DEFC14A 1 d348138ddefc14a.htm DEFC14A DEFC14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant                                                                      Filed by a Party other than the Registrant

 

 

Check the appropriate box:

 

 

   

 

 

 Preliminary Proxy Statement

 

   

 

 

 CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))

 

   

 

 

 Definitive Proxy Statement

 

   

 

 

 Definitive Additional Materials

 

     

 

 

 Soliciting Material Pursuant to ss.240.14a-12

 

GENERAL MOTORS COMPANY

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

Payment of Filing Fee (Check the appropriate box):

 

   

 

 

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 Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

   

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 Fee paid previously with preliminary materials.

 

 

   

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and  identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

   

 

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LOGO

 

general motors company proxy statement and notice of 2017 annual meeting of shareholders [                    ], 2017 | [            ] eastern time ct6 plug-in


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WHO WE ARE AND WHY WE ARE HERE...

 

 

LOGO    LOGO   LOGO   LOGO    LOGO

We earn

customers

for life

  

Our brands

inspire passion

and loyalty

 

We translate

breakthrough

technologies into

vehicles and experiences

that people love

 

We serve and improve

the communities in

which we live and work

around the world

  

We are building

the most valued

automotive

company

 

 

LOGO

 

GENERAL MOTORS COMPANY


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Letter from the Chairman & Chief Executive Officer

Dear Fellow Shareholder:

I am pleased to invite you to attend the 2017 Annual Meeting of Shareholders (“Annual Meeting”) of General Motors Company. It will be held at 9:30 a.m. Eastern Time on June 6, 2017, at the General Motors Global Headquarters, 300 Renaissance Center, Detroit, Michigan, 48265. Please see “How can I attend the Annual Meeting?” on page 94 for further instructions.

Our Plan is Working

GM’s record performance during the last three years and strong 2017 outlook are the direct result of the ongoing actions we’re taking to transform your Company and enhance shareholder value. Building on that commitment, we recently announced a transaction under which our Opel/Vauxhall European operations and our GM Financial European operations will become part of PSA Group. This is the latest in a series of decisions to continue the deployment of capital to higher-return opportunities, including in advanced technologies driving the future, and unlock significant value for our shareholders. Every major decision we make is focused on building sustainable, long-term value for our shareholders. Under our disciplined capital allocation plan we will continue to reinvest in the business to achieve a 20% or greater return on invested capital; maintain a strong, investment-grade balance sheet with a target cash balance of $18 billion (post-transaction); and return all remaining free cash flow to shareholders on an ongoing basis.

Key to Our Success

We place the customer at the center of everything we do and that guiding principle continued to drive our success in 2016. By designing a vehicle that met and exceeded customer demands in every essential category, the Chevrolet Bolt EV won North American Car of the Year and many other awards. As the transformation of our industry continues at an accelerating pace, the Bolt EV is breaking new ground, and we believe it is the beginning of a new phase of opportunity in electrification. The success of our winning portfolio of cars, trucks and crossovers is giving us the opportunity to invest in the initiatives that are enabling us to lead in the future of personal mobility. The convergence of connectivity, alternative propulsion, autonomous vehicles and the sharing economy is truly allowing us to stretch the boundaries of what is possible and develop vehicles that are safer, smarter, cleaner and more energy-efficient than ever before.

Corporate Social Responsibility

We strive to align environmental, social, and governance (“ESG”) issues to our purpose and values. As a transformative leader, GM delivers safer, simpler and better solutions for humanity to move forward and enhance life’s journey. Over the past year, I have worked with the Board to better position GM as forward-thinking and elevate our leadership profile and reputation among investors, policymakers and others as a leader in ESG best practices. We believe we have a unique opportunity to resolve important issues and contribute to decreasing pollution, congestion, and accidents, and do this while being transparent about the principles and policies that guide us forward.

Greenlight’s Proposal and Director Nominees

As we continue to navigate this period of extraordinary change, we received notice that a shareholder, Greenlight Capital, Inc. (“Greenlight”), intends to present at the Annual Meeting a proposal, which we have further described in this Proxy Statement in accordance with the materials we received from Greenlight. This proposal suggests that the current dividend on the Company’s existing common stock should cease and a new, additional class of common stock – so called “Dividend Shares” – should be distributed. These “Dividend Shares” would be exclusively entitled to a fixed dividend at the current amount in perpetuity, but would not share in future earnings upside and would have limited downside protection against negative risk. Dividends or share repurchases on our common shares could not occur before all dividends on the Dividend Shares, both past and current, had been paid, making the dividend payable on the Dividend Shares cumulative and significantly limiting our financial flexibility.

GM values the views of its owners and engaged directly with Greenlight on numerous occasions during the past seven months, including a meeting between Greenlight and members of your Board of Directors. After a thorough assessment, your Board of Directors unanimously concluded that Greenlight’s proposal would be a speculative and unproven change in capital structure that would create significant additional risks for GM’s shareholders and its business, and is not in the best interests of our shareholders.

The key risks your Board found in the proposal include: no positive effect on the Company’s underlying business or cash flows and, therefore, entirely speculative valuation impact; unknown, uncertain, and untested market demand and liquidity for the Dividend Shares, as well as the remaining common shares that would no longer be dividend-paying; substantially reduced financial flexibility resulting in the likely loss of GM’s investment grade credit rating; and material governance issues and conflicts as a result of the divergent objectives of the two classes of common stock.

Greenlight also intends to nominate a slate of three director nominees for election to the Board in support of its proposal, and in opposition to the highly qualified nominees recommended by your Board. Your Board has a well-defined process for selection of director candidates, which begins with a review of the strategic needs of the business and alignment of the Board’s entire mix of skills, qualifications, and experience toward driving effective oversight of these strategic objectives and initiatives. After a thorough review of each of the Greenlight candidates under this established process, your Board of Directors unanimously determined not to recommend any of the Greenlight candidates.

 


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This Proxy Statement and any additional communications GM provides on this topic will further outline the basis for your Board’s strenuous opposition to Greenlight’s proposal and director nominees.

Your Board has thoroughly evaluated Greenlight’s proposal and director nominees and recommends that you vote FOR GM’s nominees and AGAINST the Greenlight proposal by following the instructions on the enclosed WHITE proxy card.

Your Board and management team are singularly focused on the long-term interests of all of our shareholders. We have a highly engaged Board with a diverse range of expertise that drives effective oversight of our strategic priorities and operations. We encourage healthy constructive debate and we regularly challenge ourselves to make the tough decisions that are essential in times of significant change, such as the sale to PSA. It is clear that 2017 will be another year of progress as we advance the transformation of your Company.

Your vote this year is especially important. I encourage you to review this Proxy Statement and the Company’s other communications to its shareholders carefully.

Thank you for your support and interest in GM.

Sincerely,

 

LOGO

  

LOGO Mary T. Barra

Chairman & Chief Executive Officer

 

 

 


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Letter from the Board of Directors

Dear Fellow Shareholder:

General Motors Company is committed to sound corporate governance policies and practices that are designed and continually assessed to enable the Company to operate its business responsibly, with integrity, and in the long-term best interests of its shareholders. We are pleased to share our perspectives on the following key topics of importance to you.

Shareholder Engagement

A priority for us is to listen to shareholders’ views on the Company and incorporate them into our boardroom discussions. This dialogue helps us and the Company’s senior management team gain feedback on a variety of topics, including strategic and financial performance, executive compensation, board composition and leadership structure, as well as important environmental and social issues.

Following the 2016 Annual Meeting of Shareholders, members of the Board, including our Independent Lead Director and Compensation Committee Chair, met with 11 of our largest shareholders, representing approximately 25% of our outstanding common stock. In addition, one or more members of management met with over 80 shareholders throughout 2016 on various matters. The constructive insights, experiences and ideas exchanged during these engagements allows us to further evaluate and assess key initiatives from different perspectives and viewpoints.

Compensation Tied to Value Creation

We have enhanced our executive compensation program to further align it with our strategic priorities and to reward long-term business success. During our shareholder engagement initiatives, we received feedback regarding the structure and nature of our compensation programs. We believe we have designed a program that aligns with shareholder interests, incentivizes operational excellence, and recognizes individual performance, while remaining simple enough to demonstrate a clear linkage between compensation and performance. The revised program continues to minimize any incentive for management to take excessive risks.

Greenlight’s Proposal and Director Nominees

As Mary Barra indicated in her letter to you, GM has received notice that a shareholder, Greenlight, has proposed a slate of three nominees for election to the Board, in opposition to the highly capable nominees recommended by your Board, and in support of Greenlight’s own proposal. Greenlight’s proposal contemplates that the current dividend on the Company’s existing common stock should cease and a new, additional class of common stock – so called “Dividend Shares” – should be distributed that would be exclusively entitled to a fixed dividend at the current amount in perpetuity, but would not share in future earnings upside and would have limited downside protection against negative risk. Dividends or share repurchases on our common shares could not occur before all dividends on the Dividend Shares, both past and current, had been paid making the dividend payable on the Dividend Shares cumulative and significantly limiting our financial flexibility.

GM values the views of its owners, and has engaged directly with Greenlight on numerous occasions during the past seven months, including a meeting between Greenlight and members of the Board. Your Board and management have evaluated Greenlight’s idea and its director nominees thoroughly. As we describe in our response to Greenlight’s proposal, Item No. 7 in this Proxy Statement, we have unanimously concluded that the proposal would create significant additional risks for GM’s shareholders and its business. Management and your Board regularly review the Company’s strategy and capital allocation framework. We recently conducted an extensive review of various alternative capital allocation strategies, including Greenlight’s idea, changes in the pacing and/or nature of return of capital to shareholders, and the issuance or distribution of preferred or other securities. Together, the Board and management team, with expert advice from three top-tier investment banks, concluded that the Company’s existing capital allocation strategy is the right one to deliver long-term, sustainable value for GM’s shareholders.

Your Board has concluded that GM’s nominees for election as directors represent the best blend of experience, qualifications, and skills to provide effective oversight of the Company’s strategic plans and objectives. The selection of qualified directors is both complex and crucial to furthering the long-term interests of our shareholders. Candidates must be able to contribute significantly to the Board’s discussion and decision-making on the broad array of complex issues facing the Company. Your Board believes that each of the Board’s nominees brings the skills and experiences that are essential to the Board and complement the qualifications and expertise of the other Board members. In contrast, we believe the skills, experiences and qualifications of Greenlight’s nominees are not at the level of the Board’s nominees and that Greenlight’s nominees are being proposed in connection with Greenlight’s proposal, which your Board has rejected. We do not endorse any of Greenlight’s nominees and urge you to disregard Greenlight’s solicitation of votes for its nominees.

 


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Greenlight has filed with the SEC preliminary proxy materials indicating its intent to furnish a proxy statement to shareholders of the Company, together with a proxy card. Your Board unanimously and strongly urges you to disregard any proxy card that you receive from Greenlight. If you have previously submitted a proxy card sent to you by Greenlight, you can revoke that proxy and vote for the nominees recommended by the Board and on the other matters to be voted on at the Annual Meeting by using the enclosed WHITE proxy card.

