Good morning, and welcome.
Good morning, and welcome.
to the broadcast of Ford Motor Company's annual meeting of shareholders. I would now like to introduce Ford's Chairman of the Board of Directors, Mr. William Clay Ford, Jr.
Well, thank you. Good morning, and welcome. I'm Bill Ford, chairman of your board of directors, and it's my privilege to call to order our 65th annual meeting of shareholders. I hope this finds you all well and safe during this pandemic. Today's live webcast of our virtual annual meeting helps us to better engage you, our shareholders, by making it accessible to you wherever you're located. Thank you to everyone who's joined us today. At this time, I'd like to introduce the company officers who are joining me on this webcast. First, Jim Hackett, President and CEO, and a member of the board of directors. Jim Farley, Chief Operating Officer. Tim Stone, Chief Financial Officer. Jon Osgood, our Corporate Secretary, and Bradley Gayton, Chief Administrative Officer and General Counsel.
Also, in addition to Jim and me, the other Board of Director nominees are attending today's meeting through this live webcast. I want to thank the board for the great work they do on our behalf. Before we get into the business of the meeting, I'd like to go through the mechanics of this virtual meeting. If you'd like to submit a question during the meeting, you may do so by typing your question in the box located at the bottom left corner of the webcast screen. We'll respond to those questions pertinent to the meeting matters during the Q&A period. Answers to any pertinent questions that we're unable to respond to during the meeting due to time constraints will be posted to our investor relations website as soon as practical after the meeting, and they'll remain there for one week.
Additionally, if you have not already voted your shares, you may do so by clicking on the Vote Here button at the bottom right of the webcast screen. The polls will remain open until the conclusion of the Q&A period of the meeting. Okay, now let's take care of the business of the meeting. The agenda is shown on the top right corner of the webcast. We'll start with matters to be voted on today, after that, I'll report on the state of our business, Jim will outline for you our vision to continue moving the company forward. After Jim's report, we'll have a Q&A period. Shareholders who have proposals in our proxy statement will be given three minutes to speak in support of their proposal. Representatives of Broadridge Financial Solutions have been appointed as inspectors of election for this meeting.
Now let's go to the proposals. Proposal 1. The first item to be voted upon is the election of directors. The 13 director nominees who've been nominated by the board of directors as candidates for election are shown in the proxy statement. We are all members of the current board. Jon, will you please make the nomination?
Sure. I nominate as directors the 13 nominees named in our proxy statement.
Thank you, Jon. Let's move on to Proposal 2 . The next item of business is Proposal 2 in the proxy statement, ratifying the selection by the audit committee of PricewaterhouseCoopers as independent registered public accounting firm to audit the company's books for 2020. Joining us today is Kevin Thomas, PwC's 2020 global audit engagement partner for Ford. Jon, will you please move Proposal 2 ?
I move the adoption of the resolution in the proxy statement relating to ratifying the selection of the independent registered public accounting firm.
Thank you, Jon. The Board of Directors recommends a vote for this proposal. Proposal 3. We'll now proceed to proposal 3, which relates to a shareholder advisory vote to approve the compensation of the named executives as disclosed in the proxy. We seek to closely align the interests of our executives with yours. Our compensation programs are designed to reward our executives for the achievement of short and long-term strategic and operational goals while avoiding unnecessary risk-taking. Our more detailed reasons in support of this proposal are set out in our proxy statement. Jon, will you now please move Proposal 3 ?
Of course. I move the adoption of the resolution in the proxy statement related to the approval on an advisory basis of the compensation of the named executives as disclosed in the company's proxy statement.
Thank you, Jon. The board of directors recommends a vote for this proposal. Proposal 4. We will now proceed to Proposal 4, which requests that the board take steps to adopt a recapitalization plan to provide for all of the company stock to have one vote per share. The board recommends a vote against Proposal 4 for the reasons set out in our proxy. I now ask the operator to open the line so that Mr. John Chevedden may present the proposal at this time. Good morning, Mr. Chevedden. If you're on the line, and I think you are, please proceed.
Hello, this is John Chevedden. Can you hear me okay?
Yes, we can hear you fine. Thank you.
Proposal 4, equal voting rights for each share.
Shareholders request that our board take the steps to ensure that all of our company's outstanding stock has an equal one vote per share in each voting situation. This would encompass all practical steps, including encouragement and negotiation with current and future shareholders who have more than one vote per share to request that they relinquish for the common good of all shareholders, any preexisting rights. Ford family shares have 36 votes per share compared to the small one vote per share for regular shareholders. This dual class voting stock reduces accountability by allowing corporate control to be retained by insiders disproportionate to their money at risk. This proposal topic has received more than 51% of the independent vote of the non-family Ford stock in each year since 2011. Ford took away our right to an in-person annual meeting years before the pandemic.
