Lear Corp., the auto-parts maker, reached an agreement with dissident shareholders Marcato Capital Management LLC and Oskie Capital Management LLC that includes expanding a stock buyback.
Under the agreement, Marcato and Oskie have withdrawn their slate of nominees for election to Lear’s board at the 2013 annual meeting next month and to vote their shares in support of the company’s nominees. Lear will expand the board to nine “as soon as practicable” after the meeting and add a director chosen by the company and the two shareholders.
Lear also agreed to accelerate and expand its plans to buy back shares. The Southfield, Michigan-based company said in a statement it repurchased $200 million of its shares in the first quarter and will buy back $800 million under an existing $1 billion plan within 12 months. The directors also authorized the repurchase of $750 million in shares after the $1 billion plan is completed.
“This is a pretty reasonable outcome,” Matthew Stover, an auto analyst with Guggenheim Securities in Boston, said in a telephone interview. “It puts the company in a more natural position of leverage long term without compromising its financial flexibility.”
Marcato and Oskie in February said they met with Lear management about ways to boost shareholder value, including repurchases. Lear on Feb. 7 said the board authorized management to increase pace of the $1 billion repurchase plan to be $600 million during 2013. Lear also increased its quarterly cash dividend 21 percent to 17 cents a share.
Lear gained 1 percent to $55.40 at the close in New York. The shares have increased 18 percent this year, more than the 9.5 percent gain in the Standard & Poor’s 500 Index.