Your Board unanimously recommends that you vote FOR the election of our 11 director nominees and AGAINST the Greenlight Proposal on the enclosed WHITE proxy card or voting instruction form.

Your Vote is Important

It is important that your shares be represented at the meeting whether or not you are personally able to attend. Accordingly, after reading the attached Notice of the 2017 Annual Meeting of Shareholders and Proxy Statement, please promptly submit your proxy by telephone, internet or mail as described in your WHITE proxy card. If you choose to submit your vote by additional proxy or voting instruction card, please sign, date and mail the WHITE proxy card in the enclosed postage-paid reply envelope.

We are honored to serve you. We encourage you to review this Proxy Statement and the Company’s other communications to its shareholders.

Sincerely,

The Board of Directors

The attached Proxy Statement is dated April 13 , 2017 and is first being mailed to shareholders on or about April 13, 2017.

If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor at the contact listed below:

INNISFREE M&A INCORPORATED

Shareholders (within the U.S. and Canada), call toll-free: +1 (877) 825-8964

Shareholders (outside the U.S. and Canada), call: +1 (412) 232-3651

Banks and Brokers, call collect: +1 (212) 750-5833

 


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Notice of 2017 Annual Meeting of Shareholders

 

 

April 13, 2017

Dear Fellow Shareholder:

You are cordially invited to attend the 2017 Annual Meeting of Shareholders (“Annual Meeting”) of General Motors Company (“GM”, “General Motors,” the “Company” or “we” or “our”) to be held on June 6, 2017, at the General Motors Global Headquarters, 300 Renaissance Center, Detroit, Michigan, 48265. At the meeting you will be asked to:

 

 

Elect the 11 Board recommended director nominees named in this Proxy Statement;

 

 

Approve, on an advisory basis, Named Executive Officer (“NEO”) compensation;

 

 

Approve the General Motors Company 2017 Short-Term Incentive Plan;

 

 

Approve the General Motors Company 2017 Long-Term Incentive Plan;

 

 

Ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2017;

 

 

Vote on a Rule 14a-8 shareholder proposal regarding independent board chairman, if properly presented at the meeting;

 

 

Vote on a shareholder proposal regarding creation of dual-class common stock submitted by Greenlight, if properly presented at the meeting; and

 

 

Transact any other business that is properly presented at the meeting.

Greenlight has notified us that it intends to nominate three individuals for election as directors to the Board at the 2017 Annual Meeting in opposition to the nominees recommended by the Board. You may receive solicitation materials from Greenlight, including proxy statements and proxy cards. We are not responsible for the accuracy of any information provided by or relating to Greenlight, its nominees, or the proposal contained in solicitation materials filed or disseminated by or on behalf of Greenlight or any other statements that Greenlight may make.

The Board does not endorse the nomination of Greenlight’s nominees and unanimously recommends that you vote on the WHITE proxy card or voting instruction form FOR the election of each nominee proposed by the GM Board. The Board also does not endorse Greenlight’s Proposal, and unanimously recommends that you vote on the WHITE proxy card or voting instruction form AGAINST the Proposal.

The Board strongly urges you not to sign or return any proxy card sent to you by Greenlight. If you have previously submitted a proxy card sent to you by Greenlight, you can revoke that proxy and vote for the nominees recommended by the Board and on the other matters to be voted on at the Annual Meeting by using the enclosed WHITE proxy card. Only the latest validly executed proxy card that you submit will be counted.

Record Date

You are entitled to vote at the meeting if you were a holder of record of GM common stock at the close of business on April 7, 2017.

Thank you for your interest in GM.

By Order of the Board of Directors,

 

LOGO

  

LOGO

Jill E. Sutton

Corporate Secretary and Deputy General Counsel, Corporate, Finance and Strategic Transactions

 

 

 

 

 

Meeting Information:

 

Date:   June 6, 2017

 

Time:   9:30 a.m. Eastern Time

 

Place:   General Motors Global Headquarters
     300 Renaissance Center
     Detroit, Michigan 48265

Your vote is important. So that your shares will be represented and voted at the meeting, please promptly submit your vote by Internet, telephone or by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided.

We are first mailing these proxy materials to our shareholders on or about April 13, 2017.

 

 

How You Can Access the Proxy Materials Online

 

Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Shareholders to Be Held on June 6, 2017.

 

Our Proxy Statement and 2016 Annual Report to Shareholders are available at gm.com/proxymaterials. You may scan the QR code below with your smartphone or other mobile device to view our interactive Proxy Statement or to view the Annual Report.

 

LOGO

 

   
 


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This Proxy Statement is provided in connection with the solicitation of proxies, by order of the Board of Directors of General Motors Company, to be used at the 2017 Annual Meeting of Shareholders of the Company.

In addition to this Proxy Statement and the WHITE proxy card or voting instruction form, the GM 2016 Annual Report is provided in this package or is available on the Internet.

 

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PROXY STATEMENT SUMMARY

     9  

BACKGROUND OF THE SOLICITATION

     10  

ITEM NO. 1  – ELECTION OF DIRECTORS

     13  
Nominees for Director Recommended by the Board      13  

Director Election Requirements

     15  

Director Nomination Process

     16  

Non-Employee Director Compensation

     23  

CORPORATE GOVERNANCE

     26  

Governance Highlights

     26  

Role of Board of Directors

     26  

Board Size

     26  

“Winning With Integrity” and Code of Ethics

     27  

Corporate Governance Guidelines

     27  

Director Independence

     27  

Board Leadership Structure

     28  

Executive Sessions

     30  

Board Committees

     30  

Access to Outside Advisors

     33  
Board and Committee Meetings and Attendance      33  
Board and Committee Oversight of Risk      33  
Succession Planning and Leadership Development      34  
Board and Committee Evaluations      34  
Annual Evaluation of CEO      34  
Director Orientation and Continuing Education      35  
Director Service on Other Public Company Boards      35  
Compensation Committee Interlocks and Insider Participation      35  
Shareholder Protections      36  
Certain Relationships and Related Party Transactions      36  
Public Policy Engagement      37  
Shareholder Engagement      37  
Corporate Responsibility, Environmental, and Sustainability Matters      38  

SECURITY OWNERSHIP INFORMATION

     39  
Security Ownership of Directors, Named Executive Officers, and Certain Other Beneficial Owners      39  
Stockholders Agreement      40  
Section 16(a) Beneficial Ownership Reporting Compliance      40  

 

EXECUTIVE COMPENSATION

     41  

Compensation Overview

     42  

Compensation Principles

     49  

Compensation Elements

     49  

Performance Measures

     50  
Performance Results and Compensation Decisions      54  
Compensation Policies and Governance Practices      60  

Compensation Committee Report

     61  

Executive Compensation Tables

     62  

Equity Compensation Plan Information

     72  

ITEM NO. 2 –

  Approval of, on an Advisory Basis, Named Executive Officer Compensation      73  

ITEM NO. 3 –

  Approval of the General Motors Company 2017 Short-Term Incentive Plan      74  

ITEM NO. 4 –

  Approval of the General Motors Company 2017 Long-Term Incentive Plan      77  

ITEM NO. 5 –

  Ratification of the Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for 2017      85  

Audit Committee Report

     86  
Fees Paid to Independent Registered Public Accounting Firm      87  
ITEM NO. 6 –   Shareholder Proposal Regarding Independent Board Chairman      88  
ITEM NO. 7 –  

Greenlight Proposal Regarding Creation of

Dual-Class Common Stock

     90  

QUESTIONS AND ANSWERS

     93  
APPENDIX A – General Motors Company 2017 Short-Term Incentive Plan      A-1  
APPENDIX B – General Motors Company 2017 Long-Term Incentive Plan      B-1  
APPENDIX C – Supplemental Information Regarding Participants      C-1  
 

 


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Proxy Statement Summary

This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully before voting.

 

 

General Information

 

 

     Meeting: 2017 Annual Meeting of Shareholders

 

     Date: June 6, 2017

 

     Time: 9:30 a.m. Eastern Time

 

     Place: General Motors Global Headquarters, 300 Renaissance Center, Detroit, Michigan, 48265

 

     Record Date: April 7, 2017

 

     Stock Symbol: GM

 

     Exchange: NYSE

 

     Transfer Agent: Computershare Trust Company, N.A.

 

     State of Incorporation: Delaware

 

     Corporate Website: gm.com

 

     Investors Website: gm.com/investors

 

     Annual Report: gm.com/annualreport

 

     Sustainability Report: gmsustainability.com

 

  

 

Corporate Governance

(see pages 26-38)

 

     Item No. 1: Election of Directors

 

     Director Nominees Recommended by Board: 11

 

     Director Term: One-year

 

     Director Election Standard: Plurality of votes cast in contested elections (majority voting standard in uncontested elections)

 

     Board Meetings in 2016: 8

 

     Standing Board Committees (Meetings in 2016):
Audit (8), Executive Compensation (6), Finance (5), Governance and Corporate Responsibility (5), and Risk (5)

 

     Right to Call Special Meetings: Yes

 

     Proxy Access: Yes

 

     Director-Investor Engagement Policy: Yes

 

     Governance Documents and Board Communications: gm.com/investors/corporate-governance.html

 

Your Board unanimously recommends a vote FOR all of our director nominees.

 

 

Executive Compensation

(see pages 41-72)

 

     Named Executive Officers

 

 

LOGO

  

Mary T. Barra

Chairman & Chief Executive Officer

 

LOGO

  

Charles K. Stevens III

Executive Vice President & Chief Financial Officer

 

LOGO

  

Daniel Ammann

President

 

LOGO

  

Mark L. Reuss

Executive Vice President, Global Product Development, Purchasing and Supply Chain

 

 

LOGO

  

Alan Batey

Executive Vice President & President, North

America

 

     Compensation Program Evolution

–    See page 45

 

     Changes for 2017

–    See pages 45-46

 

     Compensation Principles

–    See page 49

 

 

Other Items to be Voted On

(see pages 73-92)

 

Item

   Your Board’s
Recommendation

     Item No. 2: Approval of, on an Advisory Basis, Named Executive Officer Compensation

   FOR

     Item No. 3: Approval of the General Motors 2017 Short-Term Incentive Plan

   FOR

     Item No. 4: Approval of the General Motors 2017 Long-Term Incentive Plan

   FOR

     Item No. 5: Ratification of the Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for 2017

   FOR

     Item No. 6: Shareholder Proposal Regarding Independent Board Chairman

   AGAINST

     Item No. 7: Greenlight Proposal Regarding Creation of Dual-Class Common Stock

   AGAINST
  
 

 

LOGO

    9  


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Background of the Solicitation – Greenlight’s Proposal and Director Nominees

The Company evaluates its strategy and capital allocation framework on an ongoing basis. This evaluation also takes into account the perspectives of the Company’s shareholders, whose views are actively elicited, sought and received as a result of the Company’s shareholder engagement efforts.

