Wednesday, June 07, 2006

GM likely to see dramatic meeting

GM likely to see dramatic meeting
Updated 6/6/2006 10:02 AM ET

By Sharon Silke Carty, USA TODAY

DETROIT — General Motors (GM) faces what is likely to be its second-straight contentious annual shareholders meeting Tuesday. But this time, activist shareholders have a prominent group backing some of their efforts.
At the 2005 meeting, GM was in the middle of a bad year that was getting worse. It had posted a $1.1 billion loss for the first quarter, refused to say how much it would lose for the year, and announced at the shareholders meeting it would look to cut 25,000 jobs.

Since then, the automaker has slashed its dividend in half, is facing a possible strike at its biggest supplier, and has hired an outside firm to look into its accounting department.

Today's meeting, in Wilmington, Del., is expected to provide its own drama. Although the board has publicly voiced its support for CEO Rick Wagoner, he'll likely face more than one shareholder suggesting it's time he step down.

Beyond that, a longtime shareholder has proposed his own slate of directors, although none has major corporate experience. John Lauve, a GM retiree from Holly, Mich., has organized a group of small investors to run for the board. One is a real estate agent, another an architect. Two own only one share of GM stock.

That idea isn't likely to go anywhere. Still, Institutional Shareholder Services, a firm that advises investors how to vote on proxy issues, backed four of six proposals by shareholders, including one that calls for separating the jobs of chairman and CEO. Wagoner currently has both.

ISS noted that Wagoner "recently implemented a series of long-term strategic changes, which were intended to restore the company's profitability. ... Although these changes had been well received in the marketplace, the company's stock price had not increased substantially, and significant challenges remain for the company."

GM is big enough to have two people performing the jobs of CEO and chairman, ISS said.

ISS also encouraged shareholders to vote for a proposal that would make executives pay back bonuses if the company later restates earnings for that time period. GM has restated earnings going back to 2001.

The shareholder services firm did not back the independent slate of directors but backed two proposals dealing with how directors are elected.

GM sent reminder letters and e-mails in late May encouraging investors to vote against the shareholder proposals, especially the independent directors.

"GM's board believes that electing the Lauve slate is not in the best interests of our stockholders, and strongly recommends that you vote in favor of the board's nominees," GM told investors.

Posted 6/6/2006 2:08 AM ET
Updated 6/6/2006 10:02 AM ET


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