This sends a message that management considers in-person contact with shareholders a nuisance. In spite of such consistent 2011 to 2019 support from regular Ford shareholders, Ford management has done absolutely nothing to address this serious issue. Not even one small step. Corporate governance advocates, as well as many investors and index managers, have pushed back on the Ford-type dual class structure. S&P Dow Jones Indices said that new companies with multiple classes of shares would be barred from entering its flagship S&P 500 index. The Ford family should buy more stock if it wants to keep its current supersized voting power. If the Ford family bought more stock and kept its current voting power, this would increase the price of Ford stock. The price of Ford stock is now a great bargain for a family that has confidence in the future of Ford.
Although the PowerShift transmission harm has not been shown to be traceable to Ford's family supersized voting power, it does highlight real harm to Ford and a lack of good business practices at Ford. The Detroit Free Press said that the U.S. Department of Justice criminal fraud investigators demanded documents related to the transmission used in 2 million Ford Fiesta and Ford Focus cars sold throughout this decade. A 2019 Free Press investigation found through company documents and insider interviews that Ford knew the transmissions were defective before putting them on the market and continued using them for years, despite thousands of consumer complaints. Please vote yes, equal voting rights for each sharer, Proposal 4.
Thank you very much, Mr. Chevedden. We will now go to Proposal 5, which relates to the disclosure of the company's lobbying activities and expenditures. The board recommends a vote against Proposal 5 for the reasons set out in the proxy statement. I now ask the operator to open the line so that Ms. Millicent Budhai may present the proposal at this time. Good morning, Ms. Budhai. You may now proceed.
Good morning. I hereby move Proposal 5 on behalf of the co-lead filers, New York City Comptroller Scott M. Stringer, and four New York City pension funds, and the Unitarian Universalist Association. Before directly addressing the proposal, we would like to thank Ford for its leadership in working with California to develop compromised national fuel economy standards that will increase gas mileage and reduce GHG emissions and get us closer to achieving the goals of the Paris Climate Agreement. We look forward to Ford showing similar leadership in aligning its lobbying activities and disclosures with the spirit of the Paris Accord. Our proposal asks that Ford disclose its direct and indirect lobbying activities and the board's oversight and rationale for making these payments.
The filers are part of the Climate Action 100+ initiative that has more than 450 investors managing over $40 trillion in assets, and which seeks to work with high-GHG emitting global companies, such as Ford, to address the systemic risks and opportunities of climate change. One of the three pillars of the initiative is to implement a strong governance framework which clearly articulates the board's accountability and oversight of climate change. This involves asking companies to align their lobbying activities with the goals of the Paris Agreement. Despite Ford's articulated public support of the agreement, in our view, Ford's current disclosure and lobbying are not best practices and do not align with the goals of the Paris Agreement. For instance, Ford is a member of the Alliance of Automobile Manufacturers, which has questioned the validity of climate science and lobbied the U.S. government and the EPA to lower fuel economy standards.
We believe these inconsistencies in messaging detract substantially from the company's own progressive positions on climate. In recent discussions with the proponents, the company proposed additional disclosures that, in our view, are not comprehensive enough to satisfy the specific requests of the proposal. We hope to continue the dialogue until Ford's lobbying disclosures enable investors to better understand, among other areas, one, Ford's public policy and lobbying priorities. Two, the consistency between Ford's lobbying and its corporate strategy, and how management policies and procedures ensure strategic consistency. Three, transparency and dark money. Its membership in trade associations and the amount of its dues that each of these associations use for lobbying purposes, and any inconsistencies between the trade associations' positions and the company's positions. Four, details on its lobbying expenditures. Five, how the board provides explicit oversight.
Proxy advisor ISS, in supporting the proposal, states, "The additional information requested in this proposal would allow shareholders to assess the company's management of its lobbying-related activities and to better understand the risks and benefits of these activities." We urge you to support our proposal. Thank you. Just quickly before I leave, could you kindly announce the preliminary vote tallies at the end of the meeting? Thanks.
Yes, we will. At the end of the meeting, we'll give you the vote tallies for sure, and we do look forward to continuing our dialogue with you. Thank you very much. We've covered each of the proposals listed in the proxy. Before I offer comments on our business, I want to remind you that the polls are still open. If you mailed in a proxy or voted over the telephone or online, you don't need to vote at this time unless you want to change your vote. To vote your shares online, please click on the Vote Here button in the bottom right corner of the webcast screen. I want to thank you all for taking the time to join us today, and to everybody who presented a proposal. Now we'd like to report on the state of our business.
