DETROIT — General Motors said it would buy back $5 billion in company stock this year as part of a negotiated settlement with dissident investors led by a former member of the government’s auto task force.þþG.M. said the new buyback program would take effect immediately and provide a way to return excess cash to shareholders.þþAs part of the deal with the investment group, its leader, Harry J. Wilson, will withdraw his nomination for election to the G.M. board.þþThe moves avert what could have been a divisive proxy fight over how G.M. would spend its bulging cash reserves totaling more than $25 billion — some of which is money left over from the government’s $49 billion bailout of the automaker in 2009.þþMr. Wilson had been a main member of President Obama’s auto task force that shepherded the bailout of G.M., the nation’s largest automaker, as well as Chrysler.þþLast month, Mr. Wilson told G.M.’s chief executive, Mary T. Barra, that he was heading an effort by hedge fund investors to prod G.M. into spending as much as $8 billion to buy back shares and help the company’s stagnant stock price.þþMr. Wilson also announced his intention to seek a seat on G.M.’s board, which has undergone significant turnover in the past year as it grappled with G.M.’s extensive recall crisis.þþBut instead of fighting the investment group, the G.M. board and Ms. Barra negotiated a smaller, yet still substantial, buyback.þþThe agreement was announced on Monday by Ms. Barra, who said the company would work to achieve a cash balance of about $20 billion going forward.þþShe said that amount would allow G.M. to retain its investment grade ratings and continue to pay for new product programs and other capital requirements.þþ“We will continue to invest in innovative technologies and world-class vehicles that will deliver sustained profitable growth and maximize returns to shareholders,” Ms. Barra said in a statement.þþMr. Wilson agreed to withdraw his nomination for the board, as well as an accompanying shareholder proposal for an $8 billion buyback that the hedge funds had planned to include on G.M.’s annual proxy statement.þþBoth Mr. Wilson and Ms. Barra hailed the “constructive dialogue” that led to the agreement, and pledged to continue working together.þþ“As a result of this dialogue, we have arrived at a win-win outcome that includes a thoughtful approach to critical capital allocation issues and other important measures to increase long-term shareholder value,” Mr. Wilson said in a statement.þþThe investors backing Mr. Wilson own about 2 percent of G.M.’s stock, and include Appaloosa Management and Hayman Capital Management.þþThe buyback program and Mr. Wilson’s withdrawal remove a major distraction for G.M. executives and directors as the company works to rebuild its image after last year’s record number of safety recalls, including the long-delayed recall of small cars with defective ignition switches linked to 57 deaths.þþ
Source: NY Times
