Hance, Gov. Huntsman, Dr. Lechleiter, Ms. Marram, Dr. Neal, and Mr. Shaheen. We calculate the aggregate incremental costs of providing the evaluation vehicles by estimating the lease fee of a comparable vehicle under our Management Lease Program. The lease fee under that program takes into account the cost of using the vehicle, maintenance, license, title and registration fees, and insurance. We provide non-employee directors with the use of up to two Company vehicles free of charge. Directors are expected to provide evaluations of the vehicles to the Company. The cost of providing these vehicles is included in column (d).

6
Insurance. Ford provides non-employee directors with $200,000 of life insurance which ends when a director retires. A director can choose to reduce life insurance coverage to $50,000 and avoid any income imputation. Effective January 1, 2014, the non-employee director life insurance program was changed to allow former employees who become directors to participate in the program and keep the life insurance coverage provided to retired employees. The life insurance premiums paid by the Company for each director are included in column (d). Ford also provides non-employee directors with the option to obtain Company provided healthcare insurance at no cost. The healthcare insurance is identical to healthcare insurance provided to employees, except for the employee paid portion of premiums. Seven directors have elected this option and that portion of the premiums that the Company pays on behalf of directors that employees typically pay is included in column (d).

Your Board's recommendation: FOR Proposal 1

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Proposal 2. Ratification of Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors selects and hires the independent registered public accounting firm. You must approve the Audit Committee's selection for 2016.

The Audit Committee selected PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") to perform an independent audit of the Company's consolidated financial statements and internal control over financial reporting in accordance with standards established by the Public Company Accounting Oversight Board for 2016. PricewaterhouseCoopers is well qualified to serve as our independent registered public accounting firm. Representatives of PricewaterhouseCoopers will be present at the meeting with the opportunity to make a statement and answer questions.

Amounts paid by the Company to PricewaterhouseCoopers for audit and non-audit services rendered in 2015 and 2014 are disclosed in the table below.

Ford management will present the following resolution to the meeting:

"RESOLVED, That the selection, by the Audit Committee of the Board of Directors, of PricewaterhouseCoopers LLP as the independent registered public accounting firm to perform an independent audit of the Company's consolidated financial statements and internal control over financial reporting in accordance with standards established by the Public Company Accounting Oversight Board for 2016 is ratified."

Your Board's recommendation: FOR Proposal 2

Fees Paid to PricewaterhouseCoopers
  Year-ended
December 31, 2015
($)
  Year-ended
December 31, 2014
($)
 

Audit Fees 1

    38,400,000     37,800,000  

Audit-Related Fees 2

    3,100,000     3,900,000  

Tax Fees 3

    3,500,000     3,500,000  

All Other Fees 4

    4,900,000     2,600,000  

TOTAL FEES

    49,900,000     47,800,000  
1
Consists of the audit of the financial statements included in the Company's Annual Report on Form 10-K, reviews of the financial statement included in the Company's Quarterly Reports on Form 10-Q, attestation of the effectiveness of the Company's internal controls over financial reporting, preparation of statutory audit reports, and providing comfort letters in connection with Ford Motor Credit Company funding transactions.

2
Consists of support of funding transactions, due diligence for mergers, acquisitions and divestitures, employee benefit plan audits, attestation services, internal control reviews, and assistance with interpretation of accounting standards.

3
Consists of assistance with tax compliance and the preparation of tax returns, tax consultation, planning, and implementation services, assistance in connection with tax audits, and tax advice related to mergers, acquisitions and divestitures. Of the fees paid for tax services, we paid 77% and 54% for tax compliance and preparation of tax returns in 2015 and 2014, respectively.

4
Consists of research analysis regarding new markets and strategies.

Audit Committee Report

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The Audit Committee is composed of four directors, all of whom meet the independence standards contained in the NYSE Listed Company rules, SEC rules, and Ford's Corporate Governance Principles, and operates under a written charter adopted by the Board of Directors. A copy of the Audit Committee Charter may be found on the Company's website, www.corporate.ford.com. The Audit Committee selects, subject to shareholder ratification, the Company's independent registered public accounting firm.