Well, as we meet today, the full impact of the global pandemic has yet to unfold. Tragically, we've lost some members of the Ford family to this virus, and our thoughts are with their families and their loved ones. The pandemic is affecting our business, and we know the days ahead will be challenging. We also know that we've overcome difficult times in the past. This is my sixth crisis since becoming chairman, and the principles that have guided us through those will serve us well as we move forward. A few weeks ago, I visited our Rawsonville plant, where we're building ventilators, and I am so proud of our employees who stepped up to volunteer to help build protective gear and healthcare equipment during this crisis. I was so inspired to see our values in action.
It also highlights to our nation the importance of having a strong manufacturing base. No other industry can produce sophisticated machinery in the volume and speed that we can. During normal production, we turn out an F-150 every 52 seconds. This deep expertise is what has allowed us to produce millions of masks, shields, gowns, and respirators. It shows that when the economy reopens, we'll be ahead of the curve because we've been testing new safety protocols and new ways of working in our facilities. Maybe most importantly, it reaffirms the role we play in America and around the world. As the company that built the arsenal of democracy in World War II, we didn't wait for someone to tell us to help this time.
When people were looking for leadership, we showed up and delivered, and the outpouring of thanks that we've gotten from hospitals, nurses, doctors, and first responders has been wonderful. During this crisis, we've worked to further strengthen the company's cash position by making some difficult decisions. Those actions include the top 300 Ford senior executives deferring 20%-50% of their salaries for five months, and I've elected to defer my entire salary during that time. One of the lessons we've learned from the Great Recession was that a strong balance sheet allows us to weather an economic downturn, whatever the cause, and invest in our future. That's what we've been focusing on for the last few months. We're committed to generating free cash flow, enabling superior value for Ford shareholders over time by growing profitably and reinstating the dividend as soon as practical.
While our 2019 financial results didn't meet our expectations or yours, we made progress in many areas of our business. We announced strategic alliances with Volkswagen and Mahindra and completed another with Rivian. We continued the most ambitious product refresh in our history. By the end of 2019, 40% of our global product portfolio was brand new. We will soon resume an ambitious cycle of new product introductions and will continue to exit from shrinking segments while adding exciting new products like the F-150, including a first ever hybrid model, the Bronco family of off-road vehicles, the first market-specific Ford and Lincoln vehicles for China, and an all-electric Mustang Mach-E. Our product renewal efforts include an investment of more than $11.5 billion in electric vehicles. Last year, we launched the largest charging network in North America. This year, we'll have our strongest lineup of electrified vehicles ever.
We'll launch the Mustang Mach-E, which will change the way the world thinks about electric vehicles. Over the next two years, we'll have 40 hybrid and electric vehicles on the road. All our actions are helping us reach our long-term vision of producing zero-emission vehicles and making mobility safe, affordable, and sustainable. These actions are the culmination of many things that I've been working toward my entire career, and I'm proud of the progress we've made to cut emissions, mitigate climate risk, and help develop a low-carbon economy. Ford is committed to the Paris Agreement and to lower CO2 emissions, and we're the only automaker and one of 35 companies to earn a spot on CDP's Climate A List.
By leading with passion, innovation, and our values, we're not only going to pave the way for future growth, we're going to build a better world on the other side of this crisis. The purpose of our company has always been to make people's lives better, and that mission inspires us in good times and strengthens our resolve in bad times. We endure because of the talent, dedication, determination, and higher sense of purpose of our extended family of employees. It's part of what makes us Built Ford Tough. Despite the headwinds we all face, our board of directors, leadership team, employees and partners are confident that 2020 will be a cornerstone of our efforts to improve people's lives around the world. We're all excited about the future, and as always, we thank you for your continued support.
Now I'll ask our President and CEO, Jim Hackett, to say a bit more about our plans and our progress. Jim?
Thank you, Bill. Good morning to all of our shareholders. It's a privilege today to discuss the state of Ford Motor Company to its shareholders. Confirming Bill's feelings, it's an unprecedented time for everybody, and it's true of our whole industry. Never before have we had to close plants in a cascade around the world. We did it for the most important reason of all, to protect our employees and the communities where we operate. As we prepare to restart our global operations, let me confirm that we'll continue to make decisions with the health and safety of everyone in our Ford family as our highest priority. We can now see in retrospect that our action to close definitely helped flatten the curve in geographic hotspots. We're clear-eyed about now turning things back on.