Over a seven-month period, the Board and management extensively reviewed various capital allocation strategies and thoroughly considered the Greenlight Proposal, as well as the perspectives of other shareholders. In addition to the Greenlight Proposal, the Board considered other changes to the Company’s capital allocation strategy, including changes to the pacing and/or nature of return of capital to shareholders and the issuance or distribution of preferred or other securities. Following such review, the Board reaffirmed that the Company’s current capital allocation strategy, which includes investing in higher-return business opportunities, retaining a strong investment grade balance sheet, maintaining a target cash balance of $20 billion, and returning all remaining free cash flow to shareholders through dividends and share repurchases, is in the best interests of the Company and its shareholders.

In January 2017, under this framework, the Board approved the repurchase of up to an additional $5 billion of the Company’s common stock with no expiration date, in addition to completing the remaining portion of previously announced repurchase programs. On March 6, 2017, as part of the Company’s announcement of the sale of its Opel/Vauxhall subsidiary and GM Financial’s European operations, the Company announced that it would lower the cash balance requirement under its capital allocation framework by $2 billion, which it intends to use to accelerate share repurchases under these programs, subject to market conditions. The Company will continue to evaluate its capital allocation program regularly and consider the perspectives of the Company’s shareholders in doing so.

The summary below of the significant number of material contacts between the Company and Greenlight is intended to provide context to shareholders with respect to the Greenlight Proposal and Greenlight’s director nominees. During the period outlined below, the Company also engaged with other shareholders and took into account their perspectives in coming to the determinations reached by the Company’s Board and management team concerning the Company’s capital allocation strategy and, as a result, the Greenlight Proposal, as described above.

 

 

On August 11, 2016, David M. Einhorn, founder and president of Greenlight, contacted Chuck Stevens, Executive Vice President and Chief Financial Officer of the Company, by email to ask for a meeting in September to discuss an idea that Mr. Einhorn wanted to present to Mr. Stevens. In response to this email, Mr. Stevens arranged to meet with Mr. Einhorn on September 15, 2016.

 

 

At the September 15, 2016 meeting, attended by Mr. Einhorn, Mr. Stevens and other representatives of Greenlight and the Company, Mr. Einhorn delivered a presentation with respect to a concept he referred to as Dividend Shares. The presentation contemplated the distribution of newly created Dividend Shares to existing holders of common stock, stating that the Company’s dividends on existing common stock would be eliminated and reallocated to the Dividend Shares as a fixed cumulative dividend. The presentation stated that the Dividend Shares would be senior to the existing common stock, while the existing common stock would have voting rights and participate in the Company’s remaining earnings. The presentation also stated that if multiple dividends were missed on the Dividend Shares, then holders of Dividend Shares could demand board representation.

 

 

Although this presentation stated that the Dividend Shares could be either a separate class of common equity or a perpetual preferred stock, the terms of the Dividend Shares as set out in the presentation were consistent with the terms of a perpetual preferred stock, in that the Dividend Shares would be senior to the existing common stock and carry a fixed cumulative dividend as well as rights to board representation if dividends were in arrears. Accordingly, subsequent discussions regarding the proposal with representatives of Greenlight focused on a preferred stock structure, with Greenlight providing additional materials regarding such structure and the potential provisions of the proposed Dividend Shares.

 

 

On October 5, 2016, representatives of GM’s treasury and investor relations teams held a teleconference with Mr. Einhorn and other Greenlight representatives to discuss follow-up questions on the proposal. On October 31, 2016, representatives of GM’s treasury and investor relations teams and GM’s financial advisors met with representatives of Greenlight to review various potential considerations related to the proposal. On November 9, 2016, Mr. Stevens contacted Mr. Einhorn to follow up on the October 31, 2016 meeting.

 

10  

LOGO


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BACKGROUND OF THE SOLICITATION – GREENLIGHT’S PROPOSAL AND DIRECTOR NOMINEES

 

 

 

 

Through the month of November, the Company and its financial advisors continued to analyze the Greenlight proposal and various alternatives, including a dual-class common stock variant of the preferred stock structure. The Company also continued to conduct shareholder engagement initiatives, including as to matters relating to capital allocation and capital structure. In addition, the Company’s financial advisors held hypothetical discussions on a no-names basis with ratings agencies to explore the impact that the distribution of a security such as the one proposed by Greenlight would have on a major company’s credit rating. Members of the Board were kept apprised of the nature and status of the Company’s engagement with Greenlight, including the evaluation and ongoing analysis of the Greenlight proposal.

 

 

On December 6, 2016, Mr. Stevens, with representatives of GM’s treasury and investor relations teams and two of GM’s financial advisors, met with Mr. Einhorn and representatives of Greenlight to continue their discussion of issues raised by Greenlight’s proposal. On December 14, 2016, at a regularly scheduled meeting, the Board and management reviewed Greenlight’s proposal as put forth in the September 15, 2016 presentation and the discussions on the proposal between representatives of the Company and of Greenlight. The Board also reviewed the updated analyses of the proposal conducted by the Company’s management and financial advisors. Following deliberation, the Board determined that it was not in the best interests of the Company and its shareholders to pursue the proposal. On December 15, 2016, Mr. Stevens and other representatives of the Company met with Mr. Einhorn and other representatives of Greenlight to convey the Board’s decision not to move forward with Greenlight’s proposal.

 

 

On January 13, 2017, Mary Barra, Chairman & Chief Executive Officer of the Company, received a telephone call from Mr. Einhorn requesting a short discussion. Subsequently, on January 16, 2017, Ms. Barra, Mr. Stevens and Mr. Einhorn held a teleconference to discuss Greenlight’s proposal. Mr. Einhorn said that he continued to believe that the Dividend Share proposal would create value and that he believed that structuring the Dividend Shares as a second class of common stock rather than as a preferred stock could address concerns about the proposal’s potential negative impact on the Company’s credit ratings.

 

 

On January 25, 2017, Ms. Barra, Mr. Stevens and representatives of GM’s treasury and investor relations teams had a further discussion of the dual-class common stock variant of the proposal with Mr. Einhorn and other representatives of Greenlight by telephone. During the month of January, the Company and its financial advisors also refreshed and updated their prior analyses of a dual-class common stock variant of Greenlight’s proposal.

 

 

As part of the Company’s consideration of the dual-class common stock variant of Greenlight’s proposal, on January 30, 2017, a Greenlight representative sent an email to a representative of GM attaching proposed terms for the dual-class common stock variant. The proposed terms contemplated a pro rata distribution to GM’s shareholders of one Dividend Share for each share of existing common stock. The proposed terms also contemplated that the Dividend Shares would be entitled to a quarterly dividend in an amount equal to $0.38 per share. The proposed terms provided that if dividends on the Dividend Shares were in arrears, the Company would not be able to repurchase or pay dividends on the existing common stock. The proposed terms contemplated that the Dividend Shares would be entitled to one-tenth of a vote per share, except that the Dividend Shares would have a separate class vote to approve a change of control of the Company.

 

 

Later on January 30, 2017, Ms. Barra, Mr. Stevens and representatives of GM’s treasury and investor relations teams again discussed the proposal, as well as the proposed terms, with Mr. Einhorn and other representatives of Greenlight. In response to questions seeking more clarity with respect to the dual-class common stock proposal, Mr. Einhorn referred back to Greenlight’s September 15, 2016 presentation and said that the proposal was still essentially the same as set forth in that presentation. Mr. Einhorn also stated that he was considering submitting the Dividend Share proposal as a shareholder proposal at the Annual Meeting as well as a slate of four to five director nominees.

 

 

In early February, representatives of the Company spoke with representatives of three credit rating agencies on a named basis to explore the impact that the Dividend Share proposal could have on the Company.

 

 

On February 6, 2017, at a telephonic meeting, the Board received an update on the further discussions with Greenlight, and the further analyses of the proposal conducted by the Company’s management and financial advisors. Based on this review, the Board again determined that it was not in the interests of the Company and its shareholders to pursue the proposal. Later on February 6, 2017, the Company received a notice from Greenlight (the “Greenlight Notice”) of its intent to nominate a slate of four nominees to stand for election to the Board at the Annual Meeting and of its intent to present the Greenlight Proposal as a shareholder proposal at the Annual Meeting.

 

LOGO

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BACKGROUND OF THE SOLICITATION – GREENLIGHT’S PROPOSAL AND DIRECTOR NOMINEES

 

 

 

 

On February 17, 2017, outside counsel for the Company sent to outside counsel for Greenlight a directors’ questionnaire and requested that each of Greenlight’s nominees complete and return the questionnaire. On February 23, 2017, Greenlight’s outside counsel sent the completed questionnaires from Greenlight’s nominees to the Company’s outside counsel.

 

 

On March 6, 2017, the Company and PSA Group announced an agreement under which the Company’s Opel/Vauxhall subsidiary and GM Financial’s European operations will join the PSA Group. Later that day, representatives of the Company and representatives of Greenlight had a call to discuss Greenlight’s questions with respect to the transaction.

 

 

On March 16, 2017, Mr. Stevens and representatives of the Company had a telephonic discussion with representatives of Greenlight about the Company’s interactions with the credit rating agencies regarding the Greenlight Proposal.

 

 

On March 22, 2017, Mss. Barra, Mendillo, and Stephenson and Messrs. Mullen, Mulva, Schoewe, and Solso met with Mr. Einhorn and representatives of Greenlight. At the meeting, Mr. Einhorn and the representatives of Greenlight delivered a presentation and responded to questions regarding the Greenlight Proposal and the Greenlight nominees.

 

 

On March 25, 2017, the Board held a telephonic meeting to discuss the Greenlight Proposal and the Greenlight nominees. The Board unanimously determined that the Greenlight Proposal was not in the best interests of the Company or its shareholders. On the unanimous recommendation of the Governance and Corporate Responsibility Committee, the Board also unanimously determined not to recommend any of the Greenlight nominees for election to the Board.

 

 

On March 27, 2017, Ms. Barra called Mr. Einhorn to inform him that the Board had unanimously determined to reject the Greenlight Proposal and not to recommend any of the Greenlight nominees for election to the Board.

 

 

On March 28, 2017, Greenlight publicly issued a statement and a presentation in support of the Greenlight Proposal. On the same day, the Company publicly issued a statement and a presentation setting forth the reasons for the Board’s determination to reject the Greenlight Proposal and not to recommend any of the Greenlight nominees.

 

 

On April 12, 2017, Greenlight filed preliminary proxy materials with respect to the Greenlight Proposal and proposing a slate of three Greenlight nominees.

 

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ITEM NO. 1 – ELECTION OF DIRECTORS

Nominees for Director Recommended by the Board

Your Board recommends a vote FOR all of the nominees listed below.

 

LOGO

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

 

LOGO

 

LOGO   LOGO

The selection of qualified directors is critical to the long-term success of GM and its shareholders. Director nominees must be able to contribute significantly to the Board’s discussion and decision-making on the broad array of complex issues facing the Company. The Board’s established process for director selection is well-defined and comprehensive, and it begins with an assessment of GM’s strategic objectives and the skills, experience and qualifications needed to further those objectives. Through that process, your Board has determined that its nominees for election as director collectively represent the best mix of experience, qualifications and skills to further the long-term interests of all shareholders. We do not endorse any of Greenlight’s nominees and urge you to disregard Greenlight’s solicitation of votes for its nominees.

