Greenlight's Controversial Dual-Class Stock Split Proposal Defeated At GM's Shareholder Meeting

David Einhorn needs a new vision for General Motors Company GM. The Greenlight Capital founder suffered defeat at Tuesday’s annual meeting as shareholders rejected his Board nominees and proposal to establish two stock classes.

Heeding the advice of advisory firms Institutional Shareholder Services and Glass Lewis, more than 96 percent of non-Greenlight voters vetoed the plan, which would have split the stock into dividend shares and capital appreciation shares. Such a move would have cut capital costs and bolstered market capitalization by about $38 billion, Einhorn predicted.

GM management had initially considered the proposal but grew wary of the risk, CEO Mary Barra said at the meeting.

Mainstay Capital’s David Kudla supported the final decision.

"GM shareholders recognize the speculative nature of this proposal and its potential adverse consequences," Kudla, a hedge fund manager and known opponent of Greenlight's proposal, told Benzinga. "This gives GM management the ability to stay focused on the core business of engineering, building and selling great cars and trucks. It puts aside this latest distraction in financial engineering."

Kudla said only a handful of Mainstay's clients have GM shares in their account. The fund doesn't hold it as part of its overall asset allocation strategy at this time.

Nonetheless, corporate considers the stock undervalued, and Barra suggested unlocking additional value by driving cost structure and investments in autonomous vehicles and the Bolt EV.

In a statement, Greenlight Capital said, "We are disappointed that shareholders have elected to maintain the status quo. We congratulate GM's management on their win today. GM should consider adding [Leo Hindery, Will Thorndike] or others with similar financial market expertise to the Board in the future."

At time of publication, GM shares were trading around $34.19, down 0.8 percent on the day. The stock is up more than 13 percent over the past year.

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