Ford management is responsible for the Company's internal controls and the financial reporting process. The independent registered public accounting firm, PricewaterhouseCoopers, is responsible for performing independent audits of the Company's consolidated financial statements and internal controls over financial reporting and issuing an opinion on the conformity of those audited financial statements with United States

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generally accepted accounting principles and on the effectiveness of the Company's internal controls over financial reporting. The Audit Committee monitors the Company's financial reporting process and reports to the Board of Directors on its findings. PricewaterhouseCoopers served as the Company's independent registered public accounting firm in 2015 and 2014.

AUDITOR INDEPENDENCE

During the last year, the Audit Committee met and held discussions with management and PricewaterhouseCoopers. The Audit Committee reviewed and discussed with Ford management and PricewaterhouseCoopers the audited financial statements and the assessment of the effectiveness of internal controls over financial reporting contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The Audit Committee also discussed with PricewaterhouseCoopers the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, as well as by SEC regulations.

PricewaterhouseCoopers submitted to the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the audit committee concerning independence. The Audit Committee discussed with PricewaterhouseCoopers such firm's independence.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC.

The Audit Committee also considered whether the provision of other non-audit services by PricewaterhouseCoopers to the Company is compatible with maintaining the independence of PricewaterhouseCoopers and concluded that the independence of PricewaterhouseCoopers is not compromised by the provision of such services.

Annually, the Audit Committee pre-approves categories of services to be performed (rather than individual engagements) by PricewaterhouseCoopers. As part of this approval, an amount is established for each category of services (Audit, Audit-Related, Tax Services, and other services). In the event the pre-approved amounts prove to be insufficient, a request for incremental funding will be submitted to the Audit Committee for approval during the next regularly scheduled meeting. In addition, all new engagements greater than $250,000 will be presented in advance to the Audit Committee for approval. A regular report is prepared for each regular Audit Committee meeting outlining actual fees and expenses paid or committed against approved fees.

Audit Committee
Stephen G. Butler (Chair)
Kimberly A. Casiano
  James H. Hance, Jr.
Gerald L. Shaheen
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Proposal 3. Approval of the Compensation of the Named Executives

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we provide you with the opportunity to vote to approve, on a non-binding advisory basis, the compensation of our Named Executives, as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC. At the 2011 Annual Meeting you approved our proposal to provide you with this opportunity on an annual basis.

As described in detail in the "Compensation Discussion and Analysis," we seek to closely align the interests of our Named Executives with yours. Our compensation programs are designed to reward our Named Executives for the achievement of short-term and long-term strategic and operational goals, while at the same time avoiding unnecessary or excessive risk-taking. We urge you to read the Compensation Discussion and Analysis on pp. 36-55 and the other related executive compensation disclosures so that you have an understanding of our executive compensation philosophy, policies, and practices.

The vote on this resolution is not intended to address any specific element of compensation; rather the vote relates to the compensation of our Named Executives, as described in this Proxy Statement. The vote is advisory, which means that the vote is not binding on the Company, our Board of Directors, or the Compensation Committee.

Ford management will present the following resolution to the meeting:

"RESOLVED, That the Company's shareholders approve, on an advisory basis, the compensation of the Named Executives, as disclosed in the Company's Proxy Statement for the 2016 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure."

Your Board's recommendation: FOR Proposal 3

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CD&A Roadmap

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Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

Executive Summary

In 2015, we continued to implement our One Ford Plan, the key elements of which are:

    1.
    Aggressively restructure to operate profitably at the current demand and changing model mix.

    2.
    Accelerate development of new products, services, and experiences customers want and value.

    3.
    Finance our plan and maintain a strong balance sheet.

    4.
    Work together effectively as one team.

Our plan has served us well and will continue to do so going forward. We are building on our success by accelerating the pace of progress throughout our business, delivering product excellence with passion, and driving innovation in every part of the business.