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

Director Election Requirements

All directors stand for election annually. Upon the recommendation of the Governance and Corporate Responsibility Committee (“Governance Committee”), the Board has nominated each of the 11 persons identified below to serve as director for a one-year term or until his or her successor has been duly elected and qualified or until his or her earlier resignation or removal. Each director nominee recommended by the Board was elected to the Board at the 2016 Annual Meeting.

We urge you to sign and return the WHITE proxy card or voting instruction form or vote by Internet or telephone. By doing so, the Proxy Committee (comprised of Mary T. Barra, Daniel Ammann, and Charles K. Stevens, III) will vote your shares for all 11 nominees described in the following section, unless you indicate on the WHITE proxy card or voting instruction form to withhold authority to vote for one or more of such nominees. Each director will serve until the next annual meeting of shareholders and until a successor is elected and qualified, or until his or her earlier resignation, removal, or death. If any of the Board’s nominees for director becomes unavailable to serve before the Annual Meeting (which we do not anticipate), the Board may decrease the number of directors to be elected or designate a substitute nominee for that vacancy.

We have received notice pursuant to Section 1.11 of our Bylaws that Greenlight intends to nominate its own slate of nominees for election to the Board at the Annual Meeting. Greenlight has indicated its intent to furnish a proxy statement to shareholders of the Company, together with a proxy card. We believe based on Greenlight’s notice that the election of directors at the Annual Meeting will be a contested election. Our bylaws provide that in a contested election, all directors are to be elected under a plurality voting standard. Under the plurality voting standard, the 11 persons who receive the greatest number of votes are the persons elected to the Board for the following year. “Withhold” votes will be counted as present for purposes of this vote but are not counted as votes cast.

 

Your Board does not endorse any Greenlight nominee and unanimously recommends that you disregard any proxy card that may be sent to you by Greenlight. Your Board affirmatively determined that each of our 11 nominees qualifies for election to the Board under the established and rigorous criteria for director candidates described in the next section and unanimously recommends that you vote on the WHITE proxy card and voting instruction form FOR the election of each of our nominees listed below.

Please note that voting to “Withhold” with respect to the Greenlight nominees on Greenlight’s proxy card is not the same as voting for our Board’s nominees because a vote to “Withhold” with respect to any of the Greenlight nominees on Greenlight’s proxy card will revoke any proxy you previously submitted. If you have already voted using Greenlight’s proxy card, you have every right to change your vote by voting via the Internet or by telephone by following the instructions on the WHITE proxy card, or by completing and mailing the enclosed WHITE proxy card in the enclosed postage-paid envelope. Only the latest validly executed proxy that you submit will be counted—any proxy may be revoked at any time prior to its exercise at the Annual Meeting.

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

Director Nomination Process

Nominees for election as director are proposed by the Board upon recommendation of the Governance Committee.

The Governance Committee annually reviews the appropriate skills and characteristics needed for the Board to effectively perform its oversight function, including importantly, the continued execution of GM’s strategic priorities. Nominees are recommended to the Board, after considering current Board composition, Company strategy and other relevant facts and circumstances, including the director’s history of attendance and participation in meetings, other contributions to the activities of the Board and GM, active participation in orientation and ongoing educational events, the results of Board self-evaluations and any potential or actual conflicts of interest.

The selection of qualified directors is fundamental to the Board’s successful oversight of GM’s strategy and ongoing operations. The Governance Committee’s and the Board’s priorities for recruiting new Board members may vary at times, depending on the Company’s needs and the makeup of the Board at such time. In every case, candidates must be able to contribute significantly to the Board’s discussion and decision-making on the broad array of complex issues facing the Company. The Governance Committee has historically engaged a reputable, qualified search firm to help identify and evaluate candidates.

As part of its comprehensive process for selecting nominees for the Board, our Governance Committee utilizes a detailed skills matrix to consider the particular experience, qualifications, and attributes of current Board members and prospective candidates. The Governance Committee seeks nominees who, taken together as a group, possess the skills, diversity, and expertise appropriate for maintaining a well-rounded and effective Board aligned with achievement of the Company’s business strategy and operations. In evaluating potential director candidates, the Governance Committee considers, among other factors, the criteria listed below and any additional characteristics that it believes one or more directors should possess, based on an assessment of the needs of our Board at that time.

 

LOGO   Significant leadership experience over an extended period, especially as CEO; extraordinary leadership qualities; and the ability to identify and develop those qualities in others.
LOGO   Leadership in automotive or related industry. Expertise in key businesses and proven knowledge of key customers and risks associated with the business.
LOGO   Experience in managing significant manufacturing operations.
LOGO   Understanding of technology and innovation through academia or industry experience.
LOGO   Relevant risk management oversight and experience.

LOGO

 

  Global business and cultural experience.

LOGO

 

  Expertise in complex financial and accounting matters.

LOGO

 

  Knowledge of global government relations, public policy, and regulatory matters.
LOGO   Marketing experience, including digital marketing, brand and product awareness; social media experience.
LOGO   Diversity of perspective, professional experience, age, and background, such as gender, race, ethnicity, and country of origin.

The Governance Committee considers individuals with a broad range of business experience and varied backgrounds. Although GM does not have a formal policy governing diversity among Board members, the Board strives to identify candidates with diverse backgrounds. We recognize the value of overall diversity and consider members’ and candidates’ opinions, perspectives, personal and professional experiences, and backgrounds, including gender, race, ethnicity, and country of origin. We believe that the judgment and perspectives offered by a diverse board of directors improves the quality of decision making and enhances the Company’s business performance. We also believe such diversity can help the Board respond more effectively to the needs of customers, shareholders, employees, suppliers, and other stakeholders worldwide.

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

Pursuant to the Stockholders Agreement dated October 15, 2009 between the Company and the UAW Retiree Medical Benefits Trust (the “VEBA Trust”), the VEBA Trust has the right to designate one nominee to our Board for so long as it holds 50% of the shares of GM’s common stock that it initially acquired, subject to the consent of the UAW and approval by the Board (not to be unreasonably withheld). The VEBA Trust has designated Mr. Ashton, who has been recommended by the Governance Committee and nominated by the Board as part of the slate of candidates it recommends for election at the Annual Meeting.

The Governance Committee will consider persons recommended by shareholders for election to the Board. To recommend an individual for Board membership, write to Jill E. Sutton, Corporate Secretary and Deputy General Counsel, Corporate, Finance and Strategic Transactions (“Corporate Secretary and Deputy General Counsel”) of our Company, at the mailing address or e-mail address provided on page 98 in “How can I obtain the Company’s corporate governance information?” The Governance Committee will review the qualifications and experience of each recommended candidate using the same criteria for candidates proposed by Board members and communicate its decision to the candidate or the person who made the recommendation.

 

u   Information About Your Board’s Nominees for Director

Set forth below is information about our nominees, including their name and age, recent employment or principal occupation, their period of service as a GM director, the names of other public companies for which they currently serve as a director or have served as a director within the past five years, and a summary of their specific experience, qualifications, attributes, and skills that led to the Board’s conclusion that they are qualified to serve as a director on our Board at this time.

 

LOGO

   

 

Mary T. Barra, Chairman & Chief Executive Officer,

General Motors Company (since January 2016)

  LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
   

 

   

 

Age: 55  •  Director Since: 2014  •  Committees: Executive (Chair)

Current Public Company Directorships: General Dynamics Corporation

 
   

 

 

Prior Experience:

 

  CEO of GM since January 2014

 

  Executive Vice President, Global Product Development, Purchasing and Supply Chain from 2013 to 2014

 

  Senior Vice President, Global Product Development from 2011 to 2013

 

  Vice President, Global Human Resources from 2009 to 2011

 

  Vice President, Global Manufacturing Engineering from 2008 to 2009

Reasons for Nomination:

With more than 36 years at GM and having served in various leadership roles prior to becoming Chairman & CEO, Ms. Barra brings to our Board an in-depth knowledge of the Company and the global automotive industry. She has extensive leadership, strategic planning, operating and business experience and a deep understanding of the Company’s strengths, weaknesses, risks and challenges. Under her leadership, GM is focused on being the most valued automotive company by strengthening its core business of building great cars, trucks and crossovers, while also working to lead the transformation of personal mobility through advanced technologies such as connectivity, electrification, autonomous driving and car sharing. She has also established GM’s corporate culture and strategic direction based on putting the customer at the center of everything we do, all around the world, with quality and safety as foundational commitments.

    

As Chairman & CEO, Ms. Barra is able to focus the Board’s oversight and drive the most efficient execution of GM’s strategic plan and vision for the future. In addition to her demonstrated leadership and management skills, Ms. Barra’s strong engineering background and extensive experience in global product development enables her to provide significant insight to the Board on one of the most critical and complex parts of GM’s business. Her previous leadership roles in purchasing and supply chain, human resources and manufacturing engineering also allow her to contribute to Board deliberations on matters regarding those key areas of the Company. Ms. Barra’s service to GM and experience in serving as a director of another large public company with complex, global operations provide her with valuable knowledge of governance matters facing large public companies.

 

 

 

 

 

     LOGO   Senior Leadership       LOGO   Industry       LOGO   Manufacturing       LOGO   Technology       LOGO   Risk Management       LOGO   Global       LOGO   Finance       LOGO   Government       LOGO   Marketing       LOGO   Diversity    

 

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

LOGO   

  Theodore M. Solso, Independent Lead Director, General Motors Company (since January 2016)
  and Retired Chairman & Chief Executive Officer, Cummins, Inc.
(since 2011)
  LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
 

 

 

Age: 70  •  Director Since: 2012  •  Committees: Executive

Current Public Company Directorships: Ball Corporation (Lead Director)

Prior Public Company Directorships: Ashland Inc. (1999 to 2012), where he was Lead Director from 2003 to 2010

 

 

 

Prior Experience:

 

  Non-Executive Chairman of the GM Board of Directors from January 2014 to 2016

 

  Chairman & Chief Executive Officer of Cummins, Inc. (“Cummins”) from 2000 until his retirement in 2011

 

  President & Chief Operating Officer of Cummins, Inc. from 1995 to 2000

 

 

Reasons for Nomination:

Mr. Solso gained significant senior management experience during his 40-year career at Cummins, which culminated in his role as Chairman and CEO. He brings to our Board his experience and insight into the complexities of managing a major global organization, including the importance of vehicle and workplace safety. Mr. Solso led Cummins through strong financial performance and shareholder returns, international growth, business restructuring, and leadership in emissions reduction technology and related environmental activities, corporate responsibility, diversity, and human rights issues. His extensive experience in manufacturing and engineering of diesel

    

engines and compliance with challenging emissions laws and regulations enables him to contribute significantly to Board deliberations regarding GM’s global product development strategies. His previous experience in serving as U.S. Chairman of the U.S.-Brazil CEO Forum provides valuable insight into advancing the business priorities of our operations in South America. In addition to his deep understanding of global markets and business operations and corporate responsibility, Mr. Solso brings to our Board his experience as a lead director of other large, global public companies, particularly in the areas of finance, accounting and corporate governance.

