The move announced today is part of a deal with Harry Wilson, a former member of the government task force that restructured GM coming out of its 2009 bankruptcy. In exchange, Wilson agreed to withdraw his hostile candidacy for the Detroit automaker's board of directors.
Wilson had accused GM of hoarding cash to the detriment of shareholders and had sought an USD 8 billion buyback.
GM, which had USD 25.2 billion in cash at the end of last year, now says it will maintain a cash balance of USD 20 million and aim to keep its investment-grade status.
Negotiations with Wilson's group had been going on for about two weeks and culminated during the weekend, CEO Mary Barra said today. She wouldn't say much about the talks or whether Wilson was resistant to a smaller stock buyback than initially demanded. The company also talked with other major shareholders, who agreed with the buyback, she said.
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Barra indicated that the buyback might have come without Wilson's prodding. "We were on a path to do this anyway," she said today.
Stevens said today that the USD 20 billion cash reserve is high enough for GM to withstand the costs of its ignition switch recall and any potential economic downturn. The company, he said, had always stated that it planned to keep a USD 20 billion to USD 25 billion reserve. Because of efficiencies and cost cuts, the company could look at drawing that down even further, he said.