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2015 — OUR BREAKTHROUGH YEAR


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  COMPANY PRE-TAX PROFIT* -- $10.8 billion
(excluding special items)
All-time record
 
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  GLOBAL MARKET SHARE
Ford global market share at 7.3% up 0.2 percentage points

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  VOLUME -- 6.635 million
Wholesale volume highest since 2005
 
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  AUTOMOTIVE OPERATING MARGIN -- 6.8%
Highest since at least the 1990s

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  TOTAL REVENUE -- $149.6 billion
Automotive revenue highest since 2007
 
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  AUTOMOTIVE OPERATING-RELATED CASH FLOW** -- $7.3 billion
Best level since at least 2001
(excluding special items)

 

*   For reconciliation of our total profits-before-taxes to U.S. generally accepted accounting principles ("GAAP"), please refer to Appendix II.   **   For reconciliation of our Automotive Operating-Related Cash Flow to GAAP, please refer to Appendix III.

STRONG FOUNDATION IN PLACE TO GROW BUSINESS

CORE BUSINESS   EMERGING BUSINESS

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  Successfully launched 16 global products  
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  Opened last of 10 new plants to support growth in Asia Pacific

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  Quality and customer satisfaction to best-ever levels in all regions  
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  Investing $4.5 billion in electrified vehicles by 2020

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  Ford Credit recognized as highest in consumer satisfaction in the U.S.  
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  More than 15 million vehicles with SYNC on the road globally

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  Achieved four-year agreement with UAW  
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  Announced Ford Smart Mobility Plan
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FORD RETURN ON INVESTED CAPITAL

Five Year Average ROIC* Performance (Pct.)

GRAPHIC

*
Based on Ford ROIC methodology. See Item 7 Return on Invested Capital on p. 73 of the Ford Motor Company Annual Report on Form 10-K for the year-ended December 31, 2015.

Return on invested capital (ROIC) has been healthy and higher than the cost of capital in a majority of the years since the recovery from the financial crisis. This demonstrates that our investments are paying off.

We believe in the effectiveness of our One Ford Plan and the compensation programs we have designed to support it. The table below shows our performance in key metrics over the past three years:

PERFORMANCE IN KEY METRICS

 

 

    

    2013     2014     2015    

 

 

Company Pre-Tax Profit*

  $ 10.1 Bils.   $ 7.3 Bils.   $ 10.8 Bils.    

 

 

Automotive Operating-Related Cash Flow**

  $ 6.1 Bils.   $ 3.6 Bils.   $ 7.3 Bils.    

 

 

Automotive Operating Margin***

    6.5%     4.6%     6.8%    

 

 

Automotive Revenue

  $ 139.4 Bils.   $ 135.8 Bils.   $ 140.6 Bils.    
*
Excludes special items. For reconciliation of our total profits-before-taxes to U.S. generally accepted accounting principles ("GAAP"), please refer to Appendix II.

**
Excluding special items. For reconciliation of our Automotive Operating-Related Cash Flow to GAAP, please refer to Appendix III.

***
Automotive Operating Margin is defined as Automotive pre-tax results, excluding special items and Other Automotive, divided by Automotive Revenue.

FORD'S RESPONSE TO EMERGING OPPORTUNITIES

The above graphics show we have a strong core business that continues to deliver impressive results over a sustained time period. In order to create greater value for our stakeholders, it is important we use that strong foundation to take advantage of emerging growth opportunities, such as:

Strengthening our geographic footprint, particularly in emerging growth markets in Asia Pacific and the Middle East & Africa, is critical to growing profitably.

Investing in electrified vehicles is an important part of our plan not only to be environmentally responsible, but to also produce products that consumers will want and value.

Expanding in-vehicle technology with features such as SYNC 3 and the introduction of FordPass will help us connect with consumers in new and innovative ways that will increase our brand awareness and customer loyalty.

Accelerating our Ford Smart Mobility plan is perhaps the most exciting and innovative of our emerging opportunities. Finding solutions to mobility issues raised by societal changes presents tremendous growth opportunities for those companies that are innovative, willing to invest resources, and collaborate with technology leaders to bring those solutions to reality.
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We will pursue these and other opportunites as we deliver our One Ford Plan goal of profitable growth for all.

