Einhorn Call for GM Changes Rejected by Shareholder Advisers

Two shareholder advisory firms have recommended support for current General Motors Co. board members and against creating a dual share class, proposals advanced by activist investor David Einhorn to boost the automaker’s stock.

“The dissident has not made a compelling case that change at the board level focusing on the implementation of its proposal is warranted,” Institutional Shareholder Services wrote in a report released Friday. “The negative outcomes associated with the proposed dual class share structure combined with the lack of visibility regarding value creation for shareholders drive our recommendation against the dual class proposal.”

Glass Lewis & Co. previously recommended support for the GM slate.

Einhorn’s Greenlight Capital LLC, which owned 3.6 percent of GM’s shares as of March 31, seeks to replace three of 11 board members and split the stock into two classes — one tracking capital appreciation, the other, dividends — to unlock value. The GM shareholder meeting is scheduled for June 6.

ISS concluded that GM, under Chief Executive Officer Mary Barra, already has closed its performance gap relative to peers. While the dual-share-class proposal is intriguing, “it risks the addition of complexity to a board that is facing concrete and pressing concerns from technological and competitive perspectives, the value creation is uncertain, and there has been no market endorsement,” according to the ISS report.

Einhorn didn’t immediately reply to an email seeking comment.

“Ultimately, we are not convinced that a more aggressive approach is warranted or in the best interests of shareholders given the cyclical nature of the industry and current headwinds and disruption facing the industry,” according to an excerpt of the Glass Lewis report posted by GM.

Shares of GM rose 1.4 percent Friday to $33.07, and are down 5.1 percent this year.

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