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GM Shareholders Reject Greenlight Capital’s Dual-Class Stock Proposal
DETROIT, Michigan – General Motors’ shareholders rejected Greenlight Capital’s proposal to split the company’s stock into two classes, with 91 percent rejecting maverick hedge fund investor David Einhorn’s attempt to separate automotive operations and its future mobility technologies. If Greenlight’s 52 million voting shares (about 3.6 percent of common stock) are not counted, the opposition amounts to 96 percent, based on preliminary results from the annual shareholders’ meeting held at the automaker’s Renaissance Center headquarters, Tuesday morning.
Einhorn’s challenge, which included an attempt to elect three board members nominated by Greenlight, was never considered a threat to GM management. Greenlight’s three nominees also were rejected, and shareholders instead elected the 11 members recommended by the GM board.
Greenlight’s dual-class stock would have split common shares into one class that would concentrate on dividends paid to investors based on GM’s healthy profits, $2.6-billion net in 2016, and one that would “reflect GM’s growth potential,” according to Reuters. The growth-potential stock was proposed to take advantage of GM’s future mobility initiatives, including its Maven car-sharing program, its electric vehicle technology and its purchase last year of San Francisco-based Cruise Automation to advance autonomous car technology.
In other words, Greenlight proposed the rejected special Class A stock to give GM the potential to be a Wall Street darling in the mold of Elon Musk’s Tesla. Mary Barra, GM’s chairwoman and CEO, emphasized her company’s long-term, sustainable growth prospects.
The Greenlight Capital hedge fund is among institutional investors that have pushed GM to return more of its cash reserves to investors. GM expects to return approximately $7 billion to shareholders in 2017, after returning about $18 billion between 2012 and 2016, Barra said.
In a press conference prior to the annual meeting, Barra said she couldn’t speculate as to why GM’s share value has been stagnant since its post-bankruptcy initial public offering, and why it’s being lumped in with the other domestic automakers despite healthy profits, “but what I can do is continue to outperform the industry, and to make sure we make the right investments so that we demonstrate that we have a bright future with tremendous growth and have significant profitability as well. We believe that as we put more points on the board, it [stock value] will turn.”
Following GM’s annual meeting, its common stock had dropped 0.31 points, to $34.15 per share. Tesla’s stock was up 7.06 points, to $354.38, which put Tesla’s market cap at $58.21 billion, or $7.15 billion higher than GM’s.
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