 
CHART
 
CHART
 
CHART

*    Excluding special items

FORD TOTAL SHAREHOLDER RETURN ("TSR") PERFORMANCE

GRAPHIC

*
The "TSR Peer Group" referenced above is the peer group we used in our 2015 Performance Unit grants. See Performance Unit Grants discussion on pp. 51-52 for a description of the TSR Peer Group.

The chart above indicates that our TSR performance has lagged that of our peer group and the S&P 500 over the one-, three-, and five-year periods. In the 2015 CD&A, we discussed how our record 24 product launches in 2014 would set the stage for improved operating results in 2015 and beyond — and 2015 was a breakthrough year for Ford. As the table on p. 37 shows, our operating results improved significantly from 2014. Shareholders have benefited from our results also. In January 2015, we increased our dividend rate by 20% from 2014 to a quarterly rate of $0.15 per share, and in January 2016 we maintained the quarterly rate and announced an annual supplemental dividend of $0.25 per share.

We also provided guidance for 2016, which includes pre-tax profit, automotive revenue, and automotive operating margin equal to or higher than 2015, and strong automotive operating-related cash flow. While the equity markets have not rewarded our common stock for our improved results, continued strong core performance and accelerating our plans to take advantage of emerging opportunites will result in long-term value for our stakeholders. We will communicate our achievements in these important areas as we transition to an automotive and mobility company.

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COMPENSATION PHILOSOPHY AND STRATEGY

Our compensation and benefits Philosophy, Strategy, and Guiding Principles are the pillars that provide the foundation within which compensation and benefits programs are developed at Ford. The Guiding Principles ensure our Philosophy and Strategy statements are applied consistently across the business for our salaried employees, and driving total shareholder return is inherent in each pillar. They work together — no one principle is more important than any other, and business judgment is used to balance them to ensure our compensation and benefit programs are effective in supporting our objectives. The Compensation Committee adopted the following with respect to all salaried employees:

Compensation and Benefits Philosophy:    Compensation and benefits programs are an important part of the Company's employment relationship, which also includes challenging and rewarding work, growth and career development opportunities, and being part of a leading company with a diverse workforce and great products. Ford is a global company with consistent compensation and benefits practices that are affordable to the business.

Pay for performance is fundamental to our compensation philosophy. We reward individuals for performance and contributions to business success. Our compensation and benefits package in total will be competitive with leading companies in each country.

Strategy Statement:    Compensation will be used to attract, retain, and motivate employees and to reward the achievement of business results through the delivery of competitive pay and incentive programs. Benefits provide employees with income security and protection from catastrophic loss. The Company will develop benefit programs that meet these objectives while minimizing its long-term liabilities.

GUIDING PRINCIPLES

Performance Orientation. Compensation programs should support and reinforce a pay-for-performance culture. They should motivate and reward employees for achieving desired business results. Benefit programs should provide income security and support/protect for catastrophic loss.

Competitive Positioning. Competitive compensation and benefit programs are critical to attracting, motivating, and retaining a high performing workforce. We target the average competitive level of automotive and other leading companies within the national market, including large automotive, leading multinational, and other selected companies, as appropriate. Competitiveness will be measured based on program value to employees relative to the comparator group. When business conditions are such that our incentive programs do not provide competitive compensation on a longer-term basis, we will utilize short- and long-term retention programs to ensure the Company retains key employees who enable the Company to respond successfully to financial and operational challenges.

Affordability. Compensation and benefits must be affordable to the Company over the medium- to long-term. To the extent possible, compensation and benefit programs will not fluctuate significantly based on short-term business conditions.

Desired Behaviors. Compensation and benefit programs should support the Company's business performance objectives and promote desired behaviors.

Flexibility. Compensation, benefit, and other related programs should take into account workforce diversity and provide meaningful individual choice where appropriate.

