Stephen Feinberg Reduces Stake in Ally Financial to Less Than 5%by
Ally Financial Inc. director Stephen A. Feinberg sold almost half his stake in the auto lender after a shareholder-advisory firm faulted his ability to use the stock as collateral for debt.
Feinberg, 56, who is chief executive officer of Cerberus Capital Management LP, sold 17.4 million shares this week and now owns 24.1 million shares of the Detroit-based firm, according to a regulatory filing Wednesday. That brings his stake from 8.6 percent to just below 5 percent, the level that requires reporting ownership to the Securities and Exchange Commission.
Institutional Shareholder Services last month urged Ally shareholders to vote against members of the board’s audit committee over a company policy that allows Feinberg to pledge the shares, which means they can be given to a lender to secure a debt. Ally’s investors on Tuesday approved the company’s entire slate of directors, with those on the audit committee receiving a lower percentage of ballots cast.
“Pledging of company stock by directors or executive officers can pose a risk to the investments of outside shareholders," James Miller, an analyst at Institutional Shareholder Services, said in an April 16 report. “Directors and executives with a pledged position may be forced to sell company stock," he said, which could affect the price.
A spokesman for Ally declined to comment on the sale, while Feinberg didn’t immediately respond to a phone call to Cerberus seeking comment.
Ally Chairman Franklin Hobbs called the proxy adviser’s recommendation “disappointing and misguided" in an April 19 letter to shareholders. Feinberg has been on the company’s board since 2009.
“We have a history with Mr. Feinberg which gives us complete confidence that he would always put us first," Hobbs said in a telephone interview last month.
Ally fell 1 percent to close at $16.91 in New York. The shares have dropped 9.3 percent this year.