General Motors Co.
said Tuesday that it rejected a proposal by billionaire investor David Einhorn’s hedge fund Greenlight Capital to create a dual-class common stock structure, that in effect eliminate the dividend on the existing common stock. GM said it believes Greenlight’s proposal creates “unacceptable risks,” including the auto maker’s loss of its investment grade credit rating, material governance challenges and uncertain investor demand. “For seven months, we’ve extensively reviewed the proposed dual-class structure, as well as other capital allocation strategies, and concluded that continuing to execute our strategy and adhering to our current disciplined capital allocation framework is the best path to deliver increased value,” said Chief Executive Mary Barra. Greenlight also nominated four candidates for election to GM’s board, but GM said the board has “unanimously determined” it would not recommend any of the nominees for election. GM’s stock rallied 3.3% in midday trade, as a WSJ report of Greenlight’s proposal made the rounds. The stock has now gained 3% year to date, while the S&P 500
has tacked on 5.2%.