Good for the General

9 March 2015 By Rob Cox Follow @rob1cox

The carmaker won’t buy back as much stock as funds led by Harry Wilson requested. They did, however, get 63 pct of what they wanted and, perhaps more importantly, a commitment on how GM will allocate capital in the future. Given GM’s past profligacy, that’s a victory unto itself.

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General Motors said on March 9 it would launch a $5 billion share buyback in an agreement with dissident investors, and put forward a more detailed plan for capital allocation that promises investors the potential for further cash returns.

The automaker said it had reached a deal with an investor group that averts a proxy fight over its balance sheet and governance. As part of the agreement, investor Harry Wilson, who is backed by a group of hedge funds, said he would drop his effort to get a seat on GM’s board.

Wilson praised the company’s capital plan, which offers investors a more transparent view of GM’s cash investment proposals than previously disclosed.

GM also confirmed it would boost its quarterly dividend to 36 cents a share from 30 cents. It had disclosed plans to raise its dividend in February.

In all, the actions should return about $10 billion to shareholders through 2016.

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Wilson praised the company’s capital plan, which offers investors a more transparent view of GM’s cash investment proposals than previously disclosed.

GM also confirmed it would boost its quarterly dividend to 36 cents a share from 30 cents. It had disclosed plans to raise its dividend in February.

In all, the actions should return about $10 billion to shareholders through 2016.

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