A lot of places in the U.S. around the world are still grappling with the worst. The true economic fallout, which is really tough right now, won't be known for some time. We're mindful that there might be new outbreaks ahead. That's why we've taken significant actions to reduce costs, preserve cash, and make sure we've got the financial flexibility to ride this out and emerge as a stronger company on the other side. As Bill mentioned, we believe we'll be ready, though, when the economy reopens in a really hearty way. We restarted some of our operations in Asia, and last week we began resuming work in Europe, and on Monday, we began doing the same thing across North America. We've got workers building millions of pieces of medical gear around the world with new safety measures in place.
We learned a lot during that build, and it's been part of the foundation that has prepared us to restart our vehicle operations. I am proud today to discuss the state of our company. I believe it's in very good shape based on addressing many fundamental or structural issues. Before the crisis hit, we could see our underlying business was strengthening, and in fact, heading towards the middle of this most recent quarter, we were on track to meet or exceed our original guidance for adjusted EBIT during that time. With the new management structure we put in place earlier this year, we were already shifting the organization to better move with urgency to deliver on our future. I want to report that I'm very happy about the decision to elevate Jim Farley to Chief Operating Officer.
Having said that, there's obviously no denying that the negative economic consequences of the coronavirus, COVID-19, hit us in the first quarter. Our adjusted free cash flow was a - $2.2 billion, and we incurred an adjusted EBIT loss of $0.6 billion. As we've said, there will be more losses before we come out on the other side of this crisis. One of the rallying cries for all of us, just as it was in 2008 and 2009, is that we must not only weather the crisis, we need to emerge from it ready to build a brighter future. Even as we have taken measures to preserve cash, we are still moving forward on our Creating Tomorrow, Together plan. This is a plan that'll leverage fresh new portfolio vehicles, connectivity, autonomy, electrification, many global partnerships, and a dedicated customer experience.
To ensure this, we're protecting the cycle plan, the product plan, the launches, and the technology roadmaps. We believe this pandemic could affect how customers live and work in the future. With zero touch now an integral part of people's lives, perhaps spurring even more interest and adoption in our technologies around autonomy and what we have called micro-mobility. Even as we're protecting our teams and managing our business through this storm, we are still focused on the long game. In a time of disruption, one of the most important things to prove is that you recognize the state shift of the business, that we wouldn't walk by it, presuming just because we've been in business for decades, that it'll always be that way. Last night, I was reviewing some old notes from the last crisis, and I saw an article from Jim Collins in Fortune Magazine, 2009.
When he was asked what made the best companies the most resilient in that time, he said that what he found out in his research, what really matters, is that you actually have core values. Not just what the slogans say, but you actually live them. The more you're challenged, the more you have to have these values. Candidly, that's why you should have faith in this great company. Bill Ford and the Ford family has been a constant source of inspiration, stability, and yes, direct dialogue with me about what is needed to happen for us to all be better. My singular goal is to please all of our shareholders. That's why we've been focused on creating a plan to address the world we're moving into rather than the world we've known.
Leading the way as the most trusted company in this new era of smart vehicles for a smart world. What we know we have to do in order to harness this to our advantage, and this is what we've been working at over the past three years, is design increasingly intelligent vehicles that are fully connected to the increasingly intelligent world around us, all in service of a better customer experience. We've taken important steps to address last year's operational execution issues, and we'll keep taking tough measures to create a more agile and resilient Ford through our global redesign. We've attacked bureaucracy and overhead in our company. This includes the restructuring of our legacy industrial systems in regions where we perennially underperformed in profitability, like Europe and South America, where you have to know that those social systems and political environment make change even harder. Excuse me.
Where the proverbial can had been kicked down the road for a long time. We've addressed this, and it's worth noting in the fiscal year that we just passed, the restructuring in Europe was ahead of schedule and under budget. While the effects of the virus have delayed launches from our original plan, we're excited about our forthcoming launch of the redesigned F-150, the anchor of the F-Series, America's best-selling vehicle for 43 years. The launch will feature a first-ever hybrid electric F-150. We will also reveal the new Bronco brand. Quite excited about that. We'll continue launching 30 market-specific Ford and Lincoln vehicles in China over the next three years, 10 of which will be electric. We're going to offer electrified versions of the Lincoln Corsair and the Ford Escape / Kuga, which are now in launch.
For those who've asked, we're not letting up with our plan to continue to lean into electrification as we lead the way towards a zero-emissions future. Doing it in a way that you just heard Bill say, that is uniquely Ford. It's not only the right thing to do, but it's done with performance, style, and by leveraging some of the most iconic nameplates in the world. Bill and I have staunchly supported the CO2 standards and Paris Accord. Reducing our impact on the planet is the right thing to do, and we're going to do it in a way that people love. That Mach-E that we just launched from Mustang, and we showed late last year, fully captured the direction we're headed. It was great design technology, including connectivity, that actually makes the vehicle get better over time.
