Profit from Forfeit

When Semon E. ("Bunkie") Knudsen switched from a vice president's post at General Motors Corp. to president of archrival Ford Motor Co. last February, the main reason behind the move was that he had been closed out of G.M.'s presidency by Edward N. Cole. Already rich by inheritance and from his holdings in G.M. stock, Knudsen gave only a passing thought to the $700,000 in accumulated bonuses he was forfeiting by leaving G.M.

But, Multimillionaire Knudsen and his wife Florence have lost not a cent.

In the small type of Ford's newly released shareholders' proxy statement, a few lines explain that Knudsen, in addition to an option to buy 75,000 shares of Ford stock at $49.63, has also been granted 15,000 shares as an outright bonus. He may sell the bonus stock only after a minimum of eight years--five at Ford, and three more, in which he must refrain from "specified competitive activity." Even then Knudsen can sell no more than 3,000 shares a year for a five-year period. At current market value, that stock bonus would be worth $870,000 before taxes. More than that, Knudsen's annual salary as Ford president is guaranteed for five years at not less than $200,000. That is as much as Chairman Henry Ford II is paid and considerably more than the $147,500 Knudsen was collecting when he left G.M.*

So far, to earn his money, Knudsen has been doing what new executives customarily do--getting the feel of the company. He has visited plants in Chicago, Dallas and Canada, met dealers in various cities, inspected Ford's big Rouge plant from top to bottom. The 1969 model cars are all locked up as far as design goes, but Knudsen has been studying the '70 styles and the clay models for future years. His orientation will be over by summer, and from that time on, Bunkie Knudsen is expected to move into high gear.

-Knudsen will not actually own any of the Ford shares until 1976 at the earliest. Then they will be given to him in five annual installments of 3,000 shares each. He will pay regular income tax on the basis of either 1) the price of the stock, nearly $50, on the 1968 day that he was "awarded" the shares, or 2) the price at the time that he actually gets delivery--whichever is lower. After delivery he can, of course, sell the stock, and he would pay a long-term capital-gain tax on any increase in value since 1968.

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