GM investors reject share plan
GENERAL Motors shareholders yesterday overwhelmingly rejected proposals by hedge fund Greenlight Capital to restructure the company’s stock and reshape its board, backing chief executive Mary Barra’s efforts to rev up the company’s stalled share price.
Seeing off the challenge from Greenlight manager David Einhorn does not mean the end of Barra’s challenges.
GM shares traded yesterday at $34.25 (R439.56) a share, about 16% lower than when Barra became chief executive, despite robust profits and a series of moves to sell or shut down money-losing operations.
Silicon Valley electric vehicle maker Tesla this year surpassed GM’s market value, reflecting investor confidence that, despite heavy losses, Tesla chief Elon Musk had a better strategy as the motor industry shifted towards services and electric, autonomous vehicles.
In comments prior to the shareholder meeting, Barra acknowledged Greenlight’s point on its stock price, saying “we do believe GM stock is undervalued”, and said the company was continually looking at ideas to increase investor interest. She did not elaborate on any new plans.
Preliminary results showed more than 91% of shareholders voted against Greenlight’s proposal to have GM offer dividend and capital appreciation shares, according to GM officials at its annual shareholders’ meeting.
GM’s nominees were elected with between 84% and 99% of the vote, the company said.
Greenlight founder Einhorn floated his proposal in March, saying it could boost the manufacturer’s $52-billion (R667-billion) market capitalisation by as much as $38-billion (R487-billion).
Greenlight controlled about 3.6% of GM shares, and was now the fifth-largest public shareholder, the fund said in regulatory filings.
But Einhorn’s pitch to rework GM’s capital structure flopped with debt rating agencies, which said Einhorn’s plan could hurt the company’s credit rating, and he failed to rally other shareholders to his cause.
Warren Buffett’s Berkshire Hathaway, which holds 3.3%, remained silent on the proposal.