Value, decisiveness, transparency loom large at the new GM. Mark Phelan/Detroit Free Press
Mark Phelan/Detroit Free Press
GM’s shareholders on Tuesday rejected a proposal from activist investor David Einhorn to create two classes of stock and rejected an alternative slate of board nominees.
Einhorn, for more than two months, had mounted an aggressive campaign to convince shareholders the company needed to do more to boost its stock price. Einhorn wanted to split GM’s stock into two classes — one designed for big dividend returns and another designed to reward shareholders if the automaker’s profits and stock price grows — and plans to nominate his own slate of directors.
A tally of the votes was not yet available but will be later.
Before the meeting began, GM CEO Barra acknowledged that the company’s stock price is undervalued but said Greenlight’s proposal is “not in our shareholders best interest,” and said the automaker has been making the tough decisions necessary to adapt to changing business conditions and has been working hard to reward investors prior to the company’s annual shareholder meeting in Detroit.
“We are continually working to make our business more efficient and remove costs,” Barra said.
GM has returned $6.4 billion to its shareholders in dividends since 2016 and has spent $11.7 billion repurchasing shares of stock since since 2012 but that has failed to significantly move the company’s stock price, which closed at $34.46 on Monday, or less than $1 above the $33 per share that it started at in 2011 following an initial public offering.
“We value all input from all of our shareholders and we have thoroughly and objectivity analyzed their ideas,” Barra said. “After careful consideration we determined that Greenlights proposal was not in the best interest of our shareholders.”
Barra said the company will continue to work to return capital to shareholders by trying to outperform its competition and to invest wisely.
“We’re are aggressively returning capital to shareholders, we’re deploying resources in higher return opportunities, we’re delivering great new cars, trucks and crossovers….and we’re working to lead the transformation of personal mobility,” she said.
Despite GM’s stagnant stock price the CEO’s management of the company has been increasingly praised by analysts for making bold strategic decisions that are reshaping the company’s global operations.
“The company has demonstrated a willingness to make very tough decisions,” Bruce Clark, senior vice president of Moody’s Investor Service told the Free Press on Monday.
GM announced an agreement to sell its European division to PSA Groupe in March for $2.2 billion and said in May it would no longer sell vehicles in India or South Africa. GM’s European division had been losing money for years and GM was a small player in India and decided it would need to invest heavily to gain significant market share.
Contact Brent Snavely: 313-222-6512 or [email protected] Follow him on Twitter @BrentSnavely.
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