It delivered on two of Ford's greatest passions, performance and environmental progress. We're continuing to develop the smartest, toughest lineup of commercial vehicles. This is the gift that keeps on giving. Around the world, the SYNC 4 brings new levels of intelligence, customization, and connectivity that's going to make everyone's life easier and more productive. We're going to take advantage of every opportunity in this connected area with services and subscriptions that deliver high-margin, recurring revenue streams for the company. We also continue to differentiate ourselves with pragmatic approach to creating new high-value business models for the segments that will define tomorrow. Our new partnerships with Rivian and Mahindra will only accelerate our efforts to fully electrify our lineup around the world and improve our ability to deliver value-oriented vehicles at a profit. This is it. A winning portfolio, new propulsion, connected mobility experiences, autonomous technology.
Well, there's no denying we've made meaningful progress in evolving this great company. We're also working constantly to improve our performance. A fair question is this, after all we've been doing, what didn't we see? More importantly, how have we addressed those issues? These are two that I quickly want to touch on as I end. One is the nagging warranty problems. The products in this period, where we've had higher than normal charges relate to a decision to disaggregate technical powertrain components to remote development around the world. On the surface, this balanced out workloads, but with hindsight, it made the coordination and product development more difficult. We have fully addressed these issues with our product development restructuring, and we've seen an improvement in early indicators of our warranty efforts.
I'm very optimistic that beyond the organizational shift, we're putting in place extremely resilient practices to monitor the quality of past performance before they get worse. Pardon me, of part performance before they get worse. For all the long-term shareholders of this great brand, our quality metrics, but for this narrow issue, remain very strong. The second was an over-aggressive effort to simultaneously launch our revamped Explorer, a product which was almost a decade old, while in the same period, also launching a brand-new Lincoln Aviator. The risk was compounded because of how successful the Explorer had been. A decision was made to run pilot operations virtually. We have fixed that. We leveraged the learnings to better manage the upcoming launches. The Explorer and Aviator are doing quite well. Undeniably, this disruption dented our shareholder returns.
When I took over as CEO, I felt we needed to innovate in so many areas, and that we needed to work in parallel on the fitness of the company. As I look where we are today, with much of this hard work in our rearview mirror, I wouldn't have done it any other way. I'll end with an insight and a short story. I have a group of dealers that I bring into Ford to talk about the far perspective of our strategy. They've been diligent about coming into the company and seeing the reshaping of the portfolio, and most importantly, the work that we've been doing on fitness and improving our culture. One of the dealers, after a recent meeting, sent me a card, and he said that in his 45 years as a dealer, his family and he's never felt more bullish about our company.
These are the voices I listen to, and I'll turn it back to you, Mr. Chairman. Thank you very much.
Thank you so much, Jim. Well, what we'd like to do now is share a video with you showing some of our recent accomplishments and areas of focus at our company. The video actually may take several seconds to load, and so we appreciate your patience. Please run the video now.
Email that someone just made reference to. What are you talking about?
It's the email-
Jim.
Sorry, it's the email from Jane Garcia. I just forwarded it to you, Jim.
Oh, yeah. I got it.
Jim and Tim.
I thought you meant there was a running dialogue of other questions.
Now or a couple of-
That's right.
Yeah. Are we live? Darnell? We're ready to go, Bill. Go ahead.
Okay. At this point, I'd like to answer some of the questions that were submitted online. I remind you that the polls will remain open until the conclusion of the Q&A period. Please bear with us because we're all in different locations, and so coordinating all of this may not be perfect. We'll give it a shot. Let me start with a question which I think is on everybody's mind on stock performance. There were a number of questions on it. Why are the share prices low? How will you boost the stock price? Things of that sort. Let me just take a shot at this one. As Jim said in his remarks, we had a very good first quarter last year, and our stock was headed in the right direction.
Unfortunately, we had the Explorer launch which did not go well, and it really kind of knocked us back in terms of our full-year performance, that and our warranty. As Jim pointed out on both of those issues, we feel like we've gotten our arms around them. Of course, now we're in COVID, which is affecting the whole stock market and more particularly the stocks of all of our industry has been affected. Coming out of COVID, it really is all about performance and executing against our plan. We feel very good about our plan. We feel that we've got the right metrics in place. Look, management's compensation is heavily tied to our stock. It's in everyone's interest to get our stock price back up.
There's another question which is kind of related, and it's on the dividend suspension and reinstatement. Needless to say, there are a lot of questions about when the dividend will be restored, and will they be restored to previous levels? Maybe I'll ask Jim, you could start with this one and maybe then have Tim add on a little bit.
