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Greenlight Capital’s Letter To General Motors’ Shareholders

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Greenlight Capital sends a letter to General Motors’ shareholders asking them to vote for the proxy contest.

To Our Fellow Shareholders of General Motors Company:

While the share price of General Motors Company (“GM”) hovers around its IPO price, what are GM and its Board of Directors (the “Board”) doing to create value for shareholders?

Seemingly nothing. Or, at least nothing that is working.

Consider this simple fact: GM has the lowest price-to-earnings (P/E) ratio of any of the 500 companies in the S&P 500. The incumbent Board and management have failed to generate value for GM’s shareholders since its IPO, despite an equity bull market. We believe that more of the same thinking and the same capital structure is unlikely to lead to an increased valuation. Despite these problems, the Board and GM’s management appear uninterested in fixing GM’s inefficient capital structure so that the capital markets can properly recognize the intrinsic value of GM. They are resisting both our recommended new directors, who would bring fresh thinking to the Board, and our proposal to split the common stock into two classes of common equity (the “Plan”), which has the potential to unlock tens of billions of dollars in value.

A vote on the GREEN proxy card is a vote for increased shareholder value1.

Why are the incumbent directors resisting our Plan and our nominees, given that GM’s current strategy has not created value for shareholders over nearly seven years? We can only assume the current directors are not concerned about GM’s languishing stock price.

Instead of properly evaluating a well-intentioned and carefully developed plan presented by one of GM’s largest shareholders, the Board is wasting more than $15 million of shareholder money to maintain the status quo by misrepresenting our Plan, distracting you from their track record, and defending the incumbent team. We think that the Board can come up with a better use for those $15 million, and we believe our Plan will unlock value within GM’s stated financial policy constraints without causing any harm to GM. Being against change is easy. It would be nice if GM actually had a plan to advocate for.

Instead, GM’s Board and management are resisting change by hiding behind a credit rating agency red herring. GM claims that our Plan would definitively lead to a credit rating downgrade below investment-grade. But GM failed to advocate for the Plan to the credit rating agencies, never asked for a formal opinion and refused to let Greenlight pursue a formal opinion at no cost to GM. Instead, in an effort to undermine our Plan, GM presented the credit rating agencies with an altered version of our term sheet for the Plan, held conversations with the credit rating agencies without our involvement, and never explained to the credit rating agencies why the Plan would be credit neutral. We believe these actions, including GM’s willingness to call into question its own credit rating to undermine our Plan, are outrageous.

As shareholders, we need to insist on change. Please vote GREEN to show your support for new thinking and fresh perspectives at GM and on the Board. The Plan is an advisory proposal, meaning that if the Board concludes after serious consideration that the Plan is not the best capital structure strategy for GM, the Board is not forced to implement it.

Our three director nominees – Leo Hindery, Jr., Vinit Sethi and William N. Thorndike, Jr. – have the necessary experience operating large and complex companies, investing in the capital markets, evaluating capital structures and generating superior returns for investors to help refresh the GM boardroom and unlock shareholder value.

Voting GREEN is a win-win proposition. By voting the GREEN proxy card, you send a loud and clear message to the Board that you want change without affecting GM’s current operations.
More information about our nominees and the Plan are available at www.UnlockGMValue.com.

Please return the enclosed GREEN proxy card today – or vote online or by phone – to bring needed change to GM.


David Einhorn

Only the last proxy card you submit counts. If you have already submitted a white proxy card to GM, it is not too late to change your vote. To revoke your prior proxy, simply submit a GREEN proxy card or vote by phone or internet. Follow the instructions on the voting instruction card. If you have any questions about how to vote, please contact our proxy solicitor, D.F. King at 1- (800) 252-8173 or email to [email protected].

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