 

 

 

 

 

LOGO   

 

 

Joseph J. Ashton, Retired Vice President, United Auto Workers (since 2014)

     LOGO    LOGO    LOGO
 

 

 

Age: 68  •  Director Since: 2014  •  Committees: Finance, Risk

Current Public Company Directorships: None

 

    
 

 

 

Prior Experience:

 

  Vice President of the International Union, United Automobile, Aerospace and Agricultural Workers of America (the “UAW”) from 2010 until his retirement in 2014

 

  Director of the UAW’s Region 9 (Central New York, New Jersey, and Pennsylvania) from 2006 to 2010

 

  Assistant director of UAW’s Region 9 from 2003 to 2006

 

  Member of the UAW International staff from 1986 to 2014

 

  Active in labor and civic affairs, including previously serving as Executive Vice President of the Pennsylvania AFL-CIO Executive Council and Executive Vice President of the New Jersey AFL-CIO

Reasons for Nomination:

During his career with the UAW, Mr. Ashton played a key role in organizing campaigns and contract negotiations with major manufacturing and technology companies in a variety of industries, including vehicle components, defense, aerospace, steel, and marine products. Based on these experiences, he has developed a deep understanding of how labor strategy can affect a company’s financial success, including expertise in areas such as manufacturing processes, pension and

    

health care costs, government relations, employee engagement and training, and plant safety.

Mr. Ashton brings to our Board his knowledge of labor relations matters which is valuable with respect to the Company’s ongoing labor considerations, as well as GM’s commitment to industry leadership in global workplace safety.

Mr. Ashton was designated for nomination to the GM Board by the VEBA Trust.

 

 

 

 

 

     LOGO   Senior Leadership       LOGO   Industry       LOGO   Manufacturing       LOGO   Technology       LOGO   Risk Management       LOGO   Global       LOGO   Finance       LOGO   Government       LOGO   Marketing       LOGO   Diversity    

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

LOGO      Linda R. Gooden, Retired Executive Vice President, Information Systems & Global Solutions, Lockheed Martin Corporation (since 2013)    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
 

 

 

Age: 64  •  Director Since: 2015  •  Committees: Audit, Risk

Current Public Company Directorships: Automatic Data Processing, Inc., The Home Depot, Inc., and WGL Holdings, Inc. (“WGL”) and Washington Gas Light Company, a subsidiary of WGL

 

 

 

Prior Experience:

 

  Executive Vice President, Information Systems & Global Solutions (“IS&GS”) of Lockheed Martin Corporation (“Lockheed”) from 2007 to 2013

 

  Deputy Executive Vice President, Information and Technology Services of Lockheed from October to December 2006

 

  President, Information Technology of Lockheed from 1997 to December 2006

 

 

Reasons for Nomination:

Ms. Gooden brings to our Board her strong leadership capability demonstrated through her various senior leadership positions at Lockheed. She has significant operations and strategic planning expertise and an extensive background in information technology (“IT”) and cybersecurity. Under her leadership as Executive Vice President of IS&GS, Lockheed expanded its IT capabilities beyond government customers to international and commercial markets. In her role as President of Lockheed’s IT division, Ms. Gooden grew the business to become a multibillion-dollar business. Her deep knowledge of IT and

 

cybersecurity adds a valuable perspective to our Board deliberations regarding GM’s IT function, and various technology systems and processes, including those related to mobility and autonomous vehicles. Moreover, Ms. Gooden brings to our Board her experience in business restructuring, finance, and risk management. She also brings her experience as a director at other large, global public companies, particularly in the areas of finance, audit, strategic investments, acquisitions, divestitures, and technology and innovation.

 

 

 

 

LOGO     

 

Joseph Jimenez, Chief Executive Officer, Novartis AG (since 2010)

   LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
 

 

 

Age: 57  •  Director Since: 2015  •  Committees: Executive Compensation, Governance and Corporate Responsibility Current Public Company Directorships: None

Prior Public Company Directorships: Colgate-Palmolive Company (2010 to 2015)

 

 

 

Prior Experience:

 

  Head of the Novartis AG’s (“Novartis”) Pharmaceuticals Division from October 2007 to 2010

 

  Head of Novartis’ Consumer Health Division from April to October 2007

 

  Advisor to the Blackstone Group L.P., a private equity firm, from 2006 to 2007

 

  President & Chief Executive Officer of H. J. Heinz Company (“Heinz”) North America from 2002 to 2006

 

  Executive Vice President, President & Chief Executive Officer of Heinz Europe from 1999 to 2002

 

  Held various leadership positions at ConAgra Foods Inc. (“ConAgra”), including President and Senior Vice President of two operating divisions from 1993 to 1998

Reasons for Nomination:

Mr. Jimenez brings to our Board significant international and operational leadership, strategic planning, and business and finance experience gained through his role as CEO of Novartis, a complex, global company in a highly regulated industry, and previously as President of various operating divisions at Heinz and ConAgra. Mr. Jimenez has a long track record in consumer businesses, which enables him to bring a consumer orientation and valuable insight to Board deliberations regarding our strategy to enhance the customer experience and earn customers

    

for life. Moreover, he has business restructuring expertise, and he executed significant business transformations and innovations at both Heinz and Novartis, which has enabled him to make significant contributions to our Board as we continue to evaluate the structure of our global business. Mr. Jimenez also brings to our Board his prior experience as a director of another large, global public company, including service on its governance and finance committees.

 

 

 

 

 

 

     LOGO   Senior Leadership       LOGO   Industry       LOGO   Manufacturing       LOGO   Technology       LOGO   Risk Management       LOGO   Global       LOGO   Finance       LOGO   Government       LOGO   Marketing       LOGO   Diversity    

 

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

LOGO      Jane L. Mendillo, Retired President & Chief Executive Officer, Harvard Management Company (since 2014)   LOGO    LOGO    LOGO    LOGO    LOGO
 

 

 

Age: 58  •  Director Since: 2016  •  Committees: Audit, Finance

Current Public Company Directorships: Lazard Ltd

 

 
 

 

 

Prior Experience:

 

  President & Chief Executive Officer of the Harvard Management Company (“HMC”) from 2008 to 2014, managing Harvard University’s approximately $37 billion global endowment and related assets

 

  Chief Investment Officer of Wellesley College from 2002 to 2008

 

  Previously, spent 15 years at HMC in various investment roles

 

  Chair of the investment committee of the Partners Healthcare System

 

  Member of the board of directors and investment committees of the Mellon Foundation

 

  Senior Investment Advisor to the Old Mountain Private Trust Company

 

  Member of the Board of Berklee College of Music

 

Reasons for Nomination:

Ms. Mendillo brings to the Board valuable financial perspective and extensive investment management experience. In addition, she brings to our Board strong senior leadership and risk management experience, as well as capital markets expertise, from her over 30 years managing globally diverse portfolios in the endowment and investment management field. As President and CEO of HMC, she successfully led the company through the financial crisis, repositioning the endowment and reestablishing a world-class investment platform to support Harvard’s future educational and research

 

goals. As the Chief Investment Officer of Wellesley College, she built the college’s first investment office and delivered substantial growth in the college endowment through a period of rapidly changing market conditions. Ms. Mendillo’s background and extensive experience has enabled her to make a significant contribution to the Board’s oversight of GM’s strategic initiatives, particularly the evaluation of GM’s disciplined capital allocation framework and its financial policies and transactions and varied financial and risk management issues.

 

 

 

 

 

LOGO      Admiral Michael G. Mullen, Former Chairman, Joint Chiefs of Staff (since 2011)      LOGO    LOGO    LOGO    LOGO    LOGO
 

 

 

Age: 70  •  Director Since: 2013  •  Committees: Audit, Executive, Risk (Chair)

Current Public Company Directorships: Sprint Corporation

 

    
 

 

 

Prior Experience:

 

  17th Chairman of the Joint Chiefs of Staff from 2007 until his retirement in 2011

 

  28th Chief of Naval Operations (“CNO”) from 2005 to 2007, one of four different four-star assignments he held; the other two included, Commander U.S. Naval Forces Europe/Commander Allied Joint Force Command Naples, and the 32nd Vice CNO

 

  President of MGM Consulting LLC since 2012

 

  Charles and Marie Robertson Visiting Professor at the Woodrow Wilson School of Public and International Affairs at Princeton University

 

Reasons for Nomination:

Admiral Mullen brings to our Board extensive senior leadership experience gained over his 43-year career in the U.S. military. As Chairman of the Joint Chiefs of Staff, the highest-ranking officer in the U.S. military, Admiral Mullen led the armed forces during a critical period of transition, overseeing two active war zones. His involvement in key aspects of U.S. diplomacy, including forging vital relationships with diverse countries around the world, brings valuable insight to our Board as we continue to evaluate the structure of our global business. In addition to having strong global relationships, Admiral Mullen has deep

 

experience in leading change in complex organizations, risk management, crisis management, executive development and succession planning, diversity implementation, strategic planning, budget policy, cybersecurity, and technical innovation, all of which are important to the oversight of GM’s strategic initiatives. This depth of experience enables him to make a significant contribution to our Board, including with respect to GM’s efforts to continue to transform its safety culture to become an industry leader in vehicle and workplace safety. Admiral Mullen also brings his experience as a director of another large public company.

 

 

 

 

 

     LOGO   Senior Leadership       LOGO   Industry       LOGO   Manufacturing       LOGO   Technology       LOGO   Risk Management       LOGO   Global       LOGO   Finance       LOGO   Government       LOGO   Marketing       LOGO   Diversity    

 

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

LOGO

    James J. Mulva, Retired Chairman & Chief Executive Officer, ConocoPhillips (since 2012)    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
   

 

   

Age: 70  •  Director Since: 2012  •  Committees: Executive, Executive Compensation, Finance (Chair), Risk

Current Public Company Directorships: General Electric Company

Prior Public Company Directorships: Statoil ASA (2013 to 2015)

   

 

 

Prior Experience:

 

  Chairman & Chief Executive Officer of ConocoPhillips from 2004 until his retirement in 2012

 

  Chairman, President & Chief Executive Officer of ConocoPhillips from 2004 to 2008

 

  President & Chief Executive Officer of ConocoPhillips from 2002 to 2004

Reasons for Nomination:

Mr. Mulva brings to our Board 39 years of experience in the energy industry, first at Phillips Petroleum Company (“Phillips”) and then ConocoPhillips. Prior to overseeing the merger of Conoco and Phillips in 2002, Mr. Mulva served as Chairman and CEO of Phillips, where he also held various domestic and international senior management positions in finance, including Executive Vice President and Chief Financial Officer. As CEO of Phillips and later ConocoPhillips, Mr. Mulva oversaw mergers and acquisitions, business restructurings, and negotiated joint ventures, positioning the company to

 

compete in an increasingly challenging and highly competitive industry. Prior to his retirement from ConocoPhillips, Mr. Mulva oversaw the strategic repositioning of the company to split its fuel production and refining businesses. Mr. Mulva’s global strategic manufacturing expertise and keen risk and safety management experience allows him to make a significant contribution to board deliberations in these and other important areas. Mr. Mulva also brings to our Board an in-depth background in finance and his experience as a director of other large, global public companies.