You bet. Thank you, Bill. Absolutely, the dividend is part of our strategy to return value to shareholders. It matters a lot. In the course of planning how we deal with sudden shocks to the system, we regularly, almost every quarter, have with our board and our finance committee, a review of series of actions we would take if we ever had a crisis like pandemic. It's formulaic in the sense that as we did our cash projections for getting through this, we realized we needed that $2.5 billion, so we suspended the dividend. It's something we've talked about in our planning about as we take care of returning the revolver and our bondholders, we believe we'll return to levels of profitability where we'll be able to restore that. A good question is, when will that be?
Well, the plans are being laid based on what kind of economic returns we have, excuse me, the prosperity, and that's the unknown. Tim, is there anything you want to add to that looking out?
Jim, I think you handled it well. I mean, I'll just emphasize that after we've strengthened our balance sheet, including repaying our corporate revolver, we will absolutely reconsider reinstating the dividend as soon as practical. Of course, subject to approval by the Board.
Great. Thank you both. Well, this wouldn't be an annual meeting without a comment or question from Jane Garcia. Of course, we do have one. Jane, I think, has personally been to every annual meeting since I've been chairman, and since we've been doing it virtually, she's weighed in every time. I won't read her entire comment. It's extremely nice. Those of you who know Jane know how much she does in the Detroit community, and her efforts now are needed more than ever with this pandemic really hurting a lot of the social network in our community. Jane and her colleagues have just been fantastic and tireless as they always are. Let me just read the last sentence of her note to us, which just came in.
I'm so privileged and proud to be a shareholder with a corporation like Ford Motor that continues to prove true corporate responsibility goes above and beyond corporate goals. Ford is truly built to lend a hand. Together, we'll get through this. [Foreign language] Jane. Well, thank you, Jane, and thank you for all you do for our community. Every one of us who lives here owes you an enormous debt of gratitude. Once again, thank you for joining our annual meeting as you always have. Okay. On coronavirus management, there are a number of questions about what we're doing, what our strategies are, and how we're handling our employees' safety as we go through this. Some of this, I think, hopefully, you've seen some of this on television over the last month. We've been on a lot and gotten attention for what we're doing.
We are also now gearing up to go back to work in the U.S. We've already geared up to go back to work in Europe, and of course, we did in China. What I might ask now is, either Jim Hackett or Jim Farley, and you guys can decide how you want to handle this, if you could give a little more color to the efforts that we're doing in this regard.
Bill, I just have a quick comment. I really want Jim to feature what we've done. He's put a ton of work, almost tirelessly around the clock in this, what we call return to work. There was a piece that one of our colleagues sent us from Henry Ford back in the day when, to Jane's point, about this notion of balancing the social responsibility with the drive for profit. It was such a telling moment back in the day when Henry Ford felt really strongly in wanting the laborer's wage to be higher and the affordability of cars to be more accessible, and balance that against all the opportunities to make a profit.
We talked about more recently, Larry Fink from BlackRock, who's talked about compassionate companies, about the Business Roundtable, who's issued a statement similarly about how we need to perform as a business, but also remember our role in society. The reason I bring that up now is because one of the core rules we've worked with is in this crisis, we've got to design an approach that takes care of all of our people to build their confidence, not only in returning to work, but in the company. Jim, if you want to detail the plans that we put together, I think that would be helpful for shareholders. Thank you.
Hey, Jim. Hello to everyone. Our team has been working for over a month to make sure that our return to work is safe and the health of our team members is priority number one. We've consulted every medical professional we can, and I'm happy to report that the return to work in China and Ford of Europe is on track. We've had a very good experience. It's early days. We learn a lot every day, and we're responding to our team members' input every moment. We have a playbook that details air exchanges in our vehicles, in our facilities, application of personal protection for all employees that's appropriate for their job. We've redesigned all the workstations. We have temperature checks and testing for all of our team members as they come into work.
We have about 90% of our team members' salary in China back to work, and all of our plants are up and running. As Bill said, in Europe, our plants in Romania, Turkey, and Germany are all now operating. We've gone to a second shift in one of our plants in Germany, and we plan to restart the U.K. engine facilities next week. In North America, we have a week called Wave Zero team working this week, especially our FCSD teams, to support our service departments that are open around the U.S. We're really thankful for the work we've done with our union partners and all the governments around the world to make sure that we start our operations with the highest standard. As far as the financial impact, it's been very large as we said in our first quarter earnings. The biggest impact will be in the second quarter.
The team has done an amazing job to offset as much as the COVID profit impact and cash as possible. There's just thousands of work streams. Every part of the business is trying to recover our performance. I would say the last thing I would say is we've learned so many new things, new fitness and capabilities that are really going to make Ford a lot stronger, for our customers and for our employees. We'd love to go in more detail separately, but those new capabilities will be a gift to Ford for many years to come, despite the challenging times.
