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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.            )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

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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

o

 

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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No fee required.

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
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Fee paid previously with preliminary materials.

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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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Amount Previously Paid:
        
 
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Table of Contents

Notice of 2019 Virtual Annual Meeting
of Shareholders and Proxy Statement

LOGO

Thursday, May 9, 2019 at 8:30 a.m., Eastern Daylight Savings Time
Virtual Annual Meeting of Shareholders
Online Meeting Only — No Physical Meeting Location


Table of Contents

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

LOGO

Dear Shareholders:

It is my pleasure to inform you that our 2019 Annual Meeting of Shareholders will be conducted online on Thursday, May 9, 2019, starting at 8:30 a.m. EDT. The virtual nature of the meeting will continue to enable increased shareholder accessibility, while improving meeting efficiency and reducing costs. Shareholders will be able to listen, vote, and submit questions from their home or any remote location with Internet connectivity. Information on how to participate in this year's virtual meeting can be found on page 87.

In 2018 we took aggressive steps to improve the efficiency and focus of our traditional automotive business. Equally important we accelerated our efforts to be a leader in the mobility services of tomorrow. While 2018 was challenging, we still achieved our ninth consecutive year of solid earnings and positive operating-related cash flow. These profits enabled us to distribute $3.1 billion to our shareholders last year, and $18.4 billion since 2012.

As we strengthen our product portfolio we are committed to reducing vehicle emissions by delivering CO2 reductions consistent with the Paris Climate Accord. We are investing $11 billion in electrification to deliver 40 new hybrid and electric vehicles globally by 2022.

Looking farther into the future, the actions we are taking to improve efficiencies are freeing up capital to invest in emerging businesses. We expect to invest $4 billion in our autonomous vehicle efforts through 2023, including our $1 billion investment in Argo AI.

As we move into the 21st century we are reimagining what mobility will look like beyond the privately owned internal combustion engine automobile. That means not just smart cars, but also smart roads, smart parking, and smart public transit systems, all talking to one another. It means rethinking cities so that even as millions more people move to cities the air is cleaner, the streets less congested and everyone has access to efficient, affordable and sustainable mobility.

Since the days of the Model T people have trusted us to get them where they want to go, do what is right for them and make their lives better. Whatever form mobility takes in the future, our Board of Directors, leadership team and extended family of employees are determined to continue earning your trust as we strive to become the world's most trusted company designing smart vehicles for a smart world.

Thank you for your support of our efforts.

March 29, 2019

/s/ William Clay Ford, Jr.


William Clay Ford, Jr.
Chairman of the Board


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LOGO

Notice of Virtual Annual Meeting of
Shareholders of Ford Motor Company

Thursday, May 9, 2019
8:30 a.m., Eastern Daylight Savings Time

This year's virtual annual meeting will begin promptly at 8:30 a.m., Eastern Daylight Savings Time. If you plan to participate in the virtual meeting, please see the instructions on page 87 of the Proxy Statement. Shareholders will be able to listen, vote, and submit questions from their home or from any remote location that has Internet connectivity. There will be no physical location for shareholders to attend. Shareholders may only participate online by logging in at www.virtualshareholdermeeting.com/FORD2019.

ITEMS OF BUSINESS:

1.
The election of the 13 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 2019.

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 three shareholder proposals set forth in the Proxy Statement.

If you were a shareholder at the close of business on March 13, 2019, you are eligible to vote at this year's annual meeting.

Please read these materials so that you will know which items of business we intend to cover during 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 will allow your shares to be voted as you instruct even if you cannot participate in 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 83 for important information about the proxy materials, voting, the virtual annual meeting, Company documents, communications, and the deadline to submit shareholder proposals for the 2020 Annual Meeting of Shareholders.

Shareholders are being notified of the Proxy Statement and the form of proxy beginning March 29, 2019.

March 29, 2019

Dearborn, Michigan

/s/ Jonathan E. Osgood


Jonathan E. Osgood
Secretary

We urge each shareholder to promptly sign and return the enclosed proxy card or to use telephone or online voting. See our Questions and Answers beginning on page 84 for information about the virtual meeting and voting by telephone or online and how to revoke a proxy.

NOTICE OF VIRTUAL ANNUAL MEETING OF SHAREHOLDERS

GRAPHIC

2019 Proxy Statement

i


Table of Contents

Proxy Summary

  1

Corporate Governance

 
10

Corporate Governance Principles

  10

Our Governance Practices

  10

Leadership Structure

  11

Board Meetings, Composition, and Committees

  11

Board's Role in Risk Management

  14

Independence of Directors and Relevant Facts and Circumstances

  17

Codes of Ethics

  18

Communications with the Board and Annual Meeting Attendance

  18

Beneficial Stock Ownership

  19

Section 16(a) Beneficial Ownership Reporting Compliance

  21

Certain Relationships and Related Party Transactions

  21

Proposal 1. Election of Directors

 
24

Director Compensation in 2018

  32

Proposal 2. Ratification of Independent Registered Public Accounting Firm

 
34

Audit Committee Report

  35

Proposal 3. Approval of the Compensation of the Named Executives

 
36

Compensation Discussion and Analysis (CD&A) Roadmap

 
37

Executive Compensation

 
38

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

  38

COMPENSATION COMMITTEE REPORT

  59

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

  59

COMPENSATION OF NAMED EXECUTIVES

  60

Summary Compensation Table

  60

Grants of Plan-Based Awards in 2018

  62

Outstanding Equity Awards at 2018 Fiscal Year-End

  63

Option Exercises and Stock Vested in 2018

  65

Pension Benefits in 2018

  65

Nonqualified Deferred Compensation in 2018

  67

Potential Payments Upon Termination or Change-in-Control

  68

Equity Compensation Plan Information

  70

Pay Ratio

  71

Proposal 4. Approval of the Tax Benefit Preservation Plan

 
73

Shareholder Proposals

 
76

Proposal 5. Shareholder Proposal

  76

Proposal 6. Shareholder Proposal

  79

Proposal 7. Shareholder Proposal

  81

Other Items

 
83

Questions and Answers About the Proxy Materials

 
84

Instructions for the Virtual Annual Meeting

 
87

Appendix I. Tax Benefit Preservation Plan

 
I-1

Appendix II. Cautionary Note on Forward Looking Statements

 
II-1

Appendix III. Company Operating Cash Flow Metric GAAP Reconciliation

 
III-1

ii

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GRAPHIC

2019 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 84 for important information about proxy materials, voting, the virtual annual meeting, Company documents, and communications.

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 March 29, 2019.

TIME OF VIRTUAL ANNUAL MEETING


Thursday, May 9, 2019
8:30 a.m., Eastern Daylight Savings Time
We will hold a virtual annual meeting of shareholders. Shareholders may participate online by logging onto www.virtualshareholdermeeting.com/FORD2019. There will not be a physical meeting location.

 


Corporate Website:
www.corporate.ford.com
Annual Report:
www.annualreport.ford.com

MEETING AGENDA

VOTING MATTERS
  Board
Recommendations

  Pages
 

Election of the 13 Director Nominees Named in the Proxy Statement

  FOR     24-33  

Ratification of Independent Registered Public Accounting Firm

 
FOR
   
34-35
 

Approval of the Compensation of the Named Executives

 
FOR
   
36-72
 

Approval of the Tax Benefit Preservation Plan

 
FOR
   
73-75
 

Shareholder Proposal — Give Each Share an Equal Vote

 
AGAINST
   
76-78
 

Shareholder Proposal — Lobbying Disclosure

 
AGAINST
   
79-80
 

Shareholder Proposal — Political Spending Disclosure

 
AGAINST
   
81-82
 

CORPORATE GOVERNANCE HIGHLIGHTS

Lead 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 Codes of Ethics

Annual Election of All Directors

Majority Vote Standard — No Supermajority Voting Requirement

Board Meetings in 2018: 9

Standing Board Committees — Meetings in 2018: Audit: 11, Compensation: 8, Finance: 7, Nominating and Governance: 4, Sustainability and Innovation: 4

77% of the Director Nominees are Independent

PROXY SUMMARY

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DIRECTOR NOMINEES   GRAPHIC
                                                 
      AGE
DIRECTOR SINCE
PRINCIPAL OCCUPATION



    QUALIFICATIONS
    COMMITTEES
    OTHER BOARDS
 
                                                 
 
