General Motors, the largest US automaker and the third biggest in the world, made a bold move last year promoting as its leader the first woman in the industry to become chief executive officer, Mary Barra.
The new manager has already proved her worth after in her first year as a leader she had to face the huge ignition switch scandal – while the company was universally panned for its late reaction to a defect that has cost more than 50 lives, her leadership was continuously seen as a beacon of hope. Now after the recall storm has just settled Barra has faced another problem – activist investors. Harry Wilson, a former member of the government appointed task force that helped the automaker recover from 2009’s bankruptcy procedure and a small group of funds proposed the automaker returned more of its cash to shareholders. The two parties agreed GM would introduce a $5 billion share buyback program and increase the dividends – while Wilson agreed to stop seeking a management board seat at the annual shareholder gathering scheduled in June.
Barra’s agreement – which could see up to $10 billion returned to investors in the next few years – could be a career-defining move as the carmaker has had a long history of failed products and money-losing expansion plans. The hook of the strategy ($5 billion returned in a share buyback and another $5 billion in dividends by 2017) is the automaker’s ability to bring 20 percent or better returns on cash invested in new vehicles, advanced technology and other capital projects.