Originally published Saturday, June 04, 2005


He won't be there, but corporate raider Kirk Kerkorian and his offer
to more than double his stake in General Motors Corp. will hang over
the proceedings at the automaker's annual shareholders meeting

The stunning bid by the billionaire investor, who has rattled
corporate boardrooms in the past by forcing companies to restructure
or sell off assets, to raise his stake in GM to nearly 9% has raised
expectations that this year's shareholder meeting will be more than
the usual fare of speeches, quick votes and free sandwiches.

The Las Vegas casino mogul's offer in May to buy as many as 28
million GM shares at $31 each through his investment firm Tracinda
Corp. gives shareholders upset by the decade-low stock price a chance
to sell out. Kerkorian's bid expires the same day as the shareholder
meeting, scheduled to be held in Wilmington, Del., where the Detroit
automaker is incorporated.

A lawyer for Kerkorian has said his client intends to be a passive
investor who will own GM shares solely for investment purposes and
not to force major changes at the automaker. But Kerkorian's own
history, including his attempted takeover of the former Chrysler
Corp. in the 1990s, suggests otherwise.

Some corporations have measures that thwart takeover attempts such as
a so-called poison pill that is triggered automatically to make a
company's stock less attractive when an unwanted buyer emerges. But
GM's corporate bylaws lack many common corporate defensive measures
that would prevent Kerkorian from forcing his handpicked slate of
candidates onto the company's board of directors, automotive analyst
Brian Johnson of investment firm Sanford Bernstein said in a recent

"GM's bylaws are surprisingly shareholder-friendly, without common
takeover defenses," Johnson wrote. "Tracinda could nominate his own
slate of directors for election in June 2006 or earlier by filing
written consents of a simple majority of shareholders. Given the
concentration of GM ownership, only about two dozen institutions
would be needed to unseat GM's board at any point in time."

Tracinda said this week that it won't increase its offer of $31 per
share, even as the stock trades above the proposed price. But a host
of other scenarios could play out.

For example, more than 28 million shares could be offered to
Kerkorian, who could opt to expand his offer and take more of GM. He
could also extend the offer for 20 more business days if not enough
shares are tendered.

GM Chairman and CEO Rick Wagoner faces troubles besides Kerkorian.
Earlier this week, GM reported a 12.6% drop in May U.S. vehicle
sales, forcing the automaker to cut third-quarter vehicle production
in North America by 10%, or 100,000 cars and trucks, to deal with
high inventories.

GM officials said they expect a big turnout by the national media
eager at to cover the problems facing one of America's largest
employers and biggest contributors to the national economy.

Among current shareholders who rode the more than 30% fall in GM
share price in the last year, some might be tempted to support
several shareholder proposals to be voted on at the meeting, said
John Lauve, a former GM manager.

Lauve, who retired to Holly after 30 years with GM, cosponsored a
proposal that would require only a majority of shareholders to vote
in favor of any item for it to be considered by the company. He also
sent his own slate of 12 alternatives for the GM board to investment
firms and mutual funds that own GM shares.

"Their record of failure is the most convincing reason for change,"
Lauve said of the current GM board.

Lauve, whose father was part of the creative team under famed
designer Harley Earl, estimates he has lost $40,000 to $50,000 from
GM's falling share price since he retired in 1999.

"I've worked 30 years for this company. My father worked for it
before I did. I cannot stand by and see this great company destroyed
by incompetent leadership. What happened to Kmart?" he asked,
referring to the Troy discount retailer that went bankrupt in 2002
and later merged with Sears Holdings Corp.

The GM board has urged investors to reject Lauve's and other
shareholder proposals. Lauve's proposed change is "misleading and
unnecessary" because items subject to a stockholder vote already
require only a majority vote to be approved, GM said in proxy
statement sent to shareholders.

But the California Public Employees' Retirement System (Calpers), a
pension fund for public service workers and the holder of about
486,000 GM shares, has said it will vote for four of the five
shareholder proposals, including Lauve's, over the wishes of the GM
board of directors. Calpers, which often voices support of corporate
reform, said on its Web site that Lauve's proposal is in line with
its own backing of greater accountability for corporate board

Another shareholder proposal cited a report by the Corporate Library,
a pro-investor research firm that gave GM's board of directors a "C"
grade for effectiveness.

The Corporate Library, based in Portland, Maine, concluded that too
many GM directors are busy working as chief executives of other
companies or serve on too many corporate boards to be effective in
leading the automaker. Philip Laskawy, a former partner at accounting
firm Ernst & Young, serves on six corporate boards, while former
Compaq Computer chief executive Eckhard Pfeiffer and Kent Kresa, the
former chief executive of defense firm Northrop Grumman Corp., both
serve on five boards, including GM, the Corporate Library said.

Even with Kerkorian's intentions foremost in the minds of investors,
GM's meeting could be "a little like most Super Bowls," said David
Sowerby, a senior portfolio manager with the $70-billion investment
firm and mutual fund company Loomis Sayles & Co. in Bloomfield Hills.

"You have a lot of expectations heading in. I would be surprised to
see anything major for the critical issues facing the company,"
Sowerby said, listing GM's rising health care and pension fund costs
as top concerns.

Even if Kerkorian and his advisers remain silent Tuesday, his looming
shadow over GM will make some investors consider buying GM's stock at
the current low price, Sowerby said. "It certainly makes you look
harder," he said.

"It's on my screen, but I haven't felt a strong urge to buy the