Thanks, Jim. Okay. Here's one I think is for Tim. It has to do with our debt and our cash. We've gotten several like this. How do you plan to use our excess cash? Is the way that the question was phrased. I sure hope it's excess. So do you. What's our outlook and our plan for our debt? Along with that, what are we doing to cut our costs to make sure that our business is fit? There's a lot in there, Tim. I think you get the gist of it.
I do. Thanks, Bill. It's a great question. Let me just start by saying, we're thoroughly assessing and aggressively addressing operations to look for opportunities to preserve cash and lower our operating costs, not just for this current circumstance, but for the long term, as we build our business for customers. We've identified billions of dollars of opportunities. We know this will not be enough to recover everything this year from the production stoppage. That is production that has been lost essentially for this year. We're doing everything we can to make up for that and to get production up as soon as practical and as productive as possible. These reductions include a contribution in structural costs and capital expenditures, for example, engineering, advertising, marketing, and facilities costs, eliminating non-essential expenditures.
We've made the decision to suspend our dividend and stock repurchase programs, after much deliberation, to also postpone merit increases for all salaried employees globally, and as has been mentioned earlier, to defer executive pay for at least five months. Our priorities are to protect our cycle plan, protect our product portfolio plan for customers also, as I mentioned earlier. Our launches, our investments in technology to ensure that we come out of this current circumstance stronger than ever from a competitive position perspective when conditions improve. As an example of that, for 2020, we had said on our earnings call a few weeks back that we expect full year capital expenditures to be $6.3 billion-$6.8 billion, which is about $500 million lower than what we had said when we gave guidance in February.
It's about $0.8 billion-$1.3 billion lower than last year. Relative calls on capital, again, funding our cycle plan, our product portfolio for customers, and investing in technology and growth areas are key. Also, after manufacturing stabilizes and our adjusted free cash flow outlook is positive, we'll continue to target cash of about $20 billion as we pay down our $13 billion corporate revolver.
Great. Thanks, Tim. There's been some questions too on compensation, and I might ask Bradley to take this. Basically, there are a couple questions. One is, will we be adjusting our performance-based target for executive compensation because of the COVID virus? The other is that, are there plans to take further pay cuts for management and also, the board of directors? I might ask Bradley to handle that. I will say, though, on the first question, whether we're adjusting our targets, I think every company out there, and we've done some checking, that's been heavily affected by the COVID virus, is taking a look at this question. Our comp committee has had just a couple quick meetings on this, and it's very much a work in process. Let me turn it over to you, Bradley, if I could.
Thank you, Bill. Good morning to our fellow shareholders. Good to be with you today. As you might imagine, we are implementing a series of cost-saving initiatives that you've heard about from Tim and Bill, to preserve our liquidity, and to support our business during the coronavirus health crisis. As part of these initiatives, we've decided we're prioritizing actions to delay or defer rather than cancel or eliminate merit plans and compensation actions. As Bill mentioned in his remarks, the cost savings initiatives started at the top, with him. Our Executive Chairman deferred 100% of his cash salary, and the top 300 executives deferred between 20% and 50% of those salaries for at least five months.
As you might imagine, we'll continue to monitor this area, and should it warrant, we'll certainly come back and update our compensation practices and policies during this very fluid crisis as it evolves. The question regarding the board, you should know that, similar to our corporate executives, the board also decided to defer $100,000 of the board fees plus any committee chair fees and lead director fees. The remaining $215,000 of the board fees was always mandatorily deferred into the Ford Stock Fund. That practice continues. Thank you so much for your question, and thanks for joining us today. Bill, I'll turn it back to you.
Great. Thank you very much. Here's a question I think is for Jim Farley. It's about our dealers. There's a question regarding how we intend to help our dealers maintain financial stability during this crisis. As you all know, anytime we get into a crisis like this, our entire ecosystem is affected, our dealers, our suppliers. Obviously we just talked about our employees, but we haven't really mentioned the dealers this morning. Maybe Jim, wouldn't mind taking a run at this.
Thanks. Thanks, Bill. I'm so proud of the team for what they've done to protect the liquidity of our dealers around the world. Let's start with North America. Very early on in the crisis, we made sure that every one of our U.S. dealers had an SBA number and applied for the protection for their payroll and their employees. This really paid off because about 90%+ of our dealers applied, and now more than 80% have been funded. We watch our dealers really closely. We built a model for the liquidity, and most of all, we moved the online sales capability and remote sales and service delivery from Lincoln over to Ford quickly for our dealers. What's happened in March and April now is that our dealers are really in great shape.
