{"id":116410,"date":"2017-05-31T10:56:17","date_gmt":"2017-05-31T14:56:17","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=116410"},"modified":"2017-05-31T10:56:17","modified_gmt":"2017-05-31T14:56:17","slug":"gm-board-remains-resolute-in-fight-with-greenlight","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2017\/05\/gm-board-remains-resolute-in-fight-with-greenlight\/","title":{"rendered":"GM Board Remains Resolute in Fight With Greenlight"},"content":{"rendered":"
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David Einhorn, head of Greenlight Capital, wants GM to split its stock into two classes. He believes the move would nearly double the company's stock price.<\/figcaption><\/figure>\n

General Motors is reminding shareholders this week that the incumbent board of directors has the support of two groups that advise institutional investors, such as pension funds, on how to vote on resolutions presented by shareholders.<\/p>\n

Both Institutional Shareholder Services and Glass Lewis, two organizations that advise on proxy issues,\u00a0have recommended that GM shareholders vote for the GM Board\u2019s director nominees and\u00a0against\u00a0a proposal from New York-based Greenlight Capital that would divide GM stock into two new classes.<\/p>\n

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Beyond the Headlines!<\/figcaption><\/figure>\n

Greenlight maintains that its proposal will “unlock” the true value of GM\u2019s shares, which have seen little appreciation since it was issued anew after the company’s 2009 bankruptcy despite substantial spending on share buybacks and hefty dividend payments.<\/p>\n

The lack of appreciation has been particularly visible during the post-election rally that has boosted stock prices almost across the board.\u00a0Detroit’s automakers, however, have not participated in the boom and the soft stock prices cost Ford CEO Mark Fields his job last week.<\/p>\n

GM noted in a campaign-style release that the advisory services, ISS and\u00a0Glass Lewis, found Greenlight’s proposal lacking on a number counts. The GM release also noted that Greenlight’s nominees for the GM board of directors is linked to hedge fund’s “high risk proposal.”<\/p>\n

(GM squashes proposal to split stock into two classes.\u00a0<\/em><\/strong>Click Here<\/a><\/span><\/strong>\u00a0for the story.)<\/em><\/strong><\/p>\n

With the time for counting votes drawing closer, GM\u00a0also accused Greenlight of attempting to “mislead” shareholders.\u00a0GM’s board and management “are already driving transformational change and creating shareholder value,” GM said in a statement, citing reports prepared by ISS and Glass Lewis for the impending proxy fight.<\/p>\n

\"\"<\/a>
GM CEO Mary Barra and the board are against the stock-split proposal from Greenlight Capital and urged shareholders to vote for the incumbent board.<\/figcaption><\/figure>\n

The most damning part of the ISS and Glass Lewis report is that the value creation of Greenlight’s proposal “is uncertain, and there has been no market endorsement”\u00a0since GM’s share price remained flat after the idea of a split was first made public.<\/p>\n

\u201cThe dissident argues that post-split, the capital appreciation stock would trade for the same forward multiple that GM shares trade for today. We question this assumption,\u00a0<\/strong>as the stock narrative would continue to be the same \u2026 and the stock would offer no dividend yield support,” ISS noted in its report.<\/p>\n

In its letter this week to GM shareholders, Greenlight argues the car maker is in need of fresh thinking and a fresh perspective.<\/p>\n

(<\/em><\/strong>Click Here<\/a><\/span><\/strong> to see more about GM wrestling with Greenlight over board seats.)<\/em><\/strong><\/p>\n

“We believe the choice is clear: There is nothing to lose from insisting on fresh thinking at a company whose stock trades at its 2010 IPO price.<\/p>\n

\u201cGM\u2019s Board believes that nothing can be done proactively to create value for shareholders. In our experience, the uninspired take refuge in convincing themselves they are helpless.<\/p>\n

\u201cWe do not agree that the path to fair value at GM inevitably involves waiting out the next recession. GM has many ways to resolve its capital structure problem. Greenlight has offered one creative approach to unlocking tens of billions by splitting the current common stock into two common equities.<\/p>\n

\u201cThere may be other approaches as well. Of one thing we are certain: if shareholders do not insist on action,\u00a0GM\u2019s incumbent Board will do nothing new. They are content to wait,” Greenlight wrote in the letter.<\/p>\n

(To see more about Mark Fields\u2019 departure from Ford, <\/em><\/strong>Click Here<\/a><\/span><\/strong>.)<\/em><\/strong><\/p>\n

GM expects to beat back the challenge from Greenlight. However, Greenlight is very likely to secure enough votes from disgruntled GM shareholders to insure that the proposal could appear in the GM proxy in 2018, which will keep the pressure on GM’s board to find a strategy or show the kind of progress in its operations that will satisfy investors.<\/p>\n","protected":false},"excerpt":{"rendered":"

General Motors is reminding shareholders this week that the incumbent board of directors has the support of two advisory groups as it continues to battle with Greenlight Capital. Read the latest at TheDetroitBureau.com.<\/p>\n","protected":false},"author":20009,"featured_media":114895,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[8],"tags":[],"make":[],"post-state":[],"category_old":[151],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/116410"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/20009"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=116410"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/116410\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/114895"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=116410"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=116410"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=116410"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=116410"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=116410"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=116410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}