Investor to push GM for share buyback

Shareholder to seek seat on board, press automaker to boost undervalued stock

DETROIT— A General Motors stockholder representing four investment funds has told the company he’ll seek a seat on its board at the annual meeting this summer and will push for an $8-billion (U.S.) stock buyback to take place by next year.

Harry Wilson, a former hedge fund manager and one-time member of the Obama administration task force that helped to restructure GM and Chrysler in 2009, disclosed his plans in a meeting with GM CEO Mary Barra on Feb. 3.

The company issued a statement Tuesday morning saying its board will evaluate the proposals through its normal committee process. A date for GM’s annual meeting has not been set, but it normally takes place in June at the company’s headquarters in Detroit.

Wilson, according to the GM statement, represents Taconic Parties, Appaloosa Parties, HG Vora Parties and Hayman Parties, which together own 34.4 million common shares, or 2.1 per cent of the company.

GM said that Wilson’s notice to the company about the proposal shows he’ll get a percentage of the group’s profits from its investment in the Detroit automaker. As of a Feb. 9 notice to General Motors, Wilson himself owned 100 shares of GM.

Wilson, 43, of Scarsdale, N.Y., is seeking the board seat and stock buyback because he believes GM’s stock is undervalued and the automaker is “substantially overcapitalized,” according to his notice to GM. The share repurchase will create shareholder value, the notice said.

GM, which posted a $2.8-billion profit last year despite massive recall costs, ended the year with $25.2 billion in cash available.

Company executives often talk about returning some of that cash to shareholders. But in addition, GM executives have repeatedly said they want to maintain a “fortress balance sheet” so they have enough cash to weather an economic downturn such as the Great Recession, which sent the company into bankruptcy protection.

GM restored its quarterly dividend in January 2014 for the first time in six years. Last week the company said it would raise the dividend 20 per cent in the second quarter to 36 cents, pending board approval.