 

 

 

 

LOGO

    Patricia F. Russo, Chairman,
Hewlett Packard Enterprise Company (since November 2015)
   LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
   

 

   

Age: 64  •  Director Since: 2009  •  Committees: Executive, Executive Compensation, Finance, Governance and Corporate Responsibility (Chair)

Current Public Company Directorships: Arconic Inc. (formerly Alcoa) (Lead Director), Hewlett Packard Enterprise Company (Chairman), KKR Management LLC (the managing partner of KKR & Co. L.P.), and Merck & Co. Inc.

Prior Public Company Directorships: Hewlett-Packard Company (2011 to 2015), where she was Lead Director from 2014 to 2015

   

 

 

Prior Experience:

 

  Lead Director of the Hewlett-Packard Company (“HP”) Board of Directors from 2014 to 2015

 

  Lead Director of the GM Board of Directors from March 2010 to January 2014

 

  Chief Executive Officer of Alcatel-Lucent S.A. from 2006 to 2008

 

  Chairman & Chief Executive Officer of Lucent Technologies, Inc. (“Lucent”) from 2003 to 2006

 

  President & Chief Executive Officer of Lucent from 2002 to 2006

 

Reasons for Nomination:

As the CEO of highly technical, global, complex companies, Ms. Russo has demonstrated leadership and proven business acumen that strongly supported her nomination to our Board. She has dealt with a wide range of issues, including mergers and acquisitions, technology disruptions and business restructuring, as she led Lucent’s recovery through a severe industry downturn and later a merger with Alcatel, a French company. She led the HP board of directors in connection with its split into two public companies, gaining

 

valuable experience in connection with a highly complex business restructuring transaction. In addition, she brings to the Board extensive global experience in corporate strategy, finance, sales and marketing, technology, and leadership development. Ms. Russo also has extensive expertise in corporate governance and executive compensation gained from her robust service on boards and board committees of other large, global public companies.

 

 

 

 

 

     LOGO   Senior Leadership     LOGO   Industry     LOGO   Manufacturing     LOGO   Technology     LOGO   Risk Management     LOGO   Global     LOGO   Finance     LOGO   Government     LOGO   Marketing     LOGO   Diversity    

 

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

LOGO      Thomas M. Schoewe, Retired Executive Vice President & Chief Financial Officer, Wal-Mart Stores, Inc. (since 2011)    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
 

 

 

Age: 64  •  Director Since: 2011  •  Committees: Audit (Chair), Executive, Finance, Risk

Current Public Company Directorships: KKR Management LLC and Northrop Grumman Corporation

Prior Public Company Directorships: PulteGroup, Inc. (2009 to 2012)

 

 

 

Prior Experience:

 

  Executive Vice President & Chief Financial Officer of Wal-Mart Stores, Inc. (“Wal-Mart”) from 2000 to 2011

 

  Senior Vice President & Chief Financial Officer of Black & Decker Corporation (“Black & Decker”) from 1996 to 1999

 

  Vice President & Chief Financial Officer of Black & Decker from 1993 to 1996

 

  Vice President of Finance of Black & Decker from 1989 to 1993

 

  Vice President of Business Planning and Analysis Black & of Decker from 1986 to 1989

 

Reasons for Nomination:

With extensive financial experience acquired through positions held as chief financial officer of large multinational, consumer-facing companies, Mr. Schoewe brings financial expertise, corporate leadership, and operational experience to our Board. His demonstrated leadership in corporate finance has provided him with key skills, including financial reporting, accounting and control, business planning and analysis, and risk management that are valuable to the oversight of our business. Mr. Schoewe also brings to our

 

Board his experience at Wal-Mart and Black & Decker with large-scale, transformational information technology implementations, which provides valuable insight to our IT organization. Further, Mr. Schoewe’s previous and current board positions at public companies involved with home building, security, and investments provides exposure to diverse industries with unique challenges enabling him to make a significant contribution to our Board across a broad range of issues facing the Company.

 

 

 

 

 

LOGO   

  Carol M. Stephenson, Retired Dean, Ivey Business School,
The University of Western Ontario (since 2013)
   LOGO    LOGO    LOGO    LOGO    LOGO    LOGO
 

 

 

Age: 66  •  Director Since: 2009  •  Committees: Executive, Executive Compensation (Chair), Governance and Corporate Responsibility

Current Public Company Directorships: Ballard Power Systems, Inc., Intact Financial Corporation (formerly ING Canada), and Maple Leaf Foods Inc.

Prior Public Company Directorships: Manitoba Telecom Services (2008 to 2016)

 

 

 

Prior Experience:

 

  Dean of the Ivey Business School at The University of Western Ontario (“Ivey”) from 2003 until her retirement in 2013

 

  President & Chief Executive Officer, Lucent Technologies Canada from 1999 to 2003

 

  Member of the Advisory Board of General Motors of Canada, Limited (“GM Canada”), a GM subsidiary, from 2005 to 2009

 

  Officer of the Order of Canada in 2009

Reasons for Nomination:

Ms. Stephenson’s experience as Dean of Ivey and President and Chief Executive Officer of Lucent Technologies Canada provides our Board with diverse perspectives and progressive management expertise in marketing, operations, strategic planning, technology development, and financial management. Her experience on the boards of several top Canadian companies provides our Board with a

 

broad perspective on successful management strategies and insight on matters affecting the business interests of GM and GM Canada. Ms. Stephenson also brings to our Board her experience in serving on the compensation and governance committees of other public companies.

 

 

 

 

 

 

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

Non-Employee Director Compensation

Compensation for our non-employee directors is set by the Board at the recommendation of the Governance Committee. Ms. Barra, our sole employee director, does not receive additional compensation for her Board service other than the personal accident insurance benefit described below, the value of which is reported for Ms. Barra in the Summary Compensation Table on page 63.

The Governance Committee, which consists solely of independent directors, annually assesses the form and amount of non-employee director compensation and recommends changes, if appropriate, to the Board based upon competitive market practices. Commencing in 2016, the Governance Committee reviewed director compensation data for the same companies that comprise the peer group we use for benchmarking executive compensation, as described on page 46. The process for setting non-employee director compensation is guided by the following principles:

 

u   Guiding Principles

 

  u   Fairly compensate directors for their responsibilities and time commitments,  

 

  u   Attract and retain highly qualified directors by offering a compensation program consistent with those at companies of similar size, scope, and complexity,  

 

  u   Align the interests of directors with our shareholders by providing a significant portion of compensation in equity and requiring directors to continue to own our common stock (or common stock equivalents), and  

 

  u   Provide compensation that is simple and transparent to shareholders.  

The Governance Committee can engage the services of outside consultants, experts, and others to assist the Committee. During 2016, the Governance Committee did not engage any consultants in reviewing and setting director compensation.

 

u   Director Stock Ownership and Holding Requirements

In December 2016, the Board approved an increase in the stock ownership requirement by $100,000, so that each non-employee director is required to own our common stock or Deferred Share Units (“DSUs”) with a market value of at least $500,000.

 

  u   Ownership guidelines are reviewed each year to confirm they continue to be effective in aligning the interests of the Board and our shareholders.  

 

  u   Non-employee directors are prohibited from selling any GM securities or derivatives of GM securities, such as DSUs while they are members of the Board.  

 

  u   Each non-employee director is required to own our common stock or DSUs with a market value of at least $500,000.  

 

  u   Each director has up to five years from the date he or she is first elected to the Board to meet this ownership requirement.  

 

  u   All of our directors are in compliance with our stock retention requirements. Ms. Gooden and Ms. Mendillo are within their five-year compliance period and are expected to meet the ownership requirement by the end of such period. All other directors have met or exceeded the ownership requirement.  

 

u   Annual Compensation

During 2016, compensation for non-employee directors consisted of the elements described below. We do not pay any other retainers or meeting fees. The Lead Director and Committee Chairs receive additional compensation due to the workload and broad responsibilities of these positions.

 

  Compensation Element    2016  

Board Retainer

     $ 250,000  

Lead Director Fee (1)

     $ 100,000  

Audit Committee Chair Fee

     $ 30,000  

Compensation Committee Chair Fee

     $ 20,000  

All Other Committee Chair Fees (excluding the Executive Committee)

     $ 15,000  
  (1) In 2016, Mr. Solso received an additional fee of $50,000 (i.e., the annual Chairman fee of $300,000 prorated for two months of service) for transitional services following Ms. Barra’s assumption of the Chairman role on January 4, 2016. Effective March 4, 2016, the additional fee paid to Mr. Solso for service as Lead Director is $100,000 per year.  

 

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ITEM 1: ELECTION OF DIRECTORS

 

 

Under the General Motors Company Deferred Compensation Plan for Non-Employee Directors (the “Director Compensation Plan”), non-employee directors are required to defer 50% of their annual Board retainer (i.e., $125,000) into DSUs. Non-employee directors may elect to defer all or half of their remaining Board retainer or amounts payable (if any) for serving as Committee Chair or Lead Director into additional DSUs. The fees for a director who joins or leaves the Board or assumes additional responsibilities during the year are prorated for his or her period of service.

 

u   How Deferred Share Units Work

Each DSU is equal in value to a share of GM common stock and is fully vested upon grant, but does not have voting rights. DSUs granted are determined as follows:

 

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For a director who joined or retired from the Board during the calendar year, the retainer fee is prorated and converted to DSUs based on the average daily closing market price of our common stock for the period of service. All DSUs granted are rounded up to the nearest whole unit. Any portion of the retainer that is deferred into DSUs may also earn dividend equivalents, which are credited at the end of each calendar year to each director’s account in the form of additional DSUs. DSUs will not be available for disposition until after the director leaves the Board. After leaving the Board, the director will receive a cash payment or payments based on the number of DSUs in the director’s account, valued at the average daily closing market price for the quarter immediately preceding payment. Directors will be paid in a lump sum or in annual installments for up to five years based on their deferral elections.

 

u   Changes to Director Compensation

In December 2016, the Governance Committee determined that the Company’s director compensation program was below the median for director compensation at peer group companies and recommended that certain increases be made to fairly compensate directors for their responsibilities and time commitments and to align with competitive market practices. Following the recommendation of the Governance Committee, the Board approved the following changes to non-employee director compensation, effective January 1, 2017:

 

  An increase in the annual retainer for Board service from $250,000 to $285,000 with 50% (or $142,500) mandatorily deferred into DSUs; and

 

  An increase in the annual retainer for the Chairs of the Governance, Finance, and Risk Committees from $15,000 to $20,000.

 

u   Other Compensation

As outlined below, we provide certain additional benefits to non-employee directors.