Consistency and Stability. It is a Company objective to provide consistent and stable programs globally (subject to legal, competitive, and cultural constraints), particularly for higher level positions. Compensation and benefit programs should have a high degree of consistency within countries (i.e., among various pay levels and employee groups) and should not fluctuate significantly year-over-year. Programs may vary when competitively driven.

Delivery Efficiency. Compensation, benefit, and other related programs should be understandable and easy to administer while leveraging economies of scale and technology. They should be implemented in a consistent, equitable, and efficient manner. Programs will be delivered in a manner that is tax-effective to the Company and employees as far as practicable.
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Delivery Effectiveness. Clearly defined metrics should be developed for compensation, benefit, and other related programs that are aligned with corporate business performance metrics. Metrics are designed and utilized to measure and continually improve business results.

The Philosophy and Strategy statements and Guiding Principles are reviewed by the Committee on a regular basis, and no material changes were made in 2015.

In keeping with the above, our total direct compensation for Named Executives, consisting of base salary, annual cash incentive, and long-term equity incentive, is heavily weighted towards performance. Base salary represents 25% or less of each Named Executive's target opportunity, and a majority of our executives' target compensation is contingent on meeting incentive plan metrics.

ONE FORD PLAN

As noted above, one of the primary objectives of our compensation program is to drive executive behavior to accomplish key strategic goals. Our senior leadership team further developed the Company's strategic priorities under the strategy of One Ford. One Ford provides a single definition of our objectives and how we need to deliver on those objectives to achieve success globally. One Ford aligns our efforts toward a common definition of success, which includes One Team executing One Plan to deliver One Goal — an exciting, viable Ford delivering profitable growth for all.

Given these priorities, the Committee decided to emphasize Automotive revenue, Automotive operating-related cash flow, Automotive operating margin, Ford Credit profit before tax, and Quality in our incentive plans for 2015. We believe these metrics drive our TSR and, consequently, are well-aligned with shareholder interests. For our 2015 Performance Unit grants, we did not include a Quality metric because year-to-year measurement of Quality is more informative to our business, but added a relative TSR metric (see Long-Term Incentive Awards on pp. 50-52).

We evaluate the long-term success of our One Ford Plan by measuring TSR. Management undertook a study of the key drivers of TSR in our industry, including discussion with investors. In our view, TSR in our industry is generated through revenue growth, strong operating margins, sustainable dividends, and a strong investment grade balance sheet. Our One Ford strategy and our performance-based incentive plan metrics are aligned with these factors.

As discussed in greater detail below, performance in these critical areas drove the compensation decisions related to our Incentive Bonus Plan and Performance Units for Named Executives for 2015. For more detail on these metrics and how they were used in our incentive programs, see the table below and refer to Annual Cash Incentive Awards on pp. 47-50 and Long-Term Incentive Awards on pp. 50-52.

PERFORMANCE-BASED INCENTIVE PLANS

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As we have for many years, in 2015 we tied our executive compensation to performance against defined metrics aligned with the One Ford Plan objectives. We informed you in our 2015 CD&A that the Committee made significant changes to our Performance Unit grants for the 2015 performance period. By increasing the performance period from one to three years, the Committee incentivizes executives to focus on strengthening our business for the long-term. The addition of a relative TSR metric more closely aligns executive performance with our stock price and with your interests in stock price appreciation. The Committee did not include a Quality metric for the Performance Units because of unreliability of setting Quality targets over a three-year period. However, the Committee maintained a Quality metric in the 2015 Incentive Bonus Plan because of its importance to our reputational value. The following chart summarizes the differences in metrics and weightings between the Incentive Bonus plan and the Performance Unit grants in 2015.

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Please refer to 2015 Incentive Bonus Plan Performance Results on pp. 48-50 for details on our performance against metrics and payouts under our Incentive Bonus plan for 2015.

