GM gives Wall Street $10 billion, and its competitors an edge

Even after a year that saw it recall some 30 million vehicles, General Motors managed to pull off solid profits in 2014, especially in North America, where its lineup has far fewer weak points than four years ago. That success had lured the attention of Wall Street, which saw GM's $25.2 billion cash horde as a lucrative target. Today, GM cut a deal to keep the wolves at bay, announcing it would spend $10 billion on dividends and share buybacks — and in the process, gave its competitors an opening.

The deal was ushered in at the insistence of Harry Wilson, one of the Wall Street types who managed GM's bankruptcy in 2009. Back then, Wilson was steering the government's plan to stiff some investors in favor of GM's other creditors and save the company. Last month, Wilson announced a new job as the point man for a group of investors with 1.2 percent of GM shares, and revealed he would campaign for a board seat to get GM to spend $8.1 billion on buying shares back by 2016.

The deal GM made with Wilson today avoids the proxy battle, but in some ways is sweeter for investors than what Wilson first proposed. GM will buy back $5 billion of its shares by 2016, but will throw out another $5 billion in dividends by the end of next year. It also set a goal of keeping $20 billion in cash on hand, and vowed that after spending for new models and replenishing its accounts, all other free cash flow would go to shareholders.

The news gave GM's shares a slight bump, and Wilson has said he's satisfied. It should also satisfy Toyota and Volkswagen, who will now have a financial edge on their largest rival.