David Einhorn, head of Greenlight Capital, hasn't announced if he will resubmit his proposal to split GM stock into two classes.
General Motors Co. is likely to continue, facing pressure from dissident shareholders for the lackluster performance of the company’s shares in what has been a rising stock market.
During the company’s annual meeting, GM said shareholders decisively rejected a proposal from a New York-based hedge fund, Greenlight Capital, to divide the company’s stock into two separate classes.
David Einhorn, one of the principals of Greenlight Capital, acknowledged defeat.
“We decided to bring a creative idea to GM’s shareholders and nominate directors to help fix GM’s inefficient capital structure and unlock significant value for all shareholders. We are disappointed that shareholders have elected to maintain the status quo. We congratulate GM’s management on their win today.”
But the Greenlight proposal did get enough support from GM shareholders that if Einhorn wants to revive the proposal and put it up to another vote he can. Einhorn hasn’t tipped his hand, but the proposal will remain alive for a least another 12 months and very likely to continue to exert pressure on GM’s board, which has already committed about $18 billion to share buybacks and has been busy shedding money-losing operations in Europe and other parts of the globe.
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GM Chairman and CEO Mary Barra pointed out during the company's annual meeting that the company is divesting unprofitable businesses.
A revolt among shareholders abruptly ended Mark Fields career as Ford’s CEO and automakers continue to face pressure because of the negative comparisons with Tesla’s highflying stock.
GM CEO Mary Barra said during the shareholders meeting she was not satisfied with the company’s underperforming stock, noting the company had exited the European market with the sale of Opel to PSA and the decision to re-organize its international operations by dropping out of the market in India.
Barra said during the meeting that 2016 was a very good year for GM. “We continue to gain momentum in 2017 driven by strong performance in the U.S. and continued growth in China. We believe GM stock is undervalued,” she added.
(Click Here to see more about GM wrestling with Greenlight over board seats.)
The GM CEO said GM’s board had spent several months to evaluate the Greenlight proposal but ultimately decided that it was too risky.
The preliminary vote count showed that shareholders elected all 11 of GM’s Board nominees. The preliminary results also indicate that shareholders have rejected Greenlight’s proposal to create a dual-class common stock structure.
“We value the perspectives of our shareholders and will continue to actively engage with them – and relevant external experts – as we enhance our core business, deploy capital to higher-return opportunities, and advance our leadership in the future of personal mobility.
(GM remains resolute in fight with Greenlight. Click Here for the story.)
“We have strengthened our foundation and increased our flexibility which will allow us to take further action to maximize returns and enhance long-term value for our shareholders,” she said.