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TIAA-CREF Announces Opposition to Ford Motor Recapitalization Proposal

14 July 2000

Proposal Should Be Submitted to Separate Vote of Common Shareholders

     
    NEW YORK - TIAA-CREF, a major institutional investor and leader in corporate 
governance, today announced its intent to vote its 8.4 million shares of common 
stock against a recapitalization proposal made by the management of Ford Motor 
Company. The issue will be voted on at a special meeting of Ford shareholders on 
August 2. TIAA-CREF believes that aspects of the Ford plan are contrary to good 
corporate governance because they reduce voting rights of holders of Ford common 
shares without any compensation. TIAA-CREF has communicated its strong 
disagreement on this issue to senior Ford management and to the company's board 
of directors.

    "We are disappointed that the board of directors of Ford Motor has
structured the plan in a way that benefits Ford family interests at the
expense of public shareholders," said Peter C. Clapman, TIAA-CREF senior vice
president and chief counsel, Investments. Mr. Clapman said that while TIAA-
CREF has high regard for the Ford Motor Company and its management team, "as a
fiduciary for TIAA-CREF participants, we cannot support the Ford
recapitalization plan in its current form."

    The Ford family controls 40% of voting power through its ownership of
Class B shares. The company's dual class stock structure allows the family to
maintain this control with approximately 5.0% of the total equity in the
company.  Under the proposed recapitalization plan, the minimal level of
family ownership required to maintain 40% voting power will be reduced to
3.6%, according to TIAA-CREF's analysis.

    Moreover, under the plan, Class B holders will have the right to exchange
current Class B shares for new Class B stock and a fraction of a share of the
new common stock. Family members intend to exercise this right, according to
Ford Motor. This will provide additional voting rights to the family, beyond
its 40% voting share through Class B holdings. "If I, as a common shareholder,
behave exactly like the Ford family and take only additional shares," said Mr.
Clapman, "then my voting interest will rise along with my economic interest,
but to a much lesser extent than the Ford family's. The family's voting
interest rises 1.5 times as much as the increase in its economic interest,
while my voting interest rises only 0.6 times as much."

    "The issues facing members of the Ford family," said Mr. Clapman, "such as
their need for 'liquidity' to address estate planning considerations, are
fully understandable. These issues are similar to the estate planning concerns
faced by many of TIAA-CREF's plan participants. However, for common
shareholders to cede to Ford family members the right to sell off a
substantial portion of their shareholdings without a corresponding reduction
in voting power, as normally would occur, would be irresponsible, unless
consciously done in exchange for financial or other consideration to the
shareholders who are adversely affected."

    Ford Motor is proceeding with the plan, without a separate vote of common
shareholders, even though the company's Certificate of Incorporation prohibits
stock dividends of common shares to Class B holders. Ford says the stock
distribution is not a stock dividend, but rather is a recapitalization
pursuant to a merger. (The merger is with a non-operating company called the
"Ford Value Corporation," formed to facilitate the capital restructuring.)

    "If it looks like a stock dividend and smells like a stock dividend, it
ought to be considered a stock dividend," said Mr. Clapman. "At a minimum, the
plan should be submitted separately to holders of common shares for their
approval."

    A major intent of the Ford Motor plan is to distribute up to $10 billion
of the company's cash to shareholders. TIAA-CREF does not object to this goal
itself, but only to the structure of the plan to carry out the distribution.

    TIAA-CREF, a leading, national financial services organization, owns 8.4
million shares of Ford Motor common stock, with a market value of more than
$350 million. In addition to being the premier pension system for education
and research employees, TIAA-CREF offers mutual funds, annuities, and trust
services to the general public.  It manages a total of nearly $300 billion.