    
                                               
Stephen G. Butler
Independent
     
71
2004
Retired Chairman and Chief Executive Officer, KPMG, LLP and retired Chairman of KPMG International
 
          GRAPHIC
          Audit (Chair)
Nominating & Governance
          ConAgra Brands, Inc    
                                                    
Kimberly A. Casiano
Independent
     
61
2003
President, Kimberly Casiano & Associates, San Juan, Puerto Rico
 
          GRAPHIC
          Audit
Nominating & Governance
Sustainability & Innovation
          Mead Johnson Nutrition Company
Mutual of America
   
                                                    
Anthony F. Earley, Jr.
Independent
     
69
2009
Retired Executive Chairman of the Board of Directors, PG&E Corporation
 
          LOGO
          Compensation (Chair)
Nominating & Governance
Sustainability & Innovation
          Southern Company    
                                                    
Edsel B. Ford II      
70
1988
Consultant, Ford Motor Company
 
          GRAPHIC
          Finance
Sustainability & Innovation
               
                                                    
William Clay Ford, Jr.      
61
1988
Executive Chairman and Chairman of the Board of Directors, Ford Motor Company
 
          GRAPHIC
          Finance (Chair)
Sustainability & Innovation
               
                                                    
James P. Hackett      
63
2017
President and Chief Executive Officer, Ford Motor Company
 
          GRAPHIC
                           
                                                    
William W. Helman IV
Independent
     
60
2011
General Partner, Greylock Partners
 
          GRAPHIC
          Finance
Nominating & Governance
Sustainability & Innovation (Chair)
               
                                                    
William E. Kennard
Independent
     
62
2015
Chairman, Velocitas Partners LLC
 
          GRAPHIC
          Finance
Nominating & Governance (Chair)
Sustainability & Innovation
          AT&T Inc.
MetLife, Inc.
Duke Energy Corporation
   
                                                    
John C. Lechleiter
Independent
     
65
2013
Retired Chairman, Eli Lilly and Company
 
          GRAPHIC
          Compensation
Nominating & Governance
          Nike, Inc.    
                                                    
John L. Thornton
Independent
     
65
1996
Executive Chairman, Barrick Gold Corporation
 
          GRAPHIC
          Compensation
Finance
Nominating & Governance
          Barrick Gold Corporation    
                                                    
John B. Veihmeyer
Independent
     
63
2017
Retired Chairman and Chief Executive Officer, KPMG, LLP and retired Chairman of KPMG International
 
          GRAPHIC
          Audit
Nominating & Governance
               
                                                    
Lynn M. Vojvodich
Independent
     
51
2017
Former Executive Vice President & Chief Marketing Officer, Salesforce
 
          GRAPHIC
          Audit
Nominating & Governance
Sustainability & Innovation
          Booking Holdings Inc.    
                                                    
John S. Weinberg
Independent
     
62
2016
Chairman of the Board of Directors and Executive Chairman, Evercore Partners Inc.
 
          GRAPHIC
          Finance
Nominating & Governance
Sustainability & Innovation
          Evercore Partners Inc.    
                                                    

2

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CD&A Roadmap

GRAPHIC

*
See pages 27, 74, and 75 of Ford's 2018 Form 10-K for definitions and reconciliations to GAAP.

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GRAPHIC

GRAPHIC

GRAPHIC

*   See pages 27 and 74 of Ford's 2018 Form 10-K for definitions and reconciliations to GAAP.

IMPROVING OUR FITNESS TO FINANCE OUR GROWTH

The information in this Performance Section shows we continue to deliver positive results over a sustained time period. In order to create greater value for our stakeholders, it is important that we attack costs as well as redesign our business operations to take advantage of future growth opportunities. The graphics below show some of our achievements in our areas of strength and the strategic choices we are making to drive future growth.

ACHIEVEMENTS   STRATEGIC CHOICES
GRAPHIC   In 2018, Ford was America's best-selling vehicle brand for the ninth consecutive year   GRAPHIC   Announced that we would exit sedan silhouettes in North America and focus our portfolio on more profitable and faster growing segments
GRAPHIC   Launched Ranger in the U.S., the second best-selling medium pickup outside the U.S.   GRAPHIC   Signed memorandum of understanding with Mahindra Group in India to co-develop midsize and compact SUVs, electric vehicles, and connected car solutions
GRAPHIC   Full-year F-Series sales were up 1.4 percent on a total of 909,330 trucks sold, marking its 42nd year as America's best-selling pickup   GRAPHIC   Miami Automated Vehicle drive for analysts and media highlighted our technology and business models for moving people and goods — exceeded expectations
GRAPHIC   Ford was the commercial vehicle leader in Europe for the fourth straight year   GRAPHIC   Announced plan to deploy cellular vehicle-to-vehicles technology in all-new vehicles in the U.S. beginning in 2022
GRAPHIC   Began redesign of our global salaried workforce to increase effectiveness and efficiency   GRAPHIC   Announced the first formal agreements in a broad alliance with Volkswagen to develop commercial vans and medium-sized pickups for global markets

GRAPHIC

4

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GRAPHIC

GRAPHIC

GRAPHIC

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 provision in our incentive grants

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
  Retain a fully independent external compensation consultant whose independence is reviewed annually by the Compensation Committee (see Corporate Governance — Compensation Committee Operations on pp. 16-17)

GRAPHIC
  Include a double-trigger change-in-control provision for equity grants (see Compensation Discussion and Analysis — 2018 Say-on-Pay on p. 58)

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WE DO NOT


GRAPHIC
  Provide evergreen employment contracts

GRAPHIC
  Pay out dividend equivalents on equity awards during vesting periods or performance periods

GRAPHIC
  Maintain individual change-in-control agreements for Named Executives

GRAPHIC
  Reprice options

GRAPHIC

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 $ Value Equity Opportunity           Variable           % 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    
*
A Performance Unit is 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") represents 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

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GRAPHIC

Our compensation practices have been consistently supported by shareholders, as evidenced by recent Say-on-Pay results.

GRAPHIC

We regularly meet with investors and consider any concerns shared with us. For instance, in 2015 we made significant changes to our Performance Unit program that addressed investor comments.

GRAPHIC

GRAPHIC

Named Executives' compensation is tied to our 2018 and 2016-2018 performance periods

80% of our Named Executives' target compensation is performance-based

We added a gender pay equity statement to our Global Compensation and Benefits Philosophy, Strategy, and Guiding Principles
Executive stock ownership guidelines continue to align the interests of executives with shareholders

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

Executive pay practices are tied to robust risk and control features

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STAKEHOLDER ENGAGEMENT

Ford has a philosophy of direct, open, transparent and frequent engagement with our stakeholders, including:

Ford's senior leadership team and Investor Relations met with fixed income and equity holders, as well as potential holders, at eighteen conferences and eighteen roadshows. We hosted quarterly earnings calls, which were webcast, and also engaged with the capital markets via phone calls, emails, in-house meetings, and other industry events. We also held an autonomous vehicle event in Miami attended by key stakeholders.

As an indication of our commitment to fostering strong communication ties with our stakeholders, we met with shareholders representing 57% of our institutional equity investor base and fixed income investors holding 25% of our unsecured debt outstanding. Topics discussed included: long term strategy, financial and operating performance, risk management, and environmental, social and governance practices. We found these meetings to be informative, and we continue to incorporate many stakeholder suggestions into our Proxy Statement and communications strategy.

GRAPHIC

ENVIROMENTAL, SOCIAL, AND GOVERNANCE

For Ford, the commitment to create a better world is as strong as ever before. We apply our global reach and resources to bring about positive impact, provide trusted mobility and drive human progress. Each June, we release our Sustainability Report, which details our performance and progress toward our sustainability and corporate responsibility goals. Some of our highlights in our 2017-2018 report are the following:


GRAPHIC

 

Reaffirmed our commitment to address climate change by delivering CO2 reductions consistent with the Paris Accord

 

GRAPHIC

 

We completed our first formal human rights saliency assessment in line with the UN Guiding Principles Reporting Framework and are taking steps to develop action plans to manage and remediate issues identified, and expand reporting on them

GRAPHIC

 

We are investing $11 billion to put hybrid and fully electric vehicles models on the road by 2022, as well as responsible development of the self-driving car

 

GRAPHIC

 

Through our supply chain initiative, the Partnership for A Cleaner Environment (PACE), we shared our best practice examples with 50 suppliers, to minimize our overall environmental impact

GRAPHIC

 

In 2017, we achieved our carbon dioxide manufacturing emissions reduction goal eight years ahead of schedule, reducing our global CO2 emissions from manufacturing operations by 30% per vehicle produced

 

GRAPHIC

 

In 2017, $63 million of charitable donations were made through the Ford Motor Company Fund. More than 237,000 volunteering hours were donated by current and retired employees across more than 1,700 community projects in 40 countries

GRAPHIC

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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 at Ford Motor Company, Shareholder Relations, P.O. Box 6248, 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 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. 77% of the Director Nominees are independent.

