The General Motors board of directors are celebrating a win this morning after stockholders rejected the Greenlight Capital proposal to create a dual-class stock structure, according to The Detroit News.
GM itself rejected the idea since Greenlight Capital’s proposed the change and has urged its shareholders to reject the change for months. Greenlight, run by billionaire David Einhorn, remained adamant the dual-class structure would unlock the potential value of GM’s stocks. The automaker’s share price has remained relatively flat since its initial public offering, despite record sales and earnings.
GM rebuked Greenlight’s proposal and stated it was high risk and would not create the additional value promised. GM also worried it would result in a loss of its investment-grade rating. The move would also remove three of its board members and replace them with Greenlight-backed candidates.
GM Chairman and CEO Mary Barra addressed reporters ahead of the vote this morning and reiterated the proposal was not a good path.
“We evaluated it very carefully… but as we went through and looked at the aspects of this particular proposal, we thought it provided several elements of risk and was not in the best interest of our shareholders,” she said.
GM was backed up by two proxy-advisory service companies this month: Institutional Shareholder Services and Glass Lewis. Both recommended shareholders to reject the proposal and echoed the automaker in stating the dual-class structure would not result in additional value created.