I'm so happy to report that the liquidity and financial health of our dealers is improving every day. For the most part, across the U.S., business has returned, and thanks to the virtual sales and remote capability, many of the dealers have been so entrepreneurial as they are to build their business back up. Now, again, it's early days and we have more work to do, but I'm really proud of the team. I'm also thankful for Ford Credit. Here's an area where our credit company is so strategically important is the support for the dealers. They did everything to support the dealers' survivability through this crisis. There's actually so many supports from Ford Credit that it's hard to go over the details, from payment deferrals, accelerated support for financing of their inventory, et cetera.
In China, I'm also happy to report that, as many of you know, our dealers went through quite a lot as our sales declined the last couple of years as our products aged. Through the crisis now, the profitability of our dealers in China, even in Hubei, the most affected province, are now in really good shape. The dealers in Europe are in a different situation. Southern Europe is very challenging. They're just starting to open now. The good news is that the dealers have found a way to get through the crisis by being very frugal and managing their expenses, and we're very optimistic that the profitability in Europe will continue to improve. For South America and international markets, it's early days. Very difficult in many markets like Brazil, South Africa, but we're now starting to see reopenings.
I'm very proud of the team, and we're really seeing our dealers get through this crisis in a very smart fashion. Thanks.
Thank you, Jim. Thanks a lot. Well, I think we have time for one more, and maybe actually, Jim, probably I'll kick it back to you because I think this is one that's on everybody's mind, and it's very timely, and it's about our restart. The question really is how long will it take Ford to ramp up its production after coronavirus is finally under control? Well, I don't think any of us know what that last part means, finally under control, because I think we're going to be living in this world of uncertainty for some time, at least until we get a vaccine. We are restarting. We've taken incredible measures to ensure safety. Jim, how long do you think it will take before we're sort of back up and running more or less as normal?
Thanks, Bill. You mentioned it's a very complex formula because the ecosystem of getting our plants up to full production is complicated. One of the most important enablers for us to get to full production as soon as possible, obviously, will be the safety of our team members, but also the supply base. All of our production and manufacturing operations rely on healthy suppliers, and their ability to start up is really critical. We shared our playbook for our startup with all of our suppliers. It's gone really well in China and in Europe. In North America, it's too early to tell. We plan to start next week, but it will really come down to our suppliers' preparation as well. We don't know yet when we'll be able to get to full production, but I'm really encouraged with the team's progress so far.
We put a second shift in Saarlouis in Germany. That's a big sign of ramping up for production in Europe. In China, we're also seeing our operations continue to add more and more manpower. It's early days. We're not yet up to full production in China, but it's looking more and more promising. It's just too early to tell for the other global markets, but the key thing is suppliers. I have to tell you one story. I'm so proud of the Ford team. There was a tornado in South Carolina, on one of our suppliers, BorgWarner, and the Ford team was down there. We got everyone down there safely, and we helped that supplier get up to speed, and now they're actually running parts and it won't be an issue for our startup next week.
It just shows the commitment our team has to our supply base to make sure that they're healthy, even in this terrible crisis, to do everything we can to make sure our suppliers can ramp up just like we can. We're optimistic. We're ready. It really comes down to lots of factors like our supply base.
Great. Thank you, Jim. Thank you everyone for your thoughtful questions. As I indicated earlier, the polls for voting will close upon the conclusion of the Q&A period. Accordingly, I declare the polls closed. There were some pertinent questions that we weren't able to answer today. Answers to those questions will be posted online at www.shareholder.ford.com. The questions and answers will be available as soon as practical after the meeting. They'll be up for one week. At this time, I'd like to hear the voting results. Jon?
Sure, Bill. Only a small percentage of the total vote remains to be counted, but it won't significantly affect the voting results. With respect to Proposal 1 , the election of the directors, each of the director nominees received at least 95.6% of the votes. The vote on the remaining proposals was as follows: On Proposal 2 , relating to the ratification of the selection of the independent registered public accounting firm, 97% of the votes were cast in favor. On Proposal 3 , relating to approval on an advisory basis of the compensation of the named executives, 84.2% of the votes cast were in favor. On Proposal 4, relating to consideration of a recapitalization plan to provide that all company stock have one vote per share, 64.9% of the votes cast were against.
On Proposal 5, relating to the disclosure of the company's lobbying activities and expenditures, 79.8% of votes cast were against.
Great. Thank you, Jon. Well, in view of the results, I declare that each of the nominees for director named in the proxy statement has been duly elected a director of the company. Proposals 2 and 3 have been adopted. Proposals 4 and 5 have been defeated. Well, that takes care of the business of the meeting, and the meeting is adjourned. Thank you all for joining us, and please stay safe.
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