GRAPHIC

 

Lead 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 and is reviewed annually.

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. In 2018, approximately 68% of annual director fees were mandatorily deferred into Ford restricted stock units, 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.

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Leadership Structure

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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. James P. Hackett 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. Hackett to focus on leading the organization while allowing Mr. Ford to focus on leading the Board of Directors. Furthermore, the Board has appointed Ellen R. Marram as our Lead Independent Director. We believe having a Lead 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 Lead 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. Hackett to ensure management is adequately addressing the matters identified by the Board.

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

Board Meetings, Composition, and Committees

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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 the Board to serve until the next annual meeting. In 2018 we implemented a more robust peer and Board and Committee self-assessment process. The Lead Independent Director communicates with each director concerning their performance and that of their peers and shares any significant concerns. We also instituted an evaluation process whereby every five years each director's skills and qualifications are analyzed as to whether such skills and qualifications remain relevant in light of changing business conditions.

During 2018, the Committee recommended that the size of the Board be kept at 14. Ms. Marram is not standing for re-election this year having reached our mandatory retirement age. Consequently, the Committee

recommended that the size of the Board be reduced to 13 at this time.

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 perspectives during its deliberations. In addition, having two members of the Ford family, William Clay Ford, Jr. and Edsel B. Ford II, who are first cousins, bring a unique historical and long-term perspective to Board 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 November 30, 2019, 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. 24 under Election of Directors.

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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 Lead Independent Director or at the request of any non-employee director. Additionally, all of the independent directors meet 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 and Securities and Exchange Commission ("SEC") rules and the Company's Corporate Governance Principles. Under these standards members of the Audit Committee also satisfy the heightened SEC independence standards for audit committees and the members of the Compensation Committee satisfy the additional NYSE independence standards for compensation committees. Each member of the Audit Committee also meets the financial literacy requirements of the NYSE Listed Company rules. 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 at Ford Motor Company, Shareholder Relations, P.O. Box 6248, 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 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 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 the 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.

Reviews our cyber security practices twice each year.

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, the President and

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CEO, and other executive officers' 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.

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

Assesses the independence of the Committee's consultant. 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 capital allocation priorities, policies, and guidelines, including the Company's cash flow, minimum cash requirements, and liquidity targets.

Reviews the Company's capital appropriations financial performance against targets by conducting interim reviews and an annual review of previously approved capital programs and periodic review of acquisitions and new business investments.

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 election of directors; and (ii) the size, composition, and compensation of the Board.

Establishes criteria for selecting new directors and the evaluation of the Board, including whether current members and candidates possess skills and qualifications that support the Company's strategy.

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 director nominees (other than self-nominations). See Composition of Board of Directors/Nominees on p. 11.

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.

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Board's Role in Risk Management

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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 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 regular basis, the senior leadership of the Company reviews the status of the business, the risks and opportunities presented to the business (in the areas of compliance, reporting, operating, and strategic risks), and, utilizing the principles of design thinking and critical thinking, 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. We continually review our enterprise risk management processes and procedures with the goal of improving our assessment of, and response to, risks and opportunities.

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 and the Audit and Compensation Committees periodically review policies related to personnel matters, including those related to sexual harassment and anti-retaliation policies related to whistleblowers. The Board, the Sustainability and Innovation Committee, the Compensation Committee, and the Finance Committee all play a role in overseeing strategic risk management.

The scope and severity of risks presented by cyber threats have increased dramatically, and constant vigilance is required to protect against intrusions. We take cyber threats very seriously, conducting alternating internal and external annual audits of our cyber security capabilities. These audits are a useful tool for ensuring that we maintain a robust cyber security program to protect our investors, customers, employees, and intellectual property. The Audit Committee reviews our cyber security practices twice each year, with report outs to the Board as needed.

We also maintain an industry-leading cyber security insurance program with many of the world's largest and most respected insurance companies. Additionally, we are a founding member of the Board of the Automotive Information Sharing and Analysis Center. Our current seat on that Board ensures that we preserve relationships that help to protect ourselves against both enterprise and in-vehicle security risks.

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OVERSIGHT OF RISK MANAGEMENT

 

 

COMPLIANCE & REPORTING

 

OPERATING & STRATEGIC
FORD BOARD
Oversight
  Audit Committee   Sustainability & Innovation 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, Strategy, and People Forums

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.

RISK ASSESSMENT REGARDING COMPENSATION POLICIES AND PRACTICES

In 2018, we conducted an annual 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 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 Compensation Committee has negative discretion over incentive program payouts;

use of Time-Based Units that vest ratably over three years 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 encourages executives to take actions that promote the long-term sustainability of our business;

double-trigger change-in-control provisions for equity grants awarded in and after 2016; and

stock ownership goals that align the interests of executive officers with those of our shareholders — this discourages executive officers from focusing on short-term results without regard to 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

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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 four 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 James P. Hackett) to approve grants of options, Performance Units, Time-Based Units, and other stock-based awards, and to the Annual Incentive Compensation Award Committee (also comprised of Messrs. Ford and Hackett) 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 in 2018 on pp. 32-33).

The Compensation Committee considers recommendations from Mr. Ford, Mr. Hackett, and the Chief Human Resources Officer 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 2018 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, which 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 eight of the Committee meetings in 2018.

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 any other services to the Company by Semler Brossy; (ii) the amount of fees 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 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. 43-44). Willis Towers Watson does not make recommendations to, nor does it assist, the Committee in determining 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. Incentive Bonus targets and awards, Performance Unit grants, Time-Based Units, and cash awards typically are decided at the February or March Committee meeting (see Timing of Awards on pp. 46-47). Officer salaries are reviewed in February each year.

See the Compensation Discussion and Analysis on pp. 38-59 for more detail on the factors considered by the Committee in making executive compensation decisions.

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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 all officers should be on unaffiliated for-profit boards at any given point in time; and

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

Independence of Directors and Relevant Facts and Circumstances

 

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DIRECTOR INDEPENDENCE

A majority of the directors must be independent directors under applicable SEC and NYSE Listed Company rules. These 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.

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.

    (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

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    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., William W. Helman IV, William E. Kennard, John C. Lechleiter, Ellen R. Marram, John L. Thornton, John B. Veihmeyer, Lynn M. Vojvodich, and John S. Weinberg. Additionally, the Board has determined that each of Stephen G. Butler, Kimberly A. Casiano, John B. Veihmeyer, and Lynn M. Vojvodich is independent under the heightened SEC independence standards for audit committees and that each of Anthony F. Earley, Jr., John C. Lechleiter, Ellen R. Marram, and John L. Thornton is independent under the additional NYSE independence standards for compensation committees.

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 a member of such company's board of directors or, in the case of Messrs. Earley and Weinberg, as an officer of such a company. In addition to Messrs. Earley and Weinberg, these directors included Mr. Kennard, 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, Dr. Lechleiter, Mr. Thornton and Mr. Veihmeyer. In addition, the Company made charitable donations in each director's name in lieu of holiday gifts. None of the relationships described above was material under the independence standards contained in our Corporate Governance Principles.

Codes of Ethics

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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, must be approved 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 Investor Relations Department at Ford Motor Company, Investor Relations, P.O. Box 6248, Dearborn, MI 48126.

Communications with the Board and Annual Meeting Attendance

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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 Lead 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 Lead 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

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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 participate in the annual meeting, unless unusual circumstances would prevent such participation. Last year, of the fourteen then current members of the Board, thirteen attended the virtual annual meeting.

