General Motors will buy back $5 billion in shares by the end of 2016 and return all available free cash flow to its shareholders in an agreement with dissident investors.

GM said Monday it reached a big deal with an investor group that avoid any issues over its balance sheet and governance, according to a GM release.

"We will continue to invest in innovative technologies and world-class vehicles that will deliver sustained profitable growth and maximize returns to shareholders," said GM CEO Mary Barra in a company statement.

As part of the deal, investor Harry Wilson will withdraw his nomination to get a seat on GM's board this June and drop his shareholder proposal.

Wilson, 43, praised the automaker's plan on Monday, which gives investors a clearer view of GM's cash investment proposals.

"We have arrived at a win-win outcome that includes a thoughtful approach to critical capital allocation issues and other important measures to increase long-term shareholder value," Wilson said in a statement released by the Detroit automaker.

Wilson, a former member of President Barak Obama's federal automotive task force, made headlines last month when he notified Barra that he would nominate himself for a seat on the board of GM and propose an $8 billion stock buyback.

GM confirmed in its release that the $5 billion buyback will start right away and conclude before the end of next year.

"GM is moving ahead with its comprehensive capital allocation framework, and constructive dialogue with our shareholders has helped ensure that we are addressing these key initiatives with the appropriate level of clarity and transparency," Barra said in a statement.

The Detroit automaker intends to keep a cash balance of $20 billion and return all available free cash flow to its shareholders while still maintaining its investment-grade rating.

Previously, GM was targeting a cash balance of $20 to $25 billion. 

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