GM General Motors Company

By Mike Colias 

General Motors Co. shareholders delivered a vote of confidence for Chief Executive Mary Barra Tuesday, shooting down hedge-fund manager David Einhorn's proposal to split the company's stock into two classes.

Preliminary voting results indicate overwhelming rejection of a plan first floated in March by Mr. Einhorn's Greenlight Capital Inc., which included a class of stock that pays dividends and a second that paid all additional earnings to growth investors. Shareholders also voted down Mr. Einhorn's slate of three proposed directors, instead opting to re-elect GM's 11 incumbent directors that the U.S. auto giant proposed.

The outcome is a win for Ms. Barra and GM's directors amid mounting pressure on Detroit auto makers to respond to a growing threat from tech companies developing electric cars and self-driving vehicles. Ms. Barra, who is chairman in addition to CEO, lead a boardroom fight against the dual-class idea, claiming it amounted to financial engineering that would have hampered the company's ability to manage cyclical downturns and invest in future technologies.

Greenlight officials could not immediately be reached. More than 90% of GM shareholder votes cast rejected Greenlight's plan.

The shareholder vote comes just weeks after Ford Motor Co. ousted its chief executive, Mark Fields. Like Ms. Barra, Mr. Fields took over in 2014 after a career climbing the ranks in various management positions. He was replaced by Jim Hackett, an industry outsider who had served on Ford's board.

Still, GM could remain susceptible to future activist moves if Ms. Barra can't lift the share price. GM shares are stuck at the $33 initial public offering price from 2010 and the stock is among the cheapest in the S&P 500 on a price-to-earnings-ratio basis.

Shares of GM traded down modestly Tuesday morning at $34.27. GM's market valuation of $51.8 billion trails Tesla Inc.'s $57.6 billion valuation, an indication that Wall Street prizes future growth opportunities over near-term profit.

GM has delivered several years of strong profits under Ms. Barra. But auto sales are slowing in the U.S. and China, the company's two primary markets.

Ms. Barra told reporters ahead of the meeting that she believes GM shares are undervalued and she continues to explore ways to "unlock that value." But she also defended GM's record, which includes share buybacks and dividends, and big bets on future growth areas where Tesla and other Silicon Valley companies are seen as having a potential edge.

"We do believe that GM's stock is undervalued and we are taking decisive action to address this," she said.

Tesla faces its own proxy battle Tuesday, with certain shareholders pushing to have directors elected yearly rather than on three-year terms. The proposal is seen as a way to increase accountability.

Write to Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

June 06, 2017 10:57 ET (14:57 GMT)

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