Detroit – General Motors Corp. may face a proxy fight aimed at electing a new board after the resignation of a director who criticized the company’s rejection of an alliance sought by billionaire investor Kirk Kerkorian.
The Oct. 6 departure of Kerkorian aide Jerome York with a letter blasting GM’s board raises the prospect of a proxy contest and puts more pressure on chief executive Rick Wagoner to revive the world’s largest automaker, said John Casesa, an analyst with Casesa Strategic Advisors LLC in New York.
“The specter of a more hostile Kerkorian will add urgency to what is already an urgent situation,” Casesa said.
A proxy fight may be justified, said Bill Smith, chief executive of Smith Asset Management in New York, which holds about 60,000 GM shares.
“I would actually be for that,” Smith said. “You have a lot of dead weight on GM’s board.”
Wagoner, 53, will have to keep accelerating efforts to recover from a $10.6 billion 2005 loss as long as Kerkorian, his fourth-largest shareholder, is openly critical, Casesa said. For example, Wagoner may have to take a harder line with the United Auto Workers union over health benefits and jobs, Casesa said.
York, 68, resigned two days after GM announced the end of alliance talks with Carlos Ghosn’s Nissan Motor Co. and Renault SA. Kerkorian, 89, said in a filing disclosing York’s resignation that he may not buy any more GM shares. That sent the stock down 6.3 percent to $31.05, wiping out $1.18 billion in GM’s market value. Just eight days earlier, Kerkorian said he might boost his holdings.
Carrie Bloom, a spokeswoman for Kerkorian’s Tracinda Corp., declined to comment on his strategy. He has until Feb. 5 to submit nominees for new GM directors for the automaker’s 2007 annual meeting in June. GM spokesman Tony Cervone declined to comment on a possible proxy fight.
Nell Minow, editor of the Corporate Library in Portland, Maine, said she gives GM directors a grade of D for overall performance, saying they’ve failed to solve competitive problems.