 

  Type    Purpose

u      Evaluation Vehicles

   We provide directors with the use of evaluation vehicles to provide feedback on our products as well as enhance the public image of our vehicles. Retired directors receive the use of an evaluation vehicle for a limited period of time. Participants are charged with imputed income based on the lease value of the vehicles and are responsible for associated taxes.

u      Personal Accident Insurance (“PAI”)

   We provide PAI coverage in the event of accidental death or dismemberment. Directors are responsible for associated taxes on the imputed income from the coverage.

 

Amount of compensation required or elected to be deferred each calendar year under the Director Compensation Plan Average daily closing market price of our common stock for that calendar year DSUs Granted

 

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Unless previously employed by the Company, non-employee directors are not eligible to participate in any of the savings or retirement programs for our employees. Other than as described in this section, there are no separate benefit plans for directors.

 

u   2016 Non-Employee Director Compensation Table

This table shows the compensation that each non-employee director received for his or her 2016 Board and Committee service. Amounts reflect partial-year Board service for Mr. Girsky and Ms. Mendillo.

 

  Director

 

  

Fees Earned or

Paid in Cash(1)

($)

 

    

Stock Awards(2)

($)

 

    

All Other

Compensation(3)

($)

 

    

Total

($)

 

 

 

Joseph J. Ashton

 

    

 

62,500

 

 

 

    

 

208,517

 

 

 

    

 

30,323

 

 

 

    

 

301,340

 

 

 

 

Stephen J. Girsky (4)

 

    

 

62,500

 

 

 

    

 

71,561

 

 

 

    

 

21,266

 

 

 

    

 

155,327

 

 

 

 

Linda R. Gooden

 

    

 

125,000

 

 

 

    

 

139,012

 

 

 

    

 

20,157

 

 

 

    

 

284,169

 

 

 

 

Joseph Jimenez

 

    

 

 

 

 

    

 

278,023

 

 

 

    

 

21,740

 

 

 

    

 

299,763

 

 

 

 

Kathryn V. Marinello (5)

 

    

 

 

 

 

    

 

279,347

 

 

 

    

 

15,990

 

 

 

    

 

295,337

 

 

 

 

Jane L. Mendillo (6)

 

    

 

 

 

 

    

 

158,836

 

 

 

    

 

4,995

 

 

 

    

 

163,831

 

 

 

 

Michael G. Mullen

 

    

 

125,000

 

 

 

    

 

155,700

 

 

 

    

 

24,740

 

 

 

    

 

305,440

 

 

 

 

James J. Mulva

 

    

 

 

 

 

    

 

294,712

 

 

 

    

 

25,219

 

 

 

    

 

319,931

 

 

 

 

Patricia F. Russo

 

    

 

125,000

 

 

 

    

 

155,700

 

 

 

    

 

18,698

 

 

 

    

 

299,398

 

 

 

 

Thomas M. Schoewe

 

    

 

155,000

 

 

 

    

 

139,012

 

 

 

    

 

28,532

 

 

 

    

 

322,544

 

 

 

 

Theodore M. Solso

 

    

 

 

 

 

    

 

426,302

 

 

 

    

 

17,407

 

 

 

    

 

443,709

 

 

 

 

Carol M. Stephenson

 

    

 

72,500

 

 

 

    

 

219,631

 

 

 

    

 

12,657

 

 

 

    

 

304,788

 

 

 

 

(1)

Reflects cash compensation received in 2016 for Board and Committee service.

 

(2)

Reflects aggregate grant date fair value of DSUs granted in 2016, including amounts that Mss. Marinello ($125,000), Mendillo ($72,917), Russo ($15,000), and Stephenson ($72,500) and Messrs. Ashton ($62,500), Jimenez ($125,000), Mullen ($15,000), Mulva ($140,000), and Solso ($258,333) elected to defer into DSUs in lieu of all or a part of their cash compensation. Grant date fair value is calculated by multiplying the number of DSUs granted by the closing price of GM common stock on December 30, 2016, which was $34.84. The holders of DSUs also receive dividend equivalents which are reinvested in additional DSUs based on the market price of the common stock on the date the dividends are paid.

 

(3)

The following table provides more information on the type and amount of benefits included in the All Other Compensation column.

 

  Director

 

  

Company

Vehicle

Program

(a)

 

    

Other

(b)

 

    

Total

 

             

Director

 

  

Company

Vehicle

Program

(a)

 

    

Other

(b)

 

    

Total

 

 

 

Mr. Ashton

 

    

 

$30,083

 

 

 

    

 

$240

 

 

 

    

 

$30,323

 

 

 

       

Mr. Mullen

 

    

 

$24,500

 

 

 

    

 

$240

 

 

 

    

 

$24,740

 

 

 

 

Mr. Girsky

 

    

 

$21,146

 

 

 

    

 

$120

 

 

 

    

 

$21,266

 

 

 

       

Mr. Mulva

 

    

 

$24,979

 

 

 

    

 

$240

 

 

 

    

 

$25,219

 

 

 

 

Ms. Gooden

 

    

 

$19,917

 

 

 

    

 

$240

 

 

 

    

 

$20,157

 

 

 

       

Ms. Russo

 

    

 

$18,458

 

 

 

    

 

$240

 

 

 

    

 

$18,698

 

 

 

 

Mr. Jimenez

 

    

 

$21,500

 

 

 

    

 

$240

 

 

 

    

 

$21,740

 

 

 

       

Mr. Schoewe

 

    

 

$28,292

 

 

 

    

 

$240

 

 

 

    

 

$28,532

 

 

 

 

Ms. Marinello

 

    

 

$15,750

 

 

 

    

 

$240

 

 

 

    

 

$15,990

 

 

 

       

Mr. Solso

 

    

 

$17,167

 

 

 

    

 

$240

 

 

 

    

 

$17,407

 

 

 

 

Ms. Mendillo

 

    

 

$  4,875

 

 

 

    

 

$120

 

 

 

    

 

$  4,995

 

 

 

       

Ms. Stephenson

 

    

 

$12,417

 

 

 

    

 

$240

 

 

 

    

 

$12,657

 

 

 

 

  (a) Company vehicle program includes the estimated annual lease value of the Company vehicles driven by directors. We include the annual lease value because it is more reflective of the value of the company vehicle perquisite than the Company’s incremental costs, which are generally significantly lower because the Company manufactures and ordinarily disposes of Company vehicles for a profit, resulting in minimal incremental costs, if any. Taxes related to imputed income are the responsibility of each participant.

 

  (b) Reflects cost of premiums for providing personal accident insurance (annual premium cost of $240 is prorated, as applicable, for period of service).

 

(4)

Mr. Girsky resigned from the Board effective June 7, 2016.

 

(5)

Ms. Marinello resigned from the Board on December 19, 2016.

 

(6)

Ms. Mendillo joined the Board on June 7, 2016.

 

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CORPORATE GOVERNANCE

Governance Highlights

 

 

 

 

 

Nine (9) out of eleven (11) directors are independent

 

   

 

 

  

 

Director-Shareholder Engagement Policy

 

 

 

 

 

Strong Independent Lead Director with clearly delineated duties

 

   

 

 

  

 

Regular executive sessions of non-management directors

 

 

 

 

 

Annual election of all directors

 

   

 

 

  

 

Orientation program for new directors and continuing education for all directors

 

 

 

 

 

Majority voting with director resignation policy (plurality standard to apply in contested elections)

 

   

 

 

  

 

Robust stock ownership guidelines for executive officers and non-employee directors

 

 

 

 

 

Annual evaluation of CEO by Board

 

   

 

 

  

 

Risk oversight by full Board and Committees

 

 

 

 

 

Annual Board and Committee self-evaluations, including individual Board member evaluation

 

   

 

 

  

 

Shareholder right to call special meetings

 

 

 

 

 

Audit, Executive Compensation, and Governance Committees composed entirely of independent directors

 

   

 

 

  

 

Board and Committees may hire outside advisors independently of management

 

 

 

 

 

“Overboarding” limits

 

   

 

 

  

 

Proxy access for shareholders

 

 

 

 

 

Diverse Board in terms of gender, ethnicity, and specific skills and qualifications

 

   

 

 

  

 

Enhanced clawback policy that applies to our short- and long-term incentive plans

 

Role of Board of Directors

 

GM is governed by a Board of Directors and Committees of the Board that meet throughout the year. The Board is elected by shareholders to oversee and provide guidance on the Company’s business and affairs. The Board is the ultimate decision-making body of the Company, except for those matters reserved to shareholders. The Board is highly engaged in the process of strategic development and oversight of ongoing execution of the Company’s strategic plan. The Board oversees management’s activities in connection with proper safeguarding of the assets of the

Company, maintenance of appropriate financial and other internal controls, and compliance with applicable laws and regulations and proper governance. The Board is committed to sound corporate governance policies and practices that are designed and routinely assessed to enable the Company to operate its business responsibly, with integrity, and to position GM to compete more effectively, sustain its success, and build long-term shareholder value.

 

 

Board Size

 

The Board of Directors sets the number of directors from time to time by resolution adopted by a majority of the Board. The Board of Directors is currently composed of 11 members. The Governance Committee reassesses the Board’s size at least annually. The Board has the flexibility to increase or reduce the size of the Board, based upon prevailing facts and circumstances. If any nominee is unable

to serve as a director or if any director leaves the Board between annual meetings, the Board, by resolution, may reduce the number of directors or elect an individual to fill the resulting vacancy. If all of the Board’s nominees are elected, the Board will be composed of 11 members immediately following the Annual Meeting.

 

 

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“Winning With Integrity” and Code of Ethics

 

The Board is committed to the highest legal and ethical standards in fulfilling its responsibilities. We have adopted a code of business conduct and ethics, “Winning With Integrity” that applies to our directors, officers, and employees. “Winning With Integrity” forms the foundation for compliance with corporate policies and procedures and creates a Company-wide focus on uncompromising integrity in every aspect of our operations. The code embodies our expectations for a number of topics, including workplace and vehicle safety, conflicts of interest, protection of confidential information, insider trading,

competition and fair dealing, human rights, community involvement and corporate citizenship, political activities and lobbying, preservation and use of company assets, and compliance with all laws and regulations applicable to the conduct of our business. Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the code. The code is available on our website at gm.com/investors, under “Corporate Governance” and is available in print upon request. We will post any updates to the code on our website.

 

 

Corporate Governance Guidelines

 

Our Board has adopted a governance structure that it believes promotes the best interests of our shareholders. The Corporate Governance Guidelines form a transparent framework for the effective governance of the Company. The Governance Committee regularly considers the Corporate Governance Guidelines and periodically recommends to our Board the adoption of amendments in response to changing regulations, evolving best practices,

and shareholder concerns. Our Corporate Governance Guidelines, Certificate of Incorporation, Bylaws, Board Committee Charters, and other governance materials are available on our website at gm.com/investors under “Corporate Governance.” To obtain a copy of these materials, see “How can I obtain the Company’s corporate governance information?” on page 98.

