CEO Barra now has yet another challenge. Thus far she has risen to them all.
Hedge fund sharks are circling General Motors as it hastily announced on Tuesday that it received notice from Harry J. Wilson saying he will nominate himself to stand for election to the GM Board of Directors at the company’s 2015 annual meeting.
Wilson – no relation to Engine Charlie, who did productive work by making things – wants to bring forth a proposal that the GM bankruptcy he worked on as part of the Auto Task Force commit to $8 billion in share repurchases on or before the first anniversary of the 2015 annual meeting.
Wilson, a former Goldman Sachs exec, has the backing of several hedge funds with roughly 2% of GM stock. He is working on a commission from the increased value of hedge fund stock if the buyback goes through.
The ploy is clearly threat to GM’s “fortress balance sheet” strategy that looks to clean up underfunded pension liabilities and preserve enough cash to weather another global recession. GM has now posted 20 consecutive quarters of profits.
The hedge funds involved – the Taconic Parties, Appaloosa Parties, HG Vora Parties and the Hayman Parties – together own approximately 34.4 million shares. Looking to make a quick buck, GM’s strategy and long-term survival are of no interest. The whole caper has the smell of sulfur about it.
GM said, “The Board’s Directors and Corporate Governance Committee will evaluate the proposed director nominee based on the criteria set forth in the company’s Corporate Governance Principles and Director Qualification Standards and make a recommendation based on the best interests of all shareholders. GM shareholders are not required to take any action at this time.”
Fasten your safety belts; this is going to a wild ride.