MANAGEMENT RECOMMENDATIONS

The Committee considers recommendations from the Executive Chairman, the President and CEO, and the Group Vice President — Human Resources and Corporate Services, in developing compensation plans and evaluating performance of executive officers. The Committee's independent consultant also provides advice and analyses on the structure and level of executive compensation (see Compensation Committee Operations on pp. 14-15). As noted in 2. Compensation Determination — One Ford Plan on p. 40, we established the One Ford corporate priorities. Our senior leadership team developed the 2015 business plan metrics and targets to support our One Ford priorities. Our Human Resources and Finance departments developed the incentive plan performance weightings, targets, and payout ranges in support of the business plan and One Ford. Final decisions on the design of our incentive plans and all major elements of compensation, however, as well as total compensation for each executive officer, were made by the Compensation Committee.

COMPETITIVE SURVEY

In December 2014, the Committee reviewed a report analyzing Ford's compensation programs for executives. The report was prepared by the Company, reviewed by the Committee's independent consultant, and was based on information obtained from the Willis Towers Watson Executive Compensation Database. The report discussed how our executive compensation program compared with those of peer companies on base salary, annual bonus, long-term incentives, and total direct compensation. The survey group compensation data was collected during the second quarter of 2014 and, therefore, reflected any bonuses paid in early 2014 for 2013 performance, as well as equity grants made in early 2014.

While the Committee used the December 2014 survey data as a reference point, it was not, in 2015, the sole determining factor in executive compensation decisions. We generally seek to provide total compensation opportunities at or around the survey group's median total compensation. Consistent with our compensation Guiding Principles discussed above, we incorporate flexibility into our compensation programs to respond to, and adjust for, changes in the business/economic environment and individual accomplishments, performance, and circumstances.

Throughout the CD&A we discuss the competitiveness of the elements of the Named Executives' compensation compared to our survey group. The survey we use for these comparisons is a December 2015 survey also prepared by the Company and reviewed by the Committee's consultant, and based on the Willis Towers Watson Executive Compensation Database. The Committee uses the following criteria, which were established in 2009 in consultation with the Committee's independent consultant, to determine the companies included in the survey group:

    member of the Fortune 100;

    similar primary business to Ford and/or similar business model (e.g., engineering, manufacturing, sales, financial services, and numerous job matches);

    particular line of business comprises no more than 20% of the total peer group; and

    participates in the Willis Towers Watson survey process.

The above criteria ensure that the chosen executive compensation survey group will be representative of Ford's market for talent. The Committee reviews the criteria and survey group annually, and Hewlett-Packard was removed from the survey group in 2015 due to its not participating in the Willis Towers Watson survey process for several years. Changes to the survey group are typically minimized in order to support data stability and reliability. Our non-U.S. based competitors do not participate in the Willis Towers Watson survey process. Our survey group includes the following companies:

3M   ExxonMobil
Alcoa   General Dynamics
AT&T   General Electric
Boeing*   General Motors
Caterpillar   Honeywell
Chevron   IBM
Chrysler   Johnson & Johnson
Cisco Systems   PepsiCo
Coca-Cola   Pfizer
ConocoPhillips   United Technologies
Dow Chemical   Valero
DuPont    
*
Boeing is typically included in our survey group analysis, but its data were not available in the Willis Towers Watson database this year.

The survey database did not contain enough job-position-related matches for Mr. Ford, our Executive Chairman. Consequently, his compensation was excluded from our analysis of how the total direct compensation of our Named Executives compares to that of the survey group. The 2015 survey results

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indicated that the targeted total direct compensation for Mr. Fields was slightly above the median. For Messrs. Shanks and Hinrichs, targeted total direct compensation was at the median, and Mr. Farley's was above the median. An analysis of how each element of actual compensation discussed below compared to the survey data for 2015, as well as how the factors described above, including the competitive survey data review, affected Named Executive compensation decisions during 2015, is included in the discussion of each element.

PAY EQUITY

Periodically, the Committee reviews the amount of all components of compensation of our executive officers. This review includes data on salary, annual bonuses, and equity-based awards, as well as qualitative and quantitative data on perquisites. The Committee also takes into account relative pay considerations within the officer group and data covering individual performance. The Committee uses this analysis to assist it in ensuring internal equity among the executive officer group.

