The announcement boosted Ford stock about 0.7 percent to $15.57 per share after the New York Stock Exchange closed.

Ford at the end of the first quarter had automotive debt of about $15.7 billion and has said that it plans to reduce that debt to about $10 billion by mid-decade.

Up to 116 million shares will be repurchased. Up to 103 million shares are to offset the dilutive effect of potential conversions of the company's 4.25 percent senior convertible notes due November 15, 2016.

At Wednesday's closing stock price of $15.46 per share, the 103 million shares would be worth about $1.6 billion.

In addition, 12.6 million shares will be repurchased to offset the dilutive effect of share-based incentive pay for about 26,000 salaried employees for this year. Those employees include top executives. At Wednesday's closing stock price, that amounts to nearly $195 million.

Bob Shanks, Ford chief financial officer, said the two actions reduce the company's diluted shares by about 3 percent.

Starting on November 20, 2014, the company can terminate the noteholders' conversion rights, and it has the right to settle conversions with shares, cash or both.

Shares repurchased in this program are intended to offset the dilutive effect of any shares Ford elects to issue to settle these potential conversions.

(Reporting by Bernie Woodall; Editing by Eric Walsh)