Beneficial Stock Ownership

FIVE PERCENT BENEFICIAL OWNERS OF COMMON STOCK

Pursuant to SEC filings, the Company was notified that as of December 31, 2018, 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
  356,398,646   9.1%    

 

The Vanguard Group and certain of its affiliates

  The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
  293,113,787   7.5%    

 

BlackRock, Inc. and certain of its affiliates

  BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
  269,502,457   6.9%    
*
State Street Bank and Trust Company is the trustee for Ford common stock in the Ford defined contribution plans master trust, which beneficially owns 4.3% 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, 2019, the persons included in the table below beneficially owned more than 5% of the outstanding Class B Stock.

 
   
   
   
   
   
 
  Name of Beneficial Owner
  Address of Beneficial Owner
  Ford
Class B Stock

  Percent of
Outstanding Ford
Class B Stock

   
    Lynn F. Alandt*   Ford Estates, 2000 Brush, Detroit, MI 48226   7,396,839   10.44%    
    David P. Larsen, as trustee of various trusts**   Ford Estates, 2000 Brush, Detroit, MI 48226   11,650,171   16.44%    
    Voting Trust***   Ford Estates, 2000 Brush, Detroit, MI 48226   70,778,212   99.90%    
*
Includes shares beneficially owned in either an individual or fiduciary capacity as sole trustee or as a co-trustee.

**
Represents beneficial ownership of shares held in a fiduciary capacity as sole trustee or as a co-trustee. Mr. Larsen 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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BENEFICIAL STOCK OWNERSHIP

The following table shows how much Ford stock each current director, nominee, and Named Executive beneficially owned as of February 1, 2019. No director, nominee, or executive officer, including Named Executives, beneficially owned more than 0.12% 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, 2019. Executive officers held options exercisable on or within 60 days after February 1, 2019 to buy 4,915,046 shares of Ford common stock.

 

Name

  Ford
Common
Stock 1,2
  Ford
Common
Stock
Units 3
   

 

Stephen G. Butler*

  129,196   156,474    

 

Kimberly A. Casiano*

  86,893   146,552    

 

Anthony F. Earley, Jr.*

  127,391   65,946    

 

James D. Farley, Jr.

  1,435,791   0    

 

James P. Hackett*

  871,074   0    

 

William W. Helman IV*

  96,100   39,118    

 

Joseph R. Hinrichs

  1,664,617   1,051    

 

William E. Kennard*

  66,519   0    

 

Name

  Ford
Common
Stock 1,2
  Ford
Common
Stock
Units 3
   

 

John C. Lechleiter*

  167,896   5,284    

 

Ellen R. Marram**

  99,026   253,865    

 

Robert L. Shanks

  1,599,775   0    

 

John L. Thornton*

  164,348   303,100    

 

John B. Veihmeyer*

  20,894   0    

 

Lynn M. Vojvodich*

  35,739   0    

 

John S. Weinberg*

  66,364   0    


 

Name

  Ford
Common
Stock 1,2
  Ford
Common
Stock
Units 3
  Ford
Class B
Stock
  Percent of
Outstanding
Ford
Class B
Stock
   

 

Edsel B. Ford II*

  1,102,433   160,284   5,372,562   7.58%    

 

William Clay Ford, Jr.*

  4,642,400   145,820   14,195,687   20.04%    

 

All Directors and Executive Officers as a group
22 persons beneficially owned 0.37% of Ford common stock or securities convertible into Ford common stock as of February 1, 2019

                   
*
Indicates Director Nominees

**
Ms. Marram is not standing for re-election at the 2019 Annual Meeting

1
For executive officers, included in the amounts for "All Directors and Executive Officers as a group" are Restricted Stock Units issued under our Long-Term Incentive Plans ("LTI Plans") as long-term incentive grants in 2018 and prior years for retention and other incentive purposes.

    In addition, amounts shown include Restricted Stock Units issued under the LTI Plans as follows: 502,370 units for Mr. Shanks; 585,790 units for William Clay Ford, Jr.; 676,474 units for Mr. Farley; 675,979 units for Mr. Hinrichs; and 738,059 units for Mr. Hackett.

    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: 123,196 units for Mr. Butler; 78,730 units for Ms. Casiano; 91,391 units for Mr. Earley; 66,519 units for Mr. Kennard; 122,896 units for Dr. Lechleiter; 78,730 units for Ms. Marram; 20,894 units for Mr. Veihmeyer; 35,739 units for Ms. Vojvodich; and 66,364 units for Mr. Weinberg.

    Included in the stock ownership shown in the table above: Edsel B. Ford II has disclaimed beneficial ownership of 393,285 shares of common stock and 959,895 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 953,775 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 393,285 shares of common stock and 1,913,670 shares of Class B Stock.

    No director or executive officer had pledged shares of common stock as security or hedged their exposure to common stock.

2
Also, on February 1, 2019 (or within 60 days after that date), the Named Executives 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.

  272,017    

 

William Clay Ford, Jr.

  3,448,490    

 

James P. Hackett

  0    
 
   
   
   

 

Person

  Number of Shares    

 

Joseph R. Hinrichs

  342,664    

 

Robert L. Shanks

  468,636    
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., 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 2018 and prior years.

Certain Relationships and Related Party Transactions

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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. 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 2018 was $63,509. William Clay Ford, Jr., is a minority owner and is a director and officer of the Lions.

In 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

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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. In 2016, the Company extended its sponsorship of the Quick Lane Bowl for another three years to cover the 2017-2019 seasons. The cost incurred during 2018 was $681,000.

Paul Alandt, Lynn F. Alandt's husband, is a minority owner of two Ford franchised dealerships and a Lincoln franchised dealership. In 2018, Ford charged the dealerships about $165.6 million for products and services in the ordinary course of business. In turn, Ford paid the dealerships about $37.7 million for services in the ordinary course of business. Also in 2018, Ford Motor Credit Company LLC, a wholly owned entity of Ford, provided about $276.3 million of financing to dealerships owned by Mr. Alandt and paid about $1.4 million to them in the ordinary course of business. The dealerships paid Ford Credit about $286.1 million in the ordinary course of business. Additionally, in 2018, Ford Credit purchased retail installment sales contracts and Red Carpet Leases from the dealerships in amounts of about $19.0 million and $111.0 million, respectively.

In March 2001, Marketing Associates, LLC (dba OneMagnify), an entity in which Edsel B. Ford II and his family have a controlling equity 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 2018, the Company paid Marketing Associates, LLC approximately $62.4 million for marketing and related services provided in the ordinary course of business.

In April 2016, the Company approved an investment of up to $10 million over five years in Fontinalis Capital Partners II, a venture capital fund that invests in next-generation mobility start-up entities. As of March 1, 2019, we have invested $8.3 million. Our investment has yielded several benefits, including: (i) increased early exposure to possible mobility investments; (ii) the ability to invest directly in an entity whether or not the investment fund invests in the entity; and (iii) increased exposure to venture capital mobility expertise. As of January 1, 2019, William Clay Ford, Jr. had a 7.85% interest and Lynn F. Alandt had a 4% interest in the investment fund.

In January 2018, Ford Smart Mobility LLC, a wholly-owned entity of Ford, acquired for $60 million

TransLoc Inc., a software company providing demand-response transit solutions, data solutions and other tools to improve operational efficiency for business-to-government and business-to-business customers. TransLoc will accelerate growth in key areas of our mobility strategy and we obtained key talent for positions within our mobility team. Fontinalis Capital Partners II owned 14.5% of TransLoc on the date of acquisition. As of January 1, 2018, William Clay Ford, Jr. had a 7.85% interest and Lynn F. Alandt had a 4% interest in Fontinalis Capital Partners II.

During 2018, the Company employed Henry Ford III, son of Edsel B. Ford II, as an Associate Director in our global Corporate Strategy skill team. Henry Ford III received 2018 compensation of approximately $201,829 consisting primarily of salary, bonus, and stock awards.

During 2018, the Company employed the husband of Marcy S. Klevorn, President, Mobility, as a Senior Project Manager in our Information Technology skill team. He received 2018 compensation of approximately $169,569 consisting primarily of salary and bonus.

During 2018, the Company employed Alexandra Ford English, daughter of William Clay Ford, Jr., as a member of our Automated Vehicle Business Team. Ms. Ford English received 2018 compensation of approximately $171,000, consisting primarily of salary and bonus.

