Barra Defeats Einhorn’s Stock Proposal
GM has been doing fairly well since it emerged from bankruptcy. It has been following the leadership of CEO Mary Barra to ride the wave of record new car sales here in the United States and it has devoted itself to the future of automotive technology. However its stock price has remained fairly steady since it was brought back to the market. David Einhorn of Greenlight Capital had a plan to change that, but it required some radical measures that could have been detrimental to the future of the company. This month, Ms. Barra was able to defeat the proposal and reestablish herself as the leader of the company.
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Einhorn’s plan was to divide GM stock into two separate classes. Some would remain traditional dividend-paying shares, and other shares would entitle the holders to a larger piece of the pie. Described by some as an “activist billionaire”, Einhorn also nominated three candidates of his own choosing to join the board of General Motors and promote his vision of GM’s future. This plan has its own pros and cons, but Mary Barra and her team were very against the changes because they would limit the company from following its aggressive business strategy.
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When the proposed changes went to a vote during this month’s annual shareholder meeting, 91% of GM shareholders voted against Mr. Einhorn according to a preliminary count. This scare showed to GM that in its pursuit of bigger and better things it still needs to pay attention to the pockets of its shareholders. However, the sound defeat of the plan is a vote of approval in the direction GM is headed.
News Source: USA Today