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Shareholder Advisers Back GM’s Objection to Dual Stock Scheme
General Motors Co. has picked up support from two shareholder advisory services for rejecting a proposed plan by activist David Einhorn to split GM stock into two classes.
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General Motors Co. has picked up support from two shareholder advisory services for rejecting a proposed plan by activist David Einhorn to split GM stock into two classes.
Einhorn’s Greenlight Capital Inc., which owns 3.6% of GM’s common shares, is frustrated by the company’s lackluster stock performance. It proposes to replace three of GM’s 11 director and create two classes of stock: one that continues to pay dividends on earning and one that distributes remaining earnings to its holders.
Greenlight claims the latter type of stock would attract investors willing to bet on potential earnings growth—and in the process hike GM’s market value by one-third or more.
GM has called Greenlight’s plan risky and untested. Bloomberg News reports that Glass Lewis & Co. and Institutional Shareholder Service concur that Greenlight hasn’t made a compelling argument that its idea would benefit shareholders. Einhorn’s proposal faces a vote by GM shareholders at the company’s annual meeting on June 6.
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