Investors Demand that Lear Step Up Share Buyback

Two activist shareholders are urging Lear Corp. to double its stock repurchase program to $2 billion and begin buying the shares immediately.

Lear said last week it would speed up the three-year plan by purchasing $600 million in stock this year. Hedge funds Marcato Capital Management LLC and Oskie Capital Management LLC, which own a combined 5.6% of the company, call that action "parsimonious" and insufficient.

In a letter to Lear's board on Tuesday, Marcato and Oskie asked directors to review the company's capital spending and strategy for acquiring and divesting assets. The funds reiterated their demand for two board seats.

Lear is "dramatically overcapitalized" for a healthy company, according to the hedge funds. They complain that the supplier is holding excessive cash and might make expensive acquisitions instead of boosting shareholder value by buying back stock.

Lear replies that it balances investment in its business and maintaining a strong balance sheet with cash distributions to stockholders. The company notes it repurchased $500 million of its shares in the past two years.