The Committee also considers the potential value of outstanding equity grants and uses this information as one data-point in evaluating equity compensation grants. For instance, the Committee regularly reviews the value of equity-based awards at certain price levels of Ford stock. The analysis includes the following:

    "in-the-money" stock options;

    unvested Restricted Stock Units; and

    2015 Performance Unit grant.

The Committee uses this analysis to evaluate the accumulated wealth and retention value in equity of the Named Executives in light of the Company's change in market value. The equity grant values to the Named Executives are at the median of the survey group and, therefore, the Committee believes that our equity-based incentive programs have been effective to attract, motivate, and retain executives, as well as incentivize executives to accomplish our One Ford Plan objectives.

TAX CONSIDERATIONS

Internal Revenue Code § 162(m).    Code Section 162(m) generally disallows Federal tax deductions for compensation in excess of $1 million paid to the Chief Executive Officer and the next three highest paid officers at year-end (other than the Chief Financial Officer) whose compensation is required to be reported in the Summary Compensation Table of the proxy statement ("Covered Executives"). Certain performance-based compensation is not subject to this deduction limitation. In our case, we believe that this exemption applies to certain awards under the Incentive Bonus Plan and the 2008 Plan. Specifically, we believe that Incentive Bonus Plan payments made for 2015 performance were not, and Final Awards related to 2015 Performance Units will not be, subject to the deduction limit. The incremental bonuses paid, however, to the Covered Executives (see column (d) of the Summary Compensation Table on p. 56) are subject to the deduction limit. At the 2013 Annual Meeting you approved the performance criteria used in the Incentive Bonus Plan and the 2008 Long-Term Incentive Plan ("2008 Plan") in order to support tax deductibility for awards granted to Covered Executives pursuant to those plans. Additionally, we cannot deduct that portion of any Covered Executive's salary that is in excess of $1 million, or the cost of any perquisites provided to a Covered Executive whose salary exceeds $1 million.

Generally, we strive to maximize the tax deductibility of our compensation arrangements. In the highly competitive market for talent, however, we believe the Committee needs flexibility in designing compensation that will attract and retain talented executives and provide special incentives to promote various corporate objectives. The Committee, therefore, retains discretion to award compensation that is not fully tax deductible.

Internal Revenue Code § 409A.    Code Section 409A provides that amounts deferred under nonqualified deferred compensation plans are includible in an employee's income when vested, unless certain requirements are met. If these requirements are not met, employees are also subject to an additional income tax and interest. All of our supplemental retirement plans, severance arrangements, other nonqualified deferred compensation plans, as well as the Incentive Bonus Plan and the 2008 Plan, are intended to meet these requirements. As a result, employees are expected to be taxed when the deferred compensation is actually paid to them.

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GRAPHIC

Underlying our compensation programs is an emphasis on sound governance practices. These practices include:

WE DO

GRAPHIC   Perform annual say-on-pay advisory vote for stockholders
GRAPHIC   Pay for performance
GRAPHIC   Use appropriate peer group when establishing compensation
GRAPHIC   Balance short- and long-term incentives
GRAPHIC   Align executive compensation with stockholder returns through long-term incentives
GRAPHIC   Cap individual payouts in incentive plans
GRAPHIC   Include clawback policy in our incentive plans
GRAPHIC   Maintain robust stock ownership goals for executives
GRAPHIC   Condition grants of long-term incentive awards on non-competition and non-disclosure restrictions
GRAPHIC   Mitigate undue risk taking in compensation programs
GRAPHIC   Include criteria in incentive plans to maximize tax deductibility
GRAPHIC   Retain a fully independent external compensation consultant whose independence is reviewed annually by the Committee (see Corporate Governance — Compensation Committee Operations on pp. 14-15)
GRAPHIC   Include a double-trigger provision for equity grants that contemplate a change-in-control (see 2016 Plan Changes on p. 54)

WE DO NOT

GRAPHIC   Provide tax gross-ups for perquisites