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Einhorn's GM Director Battle Receives A Major Blow

Greenlight Capital's David Einhorn

A top shareholder advisory firm is recommending that shareholders support General Motors' (GM) incumbent board, a major blow to activist investor David Einhorn and his fund's director-election-battle and effort to force the automaker to split its stocks into two classes.

At issue is Einhorn's Greenlight Capital, which is seeking to elect three dissident director candidates at GM's annual meeting, set for June 6.

Einhorn hopes his nominees, if elected, will push GM to split its stock into two classes, one that the manager said would "satisfy investors who want predictable income" and another that would "satisfy investors who are interested in more rapid earnings per share growth."

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However, shareholder advisory firm Glass Lewis, one of two firms whose recommendations carry a lot of weight with investors, said in a report obtained by The Street that it agreed with the position of GM's incumbent board, adding that "there are a number of risks and uncertainties associated with Greenlight's plan." The proxy adviser added that Einhorn's proposal is "speculative in nature" and "that the potential costs may outweigh the potential benefits."

In addition Glass Lewis suggested that "the dual share...