During 2018, the Company employed the husband of Catherine O'Callaghan, Vice President and Controller, as a Manager, Marketing Sales & Service. He received 2018 compensation of approximately $454,222, consisting primarily of salary, bonus, and stock awards.

Pursuant to SEC filings, the Company was notified that as of December 31, 2018, 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 approximately 9.1% of our common stock. During 2018, the Company paid State Street Corporation and its affiliates approximately $2.8 million in the ordinary course of business.

Pursuant to SEC filings, the Company was notified that as of December 31, 2018, BlackRock, Inc., 55 East 52nd Street, New York, NY 10022, and certain of its affiliates, owned approximately 6.9% of the Company's common stock. During 2018, the Company paid BlackRock, Inc. approximately $10.3 million in the ordinary course of business.

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

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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 background 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.

Thirteen 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. Ms. Marram, having reached our mandatory retirement age of 72, will not stand for re-election at the 2019 Annual Meeting of Shareholders.

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 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 nine times during 2018. 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 2018. The nominees provided the following information about themselves as of the latest practical date. Additionally, for each director nominee we have disclosed the particular experience, qualifications, attributes, or skills that led the Board to conclude that the nominee supports the Company's strategy and thus, should serve as a director.

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Stephen G. Butler

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Age: 71

Independent Director Since: 2004

Committees: Audit (Chair and financial expert), Nominating and Governance

Experience: Mr. Butler served as Chairman and Chief Executive Officer of KPMG, LLP from 1996 until he retired in 2002. He also served as Chairman of KPMG International from 1999 until 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 develop and implement its growth strategy. Mr. Butler brings valuable insight into 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 fitness, fulfilling our financial reporting obligations, and identifying areas throughout the Company where we might create greater cohesiveness.

Current Public Company Directorships: ConAgra Brands, Inc.

Kimberly A. Casiano

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Age: 61

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, the Hispanic Scholarship Fund, and the Latino Corporate Directors Association.

Reasons for Nomination: Ms. Casiano has extensive domestic and international experience in marketing and sales, particularly in the U.S. Hispanic community and Latin America. Ford benefits from Ms. Casiano's global business and executive experience cultivated through years spent managing her own company. Ms. Casiano consistently provides Ford with valuable insight in our where to play and how to win analyses and enterprise risk management systems.

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

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Anthony F. Earley, Jr.

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Age: 69

Independent Director Since: 2009

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

Experience: Mr. Earley was the Executive Chairman of PG&E Corporation from March 2017 until December 2017. From September 2011 until February 2017, he served as the Chairman, Chief Executive Officer, and President of PG&E Corporation, which filed for bankruptcy on January 29, 2019 as a result of potential liabilities for wildfires in California. Before joining PG&E Corporation, 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 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. These experiences complement our plan by providing valuable insight into ways in which Ford can operate profitably at the current demand, while changing our product mix. His expertise in electrical infrastructure complements our electrification strategy by providing key insight into the development of innovative products such as the development of hybrid and electric vehicles our customers want and value.

Current Public Company Directorships: Southern Company

Public Company Directorships Within the Past Five Years: PG&E Corporation

Edsel B. Ford II

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Age: 70

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 in the automotive industry. During his time 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 and vehicle distribution strategies.

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

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William Clay Ford, Jr.

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Age: 61

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., former Chairman of the Detroit Economic Club, and trustee of the Henry Ford Museum. He also is a member of the board of Business Leaders for Michigan.

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, connectivity, and electrification in the automobile industry, which adds significant value to Board deliberations.

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

James P. Hackett

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Age: 63

Director Since: 2017

Independent Director: September 2013-March 2016                                  

Committees: N/A

Experience: Mr. Hackett was elected President and Chief Executive Officer of Ford Motor Company in May 2017. Since March 2016, Mr. Hackett served as Chairman of Ford Smart Mobility LLC, a subsidiary of Ford formed to accelerate the Company's plans to design, build, grow, and invest in emerging mobility services. Prior to joining Ford Smart Mobility, Mr. Hackett was a member of the Ford Motor Company Board of Directors starting in 2013. As a member of the Sustainability and Innovation Committee, he was actively involved with the Ford senior leadership team in launching the Company's Ford Smart Mobility plan. He also served on the Audit and the Nominating and Governance Committees. Mr. Hackett was vice chairman of Steelcase, a global leader in the office furniture industry, from 2014 to 2015. He retired as Chief Executive Officer of Steelcase in February 2014, after having spent 20 years leading the Grand Rapids-based office furniture company.

Reasons for Nomination: As a consumer-focused visionary, Mr. Hackett is credited with guiding Steelcase to becoming a global leader in the office furniture industry. During his 30 years there, he helped transform the office furniture company from traditional manufacturer to industry innovator. Having spent his career focused on the evolving needs of consumers, Mr. Hackett is equipped to lead the Company's commitment to becoming the world's most trusted company, designing smart vehicles for a smart world that help people move more safely, confidently, and freely.

Public Company Directorships Within the Past Five Years: Steelcase Inc. and Fifth Third Bancorp

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William W. Helman IV

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Age: 60

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 investment firm focused on early stage investments in technology, enterprise software and consumer internet. He joined Greylock in 1984 and served as Managing Partner from 1999 to 2013. Mr. Helman is on the board of the Broad Institute.

Reasons for Nomination: Mr. Helman's experience with technology investments and social media marketing provides a unique and valued perspective as these issues are becoming increasingly important as the auto industry adopts new technologies, develops innovative solutions to personal mobility challenges, and adapts to new social media techniques. 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 innovative products our customers want and value.

William E. Kennard

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Age: 62

Independent Director Since: 2015

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

Experience: Mr. Kennard is the Chairman and co-founder of Velocitas Partners LLC, an asset management firm. 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 where he led investments in the telecommunications and media sectors. He also serves as a trustee of Yale University.

Reasons for Nomination: Mr. Kennard has extensive experience in the public policy, 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, unique perspective, and first-hand knowledge of the technological regulatory landscape help guide our strategy as we accelerate our innovative work in the areas of in-car connectivity and mobility solutions in a smart world.

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

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John C. Lechleiter

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Age: 65

Independent Director Since: 2013

Committees: Compensation, Nominating and Governance                                  

Experience: Dr. Lechleiter retired as Eli Lilly and Company's President and Chief Executive Officer on December 31, 2016, after 37 years with the company. He also served as Chairman of the Board of Directors of Lilly from 2009 through May 2017. Dr. Lechleiter joined Lilly in 1979 as a senior organic chemist in process research and development and became head of that department in 1982. In 1984, he began serving as director of pharmaceutical product development for the Lilly Research Center. He later held roles in project management, regulatory affairs, product development, and pharma operations. In 2005, he was named Lilly's President and Chief Operating Officer and joined the Board of Directors. Dr. Lechleiter is a member of the American Chemical Society. He serves on the boards of United Way Worldwide, the Indiana Economic Development Corporation, Battelle, Indiana Biosciences Research Institute, and Lilly Endowment, Inc. He is a member emeritus of the board of the Central Indiana Corporate Partnership.

Reasons for Nomination: Dr. Lechleiter's experience as a chairman and chief executive officer of a multinational company and his knowledge of science, marketing, management, and international business aid the Board in its deliberations. Dr. Lechleiter's background and experience in research and development 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 will assist the Board as the Company adapts to an increasingly complex and dynamic environment, both in the core business and autonomous vehicles.

Current Public Company Directorships: Nike, Inc.

Public Company Directorships Within the Past Five Years: Eli Lilly and Company

John L. Thornton

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Age: 65

Independent Director Since: 1996

Committees: Compensation, Finance, Nominating and Governance                                  

Experience: Mr. Thornton has served as Executive Chairman of Barrick Gold Corporation since April 2014. He also serves as Chairman of Silk Road Finance Corporation, an Asian investment firm, and Non-Executive Chairman of PineBridge Investments, a global asset manager. He is a Professor, Director of the Global Leadership Program, and a Member of the Advisory Board of the Tsinghua University School of Economics and Management in Beijing. He is also Chairman Emeritus of the Brookings Institution in Washington, D.C. Mr. Thornton retired as President and Director of The Goldman Sachs Group, Inc. in 2003. Mr. Thornton also previously served as Chairman of Goldman Sachs Asia and as Co-Chief Executive of Goldman Sachs International, overseeing the firm's business in Europe, the Middle East, and Africa. Mr. Thornton is Co-Chair of the Asia Society, and is also a trustee, advisory board member or member of, the China Investment Corporation (CIC), Confucius Institute Headquarters, King Abdullah University of Science and Technology, McKinsey Advisory Council, Schwarzman Scholars, and the African Leadership Academy. He is also Vice Chairman of the Morehouse College Board of Trustees.

