Einhorn’s Greenlight nominates 3 directors to GM’s board

David Einhorn has put his activist campaign against General Motors into high gear, announcing the names of executives he wants on the carmaker’s board.
The US hedge fund manager wants GM to pursue an unusual stock split that he says will boost the share price, but his idea was rejected so he is now taking it directly to shareholders.

GM’s investors will get to vote at their annual meeting on a slate of three candidates Mr Einhorn’s fund, Greenlight Capital, is nominating for the board:

• Media executive Leo Hindery, managing partner of InterMedia Partners and a former chief executive of TCI, Liberty Media and AT&T Broadband;
• Vinit Sethi, director of research at Greenlight;
• William Thorndike, founder of Housatonic Partners, a private equity investment firm, and also chairman of Consol Energy.

Mr Einhorn and Mr Sethi have been pushing GM since last September to split its shares in two, issuing one class that will pay a chunky dividend to satisfy income investors and leaving another that will skip a payout in favour of making share buybacks.

GM said the scheme was too risky, and two rating agencies said they may downgrade the company’s credit if it went ahead. The automaker reiterated that view in a statement on Wednesday, saying “our evaluation of the overall proposal remains unchanged”.

Greenlight still thinks it can persuade GM shareholders, however. In a statement, Mr Sethi said:

GM is ignoring the significant value unlocked by our plan, and has concocted a ratings issue by presenting a one-sided and flawed analysis to the rating agencies. It is clear that the rating agencies relied upon – and were misled by – the company. We believe that implementing our plan would in fact improve GM’s access to capital and enhance the company’s financial flexibility.