One of the leading investor groups in GM recently challenged the current management strategy after announcing that it’s mulling a seat on the board of directors for an $8 billion share buyback plan.
According to Harry Wilson, the person leading the investor group and also a former member of the government-appointed task force that steered the largest US automaker out of bankruptcy restructuring, GM’s management has been slow at adopting changes and vague in its targets. “There is absolutely a lack of confidence amongst investors of the company achieving its targets,” commented Wilson for Reuters. “There’s a substantial amount of shareholder frustration.” The investor group believes the corporate leadership should move quicker in adopting strategies that would lift profitability and be more specific in presenting short-term performance milestones. GM revealed Wilson’s aspirations to a management board seat recently, with the former member of the US auto task force that helped the company since 2009 when it was under government control also mulling an $8 billion share buyback program.
Wilson commented that GM “has been quite slow” at adopting changes and it’s still underperforming its potential – the company has set aggressive 2016 and 2020 profit margin goals but failed to present the needed strategy to achieve them. The investor group leader also believed GM has “way more cash than it needs, and that creates an opportunity to buy back a stock that’s very cheap” – with the company probably finishing the year with around $30 billion in cash. He also called the $8 billion buyback plan actually “incredibly conservative” and argued that his group actually wanted to propose a larger buyback strategy.