Reasons for Nomination: Mr. Thornton has extensive international business and financial experience. Mr. Thornton brings valuable insight into emerging markets gained through his oversight of the presence of Goldman Sachs International on multiple continents. Mr. Thornton's extensive experience in finance and business matters, both domestically and internationally, is critical to achieving our fitness goals of financing our long-term strategic plan, improving our balance sheet, and creating profitable growth. Mr. Thornton's unique 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

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John B. Veihmeyer

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Age: 63

Independent Director Since: 2017

Committees: Audit, Nominating and Governance                                            

Experience: Mr. Veihmeyer served as Chairman of KPMG International from 2014 until his retirement after 40 years with KPMG in September 2017. Before becoming global chairman, Mr. Veihmeyer held numerous leadership roles at KPMG, including U.S. Chairman and Chief Executive Officer from 2010 to 2015, U.S. Deputy Chairman, managing partner of KPMG's Washington, D.C. operations, and global head of Risk Management and Regulatory. Mr. Veihmeyer currently serves as a Trustee of the Financial Accounting Foundation, which oversees the Financial Accounting Standards Board. He is also a member of the Board of Trustees of the University of Notre Dame.

Reasons for Nomination: Mr. Veihmeyer 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. His experience leading KPMG, which has member firms in over 150 countries, has provided Mr. Veihmeyer with significant exposure to business operations in every region of the world. Mr. Veihmeyer also previously served on the board of Catalyst, Inc. and has been recognized for his leadership in diversity and inclusion. Mr. Veihmeyer's financial expertise, executive leadership experience, risk management skills, and international exposure bring value to the Company's Board at an unprecedented time of disruption in the automotive industry and in an increasingly complex regulatory environment.

Lynn M. Vojvodich

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Age: 51

Independent Director Since: 2017

Committees: Audit, Nominating and Governance, Sustainability and Innovation

Experience: Ms. Vojvodich is an advisor to start-up and growth-stage technology companies. Previously, Ms. Vojvodich was Executive Vice President and Chief Marketing Officer of Salesforce.com, Inc. from September 2013 until February 2017. In this role, she led Salesforce's branding and positioning, public relations, digital marketing, content marketing, marketing campaigns, and strategic events. Before joining Salesforce, Ms. Vojvodich held marketing leadership roles at Microsoft and BEA Systems, and served as a partner with venture capital firm Andreessen Horowitz. She is the founder of Take3, a marketing strategy firm.

Reasons for Nomination: Ms. Vojvodich has a wealth of expertise in marketing technology and innovation, market analysis, and the software industry. As Ford continues to transform itself into the world's most trusted company, Ms. Vojvodich provides valuable guidance regarding how the Company should market and position itself in its automotive and mobility businesses, including the use of digital strategies. Ms. Vojvodich's experience advising start-up and growth-stage technology businesses lends itself to the Company as it continues culture-shaping initiatives to attract talent and deliver a broader suite of mobility products and services.

Current Public Company Directorships: Booking Holdings Inc.

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John S. Weinberg

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Age: 62

Independent Director Since: 2016

Committees: Finance, Nominating and Governance, Sustainability and Innovation

Experience: Mr. Weinberg became Chairman of the Board of Directors and Executive Chairman of Evercore Inc. in November 2016. Previously, Mr. Weinberg served as Vice Chairman of the Goldman Sachs Group from June 2006 until October 2015. His career at Goldman Sachs spanned more than three decades, with the majority of his time spent in the banking division. Mr. Weinberg currently serves as a board member of New York-Presbyterian Hospital and Middlebury College. He also is a member of the Investment Committee of the Cystic Fibrosis Foundation.

Reasons for Nomination: Mr. Weinberg has extensive experience in finance, banking, and capital markets, as well as a deep understanding of Ford, its history, and the needs of its business. During his time with Goldman Sachs, Mr. Weinberg served as a trusted advisor to Ford and other manufacturing clients. As Ford transforms itself into the world's most trusted company, making smart cars for a smart world, Mr. Weinberg's financial expertise will aid the Company in rapidly improving our fitness to lower costs, reallocate capital, and finance our business plan.

Current Public Company Directorships: Evercore Inc.

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Director Compensation in 2018

 

(a)

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

      Fees Earned or
Paid in Cash 1
      Stock
Awards 2
    Fees 3   Perquisites/
Evaluation
Vehicles 4


 
Tax
Reimbursement

 
Life
Insurance
Premiums 5


 
All Other
Compensation

 
  Total  

 

Name

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

 

Stephen G. Butler

  130,000       214,990     0   21,767   19,345   254   41,366     386,356  

 

Kimberly A. Casiano

  100,000       214,990     0   22,132   12,006   254   34,392     349,382  

 

Anthony F. Earley, Jr.

  125,000       214,990     0   15,349   13,316   254   28,919     368,909  

 

Edsel B. Ford II

  100,000       214,990     650,000   21,372   16,957   762   689,091     1,004,081  

 

William W. Helman IV

  120,000       214,990     0   715   0   0   715     335,705  

 

William E. Kennard

  120,000       214,990     0   20,313   14,128   254   34,695     369,685  

 

John C. Lechleiter

  100,000       214,990     0   16,853   18,521   254   35,628     350,618  

 

Ellen R. Marram

  150,000       214,990     0   17,165   12,320   64   29,549     394,539  

 

John L. Thornton

  100,000       214,990     0   16,227   13,200   254   29,681     344,671  

 

John B. Veihmeyer

  100,000       214,990     0   20,081   11,357   254   31,692     346,682  

 

Lynn M. Vojvodich

  100,000       214,990     0   25,513   17,448   254   43,215     358,205  

 

John S. Weinberg

  100,000       214,990     0   18,274   17,104   64   35,442     350,432  
1
Fees.    Effective as of January 1, 2017, the Board of Directors agreed that the following compensation will be paid to non-employee directors of the Company:

Annual Board membership fee

  $ 315,000  

Annual Lead Independent Director fee

  $ 50,000  

Annual Audit Committee chair fee

  $ 30,000  

Annual Compensation Committee chair fee

  $ 25,000  

Annual other Committee chair fees

  $ 20,000  

In 2016, a review of director compensation at companies similarly situated to Ford indicated that Ford was below the median levels paid to directors. 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. The entire increase in the Annual Board membership fee is mandatorily deferred into restricted stock units pursuant to the 2014 Plan.


As discussed in footnote 2 below, certain directors chose to receive all or a portion of their fees in restricted stock units pursuant to the 2014 Plan in addition to the mandatory portion. Pursuant to SEC rules, the dollar value of any fees any director elected to receive in restricted units in excess of the fees mandatorily paid in restricted stock units pursuant to that plan is shown in the "Fees Earned or Paid in Cash" column.

2
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 approximately 68% (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 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 approximately 68% 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 directors 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.

3
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.

4
Perquisites and Evaluation Vehicle Program. All amounts shown in this column reflect: (i) the cost of evaluation vehicles provided to Directors; (ii) the cost of a charitable gift made by the Company in the directors' names divided equally among those directors who were active at December 31, 2018, and (iii) the cost of healthcare insurance premiums for certain directors. 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,

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    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).

5
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 lower 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. Eight directors have elected this option and that portion of the premiums that the Company pays on behalf of directors that equals the amount 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 ratify the Audit Committee's selection for 2019.

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 2019. 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 appropriate questions.

Amounts paid by the Company to PricewaterhouseCoopers for audit and non-audit services rendered in 2018 and 2017 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 2019 is ratified."

Your Board's recommendation: FOR Proposal 2

Fees Paid to Independent Registered Public Accounting Firm

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. The Audit Committee approved of all of the fees listed in the table below.

