Propoal would have created two classes of stock
By Bilin Lin
GM shareholders voted no Tuesday to an activist investor’s proposal to create two classes of stock.
GM shareholders rejected the stock split proposal by David Einhorn, the hedge fund manager and president of Greenlight Capital who owns a 3.6% stake at GM. Only 9% of shareholders supported the proposal, which would have created two classes of stock one that would receive dividends and another that would participate in growth and earnings.
The company opposed the proposal because it claimed it would create conflict between shareholders from different classes, as well as lower GM’s investment grade credit rating. The proposal was "not in our shareholders’ best interest,” said GM’s CEO Mary Barra.
Einhorn said in a statement that he was disappointed with the vote. “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,” he maintained.
GM’s stock has been undervalued, and Barra told Free Press’ reporter that the company is taking actions to remedy that. "We’re deploying resources in higher return opportunities, we’re delivering great new cars, trucks and crossovers all around the world, we’re continually working to make our business more efficient and to remove costs,” she said. “We’re working to lead the transformation of personal mobility."
The shareholders also rejected a proposal calling for the separation of the CEO and chairman roles, which Barra now holds.
In addition, GM’s 11 board members were all re-elected.