DETROIT _ General Motors shareholders on Tuesday overwhelmingly rejected a proposal from activist investor David Einhorn to create two classes of stock and also shot down an alternative slate of board nominees he had supported, giving CEO Mary Barra and the company's management team a big vote of confidence.
More than 91 percent of the votes cast by shareholders were against the proposal despite an aggressive two-month campaign by the well-respected Wall Street investor. Excluding votes from Greenlight Capital, the firm co-founded by Einhorn, 96 percent of the votes went against the plan.
Einhorn tried to convince shareholders the company needs to do more to boost its stock price and nominated three board members as alternatives to GM's 11 nominees. Einhorn also wanted to split GM's stock into two classes _ one designed for big-dividend returns and another designed to reward shareholders if the automaker's profits and stock price grow.
"We decided to bring a creative idea to GM's shareholders and nominate directors to help fix GM's inefficient capital structure and unlock significant value for all shareholders," Einhorn said in a statement. "We are disappointed that shareholders have elected to maintain the status quo. We congratulate GM's management on their win today."
Despite the support from shareholders, GM and other auto companies are under pressure to demonstrate they can boost profitability while also maneuvering deftly as electric, autonomous vehicles and ride-hailing apps shake up the industry. Ford pushed out former CEO Mark Fields last month in part because of the company's languishing stock price and the lack of a clear autonomous vehicle strategy.
Before Tuesday's meeting in Detroit began, GM CEO Barra acknowledged that the company's stock price is undervalued but said Greenlight's proposal was "not in our shareholders' best interest."
She said the management team has been making tough-but-necessary decisions to adapt to changing business conditions and has been working hard to reward investors.
"We do believe that GM stock is undervalued and we are taking decisive actions to address this," Barra told reporters shortly before the annual meeting began. "We're deploying resources in higher-return opportunities. We're delivering great new cars, trucks and crossovers all around the world. We're continually working to make our business more efficient and to remove costs. We're working to lead the transformation of personal mobility."
GM has returned $6.4 billion to its shareholders in dividends since 2016 and has spent $11.7 billion repurchasing shares of stock since 2012. Those moves, however, have failed to significantly move the company's stock price, which closed at $34.46 on Monday, or less than $1 above the $33 per share that it started at in 2011 following an initial public offering.
Despite GM's stagnant stock price, Barra's management of the company has been increasingly praised by analysts who say she's making bold strategic decisions that are reshaping the company's global operations.
"The company has demonstrated a willingness to make very tough decisions," Bruce Clark, senior vice president of Moody's Investor Service told the Detroit Free Press on Monday.
GM in March announced an agreement to sell its European division to PSA Groupe for $2.2 billion and said in May it would no longer sell vehicles in India or South Africa. GM's European division had been losing money for years and GM was a small player in India and decided it would need to invest heavily to gain significant market share.
James Dollinger, a Flint, Mich.-area dealer known as "The Buickman," offered one idea for resolving GM's problems _ separating the chairman and CEO roles. While complimenting Barra on her performance, Dollinger said the job is too big for one person.
"You can't focus on long-term strategy and day-to-day operations," Dollinger said. "You've got a great field team. Be the chairman."
A separate shareholder proposal that would have forced GM to separate the role of independent board chairman and CEO was defeated by shareholders.
GM argued that its shareholders are best served when the board can decided whether or not the two roles can be fulfilled by one person or should be separated.
The company did come under fire during the meeting from several shareholders who spoke out about Colombian workers who were allegedly fired after being injured on the job several years ago. Workers involved in the dispute, which dates back to 2011, have sewn their mouth shut, gone on hunger strikes and have protested at the U.S. Embassy in Columbia as well as in Detroit.
"These workers were injured on the job," said Kimberly Paige Shell-Spurling, representing the Portland (Oregon) Central American Solidarity Committee. "They were fired for their injuries even if you don't want to claim that, even if there are other reasons that were given. There is a systematic firing of injured workers."
GM says it has taken the allegations seriously and has devoted substantial resources to conduct numerous investigations. Following last year's annual meeting, GM leaders visited the GM Colmotores plant in Colombia to validate its safe, healthy working conditions.
Barra said the company has offered the workers a fair settlement but vowed to review the situation again.
"We are committed to the safety of every employee around the world," Barra said. "There have been many, many conversations. ... We have had significant resources dedicated to this issue."