Fees Paid to
PricewaterhouseCoopers
  Year-ended
December 31, 2018
($)
  Year-ended
December 31, 2017
($)
 

Audit Fees 1

    37,600,000     38,300,000  

Audit-Related Fees 2

    3,700,000     5,000,000  

Tax Fees 3

    3,400,000     3,800,000  

All Other Fees 4

    1,100,000     1,100,000  

TOTAL FEES

    45,800,000     48,200,000  
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 Company and 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 59% and 58% for tax compliance and preparation of tax returns in 2018 and 2017, respectively.

4
Consists of support in business and regulatory reviews and research analysis regarding new strategies, and advisory services related to insurance claims.

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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 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 has served as the Company's independent registered public accounting firm since 1946.

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, 2018. 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, as well as by SEC regulations. In conjunction with the mandated rotation of PricewaterhouseCoopers's lead engagement partner, the Audit Committee and its chairperson are also directly involved in the selection of PricewaterhouseCoopers's new lead engagement partner.

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. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm.

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, 2018, 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.

Audit Committee
Stephen G. Butler (Chair)   John B. Veihmeyer
Kimberly A. Casiano   Lynn M. Vojvodich

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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 2017 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. 38-59 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 2019 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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*
See pages 27, 74, and 75 of Ford's 2018 Form 10-K for definitions and reconciliations to GAAP.

CD&A ROADMAP

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

Executive Summary

Creating Tomorrow, Together

Our Belief:    Ford Motor Company was built on the belief that freedom of movement drives human progress.

Our Aspiration:    To become the world's most trusted company, designing smart vehicles for a smart world.

Our Plan for Value Creation:    The plan to reach our aspiration and create value involves engaging our passion for product and deep customers insight, focusing on fitness and tracking our success against key metrics.

Passion for Product and Deep Customer Insight:

Winning Portfolio — Strengthening our portfolio and focus on products and markets where we know we can win

Propulsion Choices — Fully committing to new propulsion systems, including adding hybrid-electrics to high-volume, profitable vehicles

Autonomous Technology — Building a viable and profitable autonomous vehicle business offering the most trusted and human-centered ride hailing and goods delivery experience for our customers

Mobility Experiences — Creating and scaling the mobility platform and services our customers and partners will embrace

Fitness:

Improved operating leverage

Adaptive business model — be it build, partner, or buy — to generate highest returns

Capital efficiency

Strong balance sheet

GRAPHIC

Metrics:

Grow by increasing our revenue even as we become more efficient

Earnings Before Interest and Taxes (EBIT) Margin

Higher Return on Invested Capital (ROIC)

Strong Cash flow

Our People:    The foundation for delivering on our plan is and will always be our people.

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2018 — LAYING THE FOUNDATION

Over the past year, we have steadily laid the foundation for the global redesign of our business. 2018 was a year in which we made many important strategic choices and began to take actions that will fundamentally redesign our business and ensure we are fit and more resilient to compete for years to come. Fitness is not merely a cost-cutting exercise, but a renewed emphasis on reducing complexity throughout the organization in order to speed up decision-making and become more efficient. It also means developing the capabilities that allow us to compete and win. Winning will be measured

by Company Revenue, Company Adjusted EBIT Margin, Company Operating Cash Flow, Adjusted Return On Invested Capital, and ultimately achieving superior Total Shareholder Returns ("TSR") among our peer group. We started our transition in 2017, and in 2018 we set the foundation for our future of becoming the world's most trusted company, designing smart vehicles for a smart world. The graphic below shows our operational performance over the past several years. We have built a solid foundation on which to launch our strategic choices for the future.

GRAPHIC


 

*

 

See pages 27 and 74 of Ford's 2018 Form 10-K for definitions and reconciliations to GAAP.

 

**

 

Includes $0.13 per share supplemental dividend

 

Our 2018 Company Revenue was higher than 2017. Net income was $3.7 billion and Company adjusted EBIT was $7.0 billion. Company Adjusted EBIT Margin was 4.4%. Company adjusted operating cash flow was positive $2.8 billion. From our perspective, results were disappointing with all key metrics down from the prior year other than Company Revenue. The NEO Compensation section of the CD&A (pp. 48-58), reflects our performance against metrics over the 2018 performance period for the Incentive Bonus Plan and the 2016-2018 performance period for the 2016 Performance Unit grant.

IMPROVING OUR FITNESS TO FINANCE OUR GROWTH

The information in this Performance Section shows we continue to deliver positive results over a sustained time period. In order to create greater value for our stakeholders, it is important that we attack costs as well as redesign our business operations to take advantage of future growth opportunities. The following graphics show some of our achievements in these areas and the strategic choices we are making to drive future growth.

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ACHIEVEMENTS   STRATEGIC CHOICES
GRAPHIC   In 2018, Ford was America's best-selling vehicle brand for the ninth consecutive year   GRAPHIC   Announced that we would exit sedan silhouettes in North America and focus our portfolio on more profitable and faster growing segments
GRAPHIC   Launched Ranger in the U.S., the second best-selling medium pickup outside the U.S.   GRAPHIC   Signed memorandum of understanding with Mahindra Group in India to co-develop midsize and compact SUVs, electric vehicles, and connected car solutions
GRAPHIC   Full-year F-Series sales were up 1.4 percent on a total of 909,330 trucks sold, marking its 42nd year as America's best-selling pickup   GRAPHIC   Miami Automated Vehicle drive for analysts and media highlighted our technology and business models for moving people and goods — exceeded expectations
GRAPHIC   Ford was the commercial vehicle leader in Europe for the fourth straight year   GRAPHIC   Announced plan to deploy cellular vehicle-to-vehicles technology in all-new vehicles in the U.S. beginning in 2022
GRAPHIC   Began redesign of our global salaried workforce to increase effectiveness and efficiency   GRAPHIC   Announced the first formal agreements in a broad alliance with Volkswagen to develop commercial vans and medium-sized pickups for global markets

We will pursue these and other opportunities as we strive to deliver superior shareholder returns through focused automotive and high-growth mobility initiatives.

FORD TOTAL SHAREHOLDER RETURN ("TSR") PERFORMANCE

Achieving superior shareholder returns is what the employees of Ford strive for each day, and we realize that our TSR has lagged that of our peer group and the S&P 500 over the most recently completed one-, three-, and five-year periods. Our efforts to become more fit and to strengthen those areas of our business where we are winning — primarily through the Creating Tomorrow, Together strategy (see p. 38) — is expected to provide the profits necessary to invest in the future of winning propulsion choices, autonomous technologies, and mobility experiences. We will continue to implement this strategy with a passion for product and keen focus on customer insights that will differentiate us from our competition and position us to deliver value for all of our stakeholders.

Our operating performance affects our TSR and we tie operating performance to our incentive plan payouts. Our Performance Unit grants include internal financial metrics and relative TSR as factors. Thus, payouts under the 2016 Performance Unit grant, which occurred in March 2019, reflect actual relative TSR performance against our peer group as constituted in 2016. This links our executives' performance to shareholder interests, which is a key tenet of our pay-for-performance philosophy (see 2016 Performance Unit Results on p. 55-56 for a discussion of the 2016 Performance Unit payout).

As the graphic on p. 39 shows, our operating results remained positive in 2018 with increased revenue, positive

earnings per share and Company Adjusted Operating Cash Flow. Shareholders have benefited from our results. Since reinstituting dividends in 2012, we have returned $18.4 billion to shareholders through year-end 2018 through dividends and share buybacks. We maintained our regular quarterly dividend of $0.15 per share throughout 2018 and paid a supplemental dividend of $0.13 per share in the first quarter. In the first quarter of 2019, we maintained the $0.15 per share regular dividend.

For 2019, we see the potential for year-over-year improvement across all key metrics, including Company Revenue, Company Adjusted EBIT Margin, and Adjusted Return on Invested Capital (ROIC). We also acknowledge certain external influences could affect our 2019 results, including tariffs, commodity costs, and interest rates, among other events.*

Looking ahead, 2019 is about implementation. A year where our thinking about the future of Ford — the fundamental redesign of the business, our capital allocation choices, our fitness, our alliance choices — become increasingly clear. Our capital allocation priorities include funding our traditional product and non-product investment plans, our growth plans for electrification, autonomy and mobility, and shareholder distributions. We believe focusing on these priorities will create value for all of our stakeholders.

*
Please refer to Appendix II for a Cautionary Note on Forward-Looking Statements.

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COMPENSATION PHILOSOPHY AND STRATEGY

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Our Global Compensation and Benefits Philosophy, Strategy, and Guiding Principles are the pillars that provide the foundation upon 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. 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 strategy.

