The Battle of the Titans

The recent proxy fight waged by Greenlight Capital, Inc. and General Motors Co. at the company's shareholder meeting resulted in overwhelming support by the shareholders of the GM CEO and board.

A stunning defeat for Greenlight that sought to replace three directors and split the stock into two classes – one that pays dividends, the second that awards all additional earnings growth to investors.

As reported in The Wall Street Journal 90% of the shareholders rejected the stock division and overwhelmingly rejected the three Greenlight proposed directors.

The New York Times reported that since coming out of bankruptcy in 2009, GM's has earned more than $40 billion.  Further, it has engaged in stock buybacks and paid dividends, and sold off underperforming assets.  

With this success, the stock has been stuck in the mid-thirties range - clearly frustrating Greenlight which led to this, what some would consider, an ill-advised stock division proposal. This further supports the argument that some have made being that Activists are short-term investors with no interest in long-term value.

An important point to be made – GM's CEO and board were not intimidated, stood their ground, believing in the company's long-term strategy, and didNOT FOLD.

Other major targets of Activists may follow GM's stance – the Procter & Gamble and Nestle issues will tell us more - time will tell - but there appears to be a shifting taking place.

Ref:  The Wall Street Journal Wednesday, June 7, 2017 | The New York Times Wednesday, June 7, 2017