The Compensation Committee of the Board of Directors regularly reviews the Global Philosophy, Strategy, and Guiding Principles and, in connection with its review of our gender pay equity practices during 2018, determined to include a statement on gender pay equity. In addition, the Committee updated the language to reflect our overall strategic direction. These changes reinforce that pay equity is an important objective that will attract top talent to Ford, and reinforces that compensation practices are tied to our strategy. The changes the Committee approved are highlighted in blue below.

Global Compensation and Benefits Philosophy: Ford Motor Company was built on the belief that freedom of movement drives human progress. It is a belief that has always fueled our passion to create great cars and trucks. And today, it drives our commitment to become the world's most trusted company, designing smart vehicles for a smart world that help people move more safely, confidently and freely. We cannot compete for the future we envision unless we are fit in all aspects of our business.

Attracting, retaining, and developing amazing talent that is empowered to work together to compete and win is a fundamental aspect of our fitness. A core principle of our talent management strategy is a longstanding

commitment to equal opportunity in all aspects of employment, including the way Ford compensates its employees.

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 strives to have these features as part of its compensation and benefits:

    A consistent framework that is affordable to the business.

    A pay for performance focus — individuals are rewarded for performance and contributions to business success.

    Compensation is fair and equitable, irrespective of gender, race, or similar personal characteristics.

    A total package that will be competitive with leading companies.

Global Compensation and Benefits Strategy: 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 affordable, competitive benefit programs that meet these objectives.

GUIDING PRINCIPLES

Pay Equity.Ford employee compensation in each market should be fair and equitable, irrespective of gender, race, or similar personal characteristics. This applies to all forms of pay, including base salary, incentives, bonuses, and other forms of compensation.

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.

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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 use 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.

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.

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 20% or less of each Named Executive's target opportunity, and a majority of our executives' target compensation is contingent on meeting incentive plan metrics.

PERFORMANCE-BASED INCENTIVE PLANS

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MANAGEMENT RECOMMENDATIONS

The Committee considered recommendations from the Executive Chairman, the President and CEO, and the Chief Human Resources Officer, 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. 16-17). Our senior leadership team established our corporate priorities and developed the 2018 business plan metrics, which were approved at the December 2017 Board meeting. Our Human Resources and Finance departments developed the incentive plan performance weightings, targets, and payout ranges in support of the business plan and in December 2017 presented the recommendations to the Committee. 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 at the February and March 2018 meetings.

We tie our executive compensation to performance against defined metrics aligned with our strategic objectives. The metrics used in our Incentive Bonus Plan and Performance Unit grants have undergone changes over the years to support our business strategies. As we continue to address core business performance in response to the evolving business environment, and invest in a future that is increasingly driven by automation, electrification and mobility services, the Committee has continually reviewed the metrics used in our performance-based plans and adopted metrics consistent with our strategies on efficiency (margin), balance sheet strength and shareholder

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distributions (cash flow), quality, and effectiveness of capital allocation (return on invested capital).

With those priorities in mind, the Committee adopted metrics and weightings shown in the following table for the 2018 Incentive Bonus Plan and Performance Unit grants.

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Please refer to 2018 Incentive Bonus Plan Results on pp. 51-52 for details on our performance against metrics and payouts under our Incentive Bonus Plan for 2018. Also, refer to 2016 Performance Unit Results on pp. 55-56 for details on our performance against metrics and payouts for the 2016-2018 performance period.

COMPETITIVE SURVEY

December 2017 Survey.    In December 2017, the Committee reviewed a report analyzing Ford's compensation programs for executives compared to our peer group companies. The Committee used the December 2017 Survey as an input for setting 2018 executive compensation. The report was prepared by the Company and 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 2017 and, therefore, reflected any bonuses paid in early 2017 for 2016 performance, as well as equity grants made in early 2017.

While the Committee used the December 2017 Survey data as a reference point, it was not the sole determining factor in executive compensation decisions in 2018. We generally seek to target total compensation opportunities at or around the survey group's median total compensation. Consistent with our compensation Guiding Principles, 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.

December 2018 Survey.    The December 2018 Survey is used throughout the CD&A when we discuss the competitiveness of the elements of the Named Executives' targeted compensation compared to our survey group. This survey was reviewed in December 2018, and includes 2018 compensation data of the survey group. The December 2018 Survey was 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 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 for the December 2017 Survey added Microsoft and Intel to represent the high-tech sector in which Ford increasingly competes for talent. Changes to the survey group are typically minimized in order to support year-over-year data stability and reliability. Our non-U.S. based competitors do not participate in the Willis Towers Watson survey process. The survey group shown below

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was the survey group used in December 2017 Survey that informed 2018 compensation decisions:

3M   General Dynamics
Arconic   General Electric
AT&T   General Motors
Boeing   Honeywell
Caterpillar   IBM
Chevron   Intel
Cisco Systems   Johnson & Johnson
Coca-Cola   Microsoft
ConocoPhillips   PepsiCo
DowDuPont   Pfizer
ExxonMobil   United Technologies
Fiat Chrysler   Valero

The December 2018 Survey group used throughout the CD&A for comparison purposes is the same as group listed above, except that Arconic was excluded and Verizon was added. Arconic no longer met our criteria as a large company once it was spun-off from Alcoa. Verizon met most of the criteria to be included in the peer group. The survey database did not contain enough job-position-related matches for Mr. Ford, our Executive Chairman, and Mr. Hinrichs, President, Global Operations. Consequently, their compensation was excluded from our analysis of how the total direct compensation of our Named Executives compares to that of the survey group. The December 2018 Survey results indicated that the targeted total direct compensation for Mr. Hackett was at the survey group's median. Targeted total direct compensation was above the survey group's median for Mr. Farley, while at the median for Mr. Shanks. An analysis of how each element of compensation compared to the survey data for 2018, as well as how the factors described above affected Named Executive compensation decisions during 2018, is included in the discussion of each compensation element.

INTERNAL PAY EQUITY — WEALTH ANALYSIS

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 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

    outstanding Performance Unit grants.

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 Committee believes that our equity-based incentive programs are effective in attracting, motivating, and retaining executives, as well as incentivizing executives to accomplish our strategic objectives.

TAX CONSIDERATIONS

Internal Revenue Code § 162(m).    The Tax Cuts and Jobs Act ("TCJA") eliminated the deductibility exemption for performance-based compensation under Internal Revenue Code Section 162(m) for taxable years beginning after December 31, 2017. As a result, all compensation in excess of $1 million paid to the Chief Executive Officer, the Chief Financial Officer, and the next three highest paid officers whose compensation is required to be reported in the Summary Compensation Table of the proxy statement for 2018 and beyond ("Covered Executives") will not be deductible. Once an individual becomes a Covered Executive for a tax year, that individual will remain a Covered Executive for all subsequent tax years, including tax years after the individual's death.

For compensation awarded for years prior to 2018, Code Section 162(m) generally disallowed Federal tax deductions for compensation in excess of $1 million paid to Covered Executives, other than the Chief Financial Officer; however, certain performance-based compensation was not subject to this deduction limitation. As noted above, the exemption from the Section 162(m) deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017. Under the TCJA, performance-based compensation paid to Covered Executives for years prior to 2018 in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. Despite the Committee's efforts to structure the Covered Executives' Incentive Bonus and Performance Units in a manner intended to be exempt from the Section 162(m) deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be

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given that such compensation will satisfy the requirements for exemption. Further, the Compensation Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with our business needs. 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 our Long-Term Incentive Plans, 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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Underlying our compensation programs is an emphasis on sound governance practices. These practices include:

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Perform annual say-on-pay advisory vote for stockholders

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Pay for performance

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Use appropriate peer group when establishing compensation

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Balance short- and long-term incentives

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Align executive compensation with stockholder returns through long-term incentives

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Cap individual payouts in incentive plans

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Include clawback provision in our incentive grants

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Maintain robust stock ownership goals for executives

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Condition grants of long-term incentive awards on non-compete and non-disclosure restrictions

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Mitigate undue risk taking in compensation programs

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Retain a fully independent external compensation consultant whose independence is reviewed annually by the Committee (see Corporate Governance — Compensation Committee Operations on pp. 16-17)

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Include a double-trigger change-in-control provision for equity grants

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