 

 

Director Independence

 

The Corporate Governance Guidelines define our standards for director independence and are based on applicable New York Stock Exchange (“NYSE”) and U.S. Securities and Exchange Commission (“SEC”) requirements. At least two-thirds of our directors are and must continue to be independent under these standards. The Governance Committee assesses the independence of each director, applying the criteria in our Corporate Governance Guidelines, and makes recommendations to the Board. For a director or director nominee to be “independent,” the Board must affirmatively determine that the director has no material relationship with the Company other than his or her service as a director. In addition, members of the Audit and Compensation Committees must meet heightened independence standards applicable under NYSE and SEC rules.

Consistent with the standards described above, the Board has reviewed all relationships between the Company and each director and director nominee (as well as Stephen J. Girsky and Kathryn J. Marinello, who resigned from the Board on June 7, 2016 and December 19, 2016, respectively), considering quantitative and qualitative criteria, and affirmatively has determined that all are independent other than Mr. Ashton, Mr. Girsky, and Ms. Barra. Mr. Ashton is not independent because of his long-term affiliation with the UAW and the substantial labor agreements between the Company and the UAW.

Mr. Girsky was not independent because of his former employment with the Company. Ms. Barra is not independent because she currently holds the position of CEO.

In recommending to the Board that each non-employee director and director nominee be found independent, the Governance Committee considered whether there were any other facts or circumstances that might impair a director’s independence. In particular, the Governance Committee evaluated charitable contributions that GM (including the GM Foundation) has made to nonprofit organizations with which our directors are or have been associated. None of these transactions were material to either GM or the director or director nominee. The Governance Committee also considered that GM, in the ordinary course of business, during the last three years, has sold fleet vehicles to and purchased products and services from companies at which some of our directors serve as non-employee directors or executives. The Board determined that these transactions were not material to GM or the other companies involved and that none of our directors had a material interest in the transaction with these companies. In each case, these transactions were in the ordinary course of business for GM and the other companies involved and were on terms and conditions available to similarly situated customers and suppliers. Therefore, they did not impair the respective director’s independence.

 

 

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CORPORATE GOVERNANCE

 

 

Board Leadership Structure

 

Our Board has the flexibility to decide when the positions of Chairman & CEO should be combined or separated and whether an executive or independent director should be Chairman. This approach is designed to allow the Board to choose the most appropriate leadership structure for the Company to best serve the interests of our shareholders at the relevant time.

In January 2016, the Board recombined the positions of Chairman & CEO under the leadership of Ms. Barra and designated Mr. Solso as Independent Lead Director. The Board determined that this structure provides a clear and unified strategic vision for GM during a time of unprecedented industry change. As the individual with primary responsibility for managing the Company, Ms. Barra’s in-depth knowledge of our businesses and understanding of day-to-day operations brings focused leadership to our Board on the matters most critical to fulfillment of the Board’s oversight function. The structure also reinforces accountability for the Company’s performance at the highest levels.

Board Oversight

The Board’s key duties include strategic, compliance, and governance oversight, as well as CEO succession planning. In each of these areas, the Board determined that a combined role of Chairman & CEO, with the presence of a strong Independent Lead Director, is the optimal Board leadership structure for GM at this time. Further, our Board’s key Committees—Audit, Executive Compensation, and Governance—are entirely composed of independent directors. The Board believes this structure, together with our other corporate governance practices, allows strong independent oversight of management while providing clear strategic alignment at the Board level and throughout the Company.

Long-Term Strategic Vision

Ms. Barra and her leadership team developed a clear strategic vision to lead the Company into a new era of mobility, positioning GM to grow in this period of rapid change and disruption. As Chairman & CEO, Ms. Barra is able to focus the Board’s oversight of management’s execution of this strategy in an efficient and streamlined manner and bring pressing issues before the independent directors expeditiously.

Compliance

Ms. Barra has been a key leader as the Company has reset its culture of safety and its relentless focus on placing the customer at the center of everything we do. As Chairman, she is able to facilitate the Board’s continued strong oversight of compliance and enterprise risk management programs.

Governance

Our independent directors possess the objective and analytical approach to governance that is expected of best-in-class boards. In addition, our Independent Lead Director, Mr. Solso, is a proven leader with an objective viewpoint and deep industry knowledge. When the Board appointed Mr. Solso as Independent Lead Director, it also strengthened the responsibilities of the role to include additional duties, to further promote independent, objective oversight. The duties of our Independent Lead Director are set forth below.

Succession Planning

CEO succession planning is conducted annually by the full Board and led by the Independent Lead Director. This fundamental Board process will remain under the independent Board leadership of Mr. Solso.

 

 

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CORPORATE GOVERNANCE

 

 

 

 

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Strong Independent Lead Director

If a GM executive holds the position of Chairman, our independent directors, by the affirmative vote of a majority of all independent directors, designate one of our independent Board members to serve as Independent Lead Director. For 2017, the Board has appointed Mr. Solso as Independent Lead Director for the second consecutive year. The duties and responsibilities of our Independent Lead Director, Mr. Solso, include the following:

 

 

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Presiding over all Board meetings when the Chairman is not present, including executive sessions of non-management directors, and advising the Chairman of any actions taken;

 

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Providing Board leadership if circumstances arise in which the role of the Chairman is potentially, or perceived to be, in conflict, or if potential conflicts of interest arise for any director;

 

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Calling executive sessions for non-management and independent directors, relaying feedback from these sessions to the Chairman, and implementing decisions made by the independent directors;

 

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Leading non-management directors in the annual evaluation of the CEO’s performance, communicating it to the CEO, and overseeing the process for CEO succession;

 

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Advising on the scope, quality, quantity, and timeliness of the flow of information between management and the Board and approving Board meeting agendas recommended by the Chairman;

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Confirming that Board meeting schedules allow enough time to discuss all agenda items;

 

 

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Serving as a liaison between non-management directors and the Chairman when requested to do so by non-management directors (although all non-management directors have direct and complete access to the Chairman at any time that they deem necessary or appropriate);

 

 

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Interviewing, along with the Chair of the Governance Committee, all Board candidates, and making recommendations to the Governance Committee and the Board;

 

 

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Being available to advise the Chairs of the Committees of the Board in fulfilling their designated roles and responsibilities to the Board; and

 

 

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Being available, if requested by major shareholders, for consultation and communication in accordance with the Board’s Director-Shareholder Engagement Policy.

 

 

 

 

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Executive Sessions

Our non-management directors have an opportunity to meet in executive session without management present as part of each regularly scheduled Board meeting. Executive sessions are chaired by the Independent Lead Director, Mr. Solso.

During executive sessions, non-management directors (or independent directors, as appropriate) review CEO performance, compensation, and succession planning; future Board agendas and flow of information to directors; corporate governance matters; any other matters of importance to the Company raised during a meeting or otherwise; and other issues presented by non-management directors.

The non-management directors of the Board met in executive session five times in 2016, including one time with only independent directors present.

Board Committees

Our Board of Directors has six standing Committees: Audit, Executive Compensation, Finance, Governance, Risk, and Executive. The Independent Lead Director, Mr. Solso, attends all meetings of the standing Committees of which he is not a member and serves as a resource for the Committees as needed.

Each member of the Audit, Compensation, and Governance Committees has been determined by the Board to be independent according to NYSE Corporate Governance listing standards. The following outlines the key responsibilities and 2016 activities of each standing Committee. Each Committee has a charter governing its activities. Committee Charters are available on our website at gm.com/investors, under “Corporate Governance.”

 

 

AUDIT

 

 

Members: Thomas M. Schoewe (Chair), Linda R. Gooden, Jane L. Mendillo, and Michael G. Mullen Meetings held in 2016: 8

 

 

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Thomas M. Schoewe, Chair

 

 

Key Responsibilities

 

u  Oversees the quality and integrity of our financial statements, related disclosures, and internal controls;

 

u  Reviews and discusses with management and the external auditors the Company’s earnings releases and quarterly and annual reports on Forms 10-Q and 10-K prior to filing with the SEC;

 

u  Reviews the Company’s critical accounting policies, financial reporting and accounting standards and principles, and key accounting decisions and judgments affecting the Company’s financial statements;

 

u  Oversees the retention, qualifications, performance, and independence of the independent auditor;

 

u  Pre-approves all audit and permitted non-audit services provided by the independent auditor;

 

u  Reviews the scope, effectiveness, and objectivity of the Company’s internal audit function; and

 

u  Oversees the Company’s compliance with legal, ethical, and regulatory requirements.

  

 

Key Activities in 2016

 

u  Approved internal audit plan with focus on the highest risks facing the organization;

 

u  Approved expanded Global Ethics and Compliance Center resources and budget, enhancing scope and exceeding requirements of the U.S. Federal Sentencing Guidelines;

 

u  Approved newly revamped code of conduct and ethics, “Winning With Integrity;”

 

u  Reviewed emerging accounting and internal control matters, including revenue recognition, leasing and financial instrument credit losses;

 

u  Monitored the disclosure of significant accounting matters and business developments and the overall effectiveness of the Company’s disclosures;

 

u  Reviewed the Company’s earnings releases and quarterly and annual reports, including financial statements, on Forms 10-Q and 10-K prior to filing with the SEC; and

 

u  Provided thought leadership and perspective to the SEC, including on non-GAAP measures.

 

Our Board has determined that each member of the Audit Committee is independent under the NYSE listing standards and the additional independence requirements applicable to audit committee members under NYSE and SEC rules. The Board has also determined that all members of the Audit Committee are financially literate in accordance with the NYSE listing standards and that Ms. Gooden, Ms. Mendillo, and Mr. Schoewe are each qualified as an “audit committee financial expert” as defined by the SEC.

 

 

 

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EXECUTIVE COMPENSATION

 

 

Members: Carol M. Stephenson (Chair), Joseph Jimenez, James J. Mulva, and Patricia F. Russo

Meetings held in 2016: 6

 

 

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Carol M. Stephenson, Chair

 

 

Key Responsibilities

 

u  Oversees the Company’s executive compensation policies, practices, and programs;

 

u  Reviews and approves corporate goals and objectives, evaluates performance (along with the full Board), and determines compensation levels for the Chairman & CEO;

 

u  Reviews and approves compensation of NEOs, executive officers, and other Senior Leaders under its purview;

 

u  Oversees compensation policies and practices so that the plans do not encourage unnecessary or excessive risks; and

 

u  Oversees the Company’s policies and practices that promote diversity and inclusion.

  

 

Key Activities in 2016

 

u  Approved STIP changes to increase focus on key financial measures and added an individual performance element for each NEO;

 

u  Approved LTIP changes to incorporate relative performance measures into PSUs and replaced time-based RSUs with Stock Options to further align our most Senior Leaders with shareholder interests;

 

u  Approved an expanded Clawback Policy to include reputational harm or other behavior-based events that result in a material inaccuracy in either financial statements or performance metrics that affect executive compensation; and

 

u  Conducted significant shareholder engagement during 2016 to seek investor feedback on executive compensation plans and programs.

 

Our Board has determined that each member of our Compensation Committee is independent in accordance with NYSE listing standards and our Corporate Governance Guidelines, as well as the enhanced independence requirements applicable to compensation committee members under NYSE Rule 303A.02. In addition, each member of our Compensation Committee qualifies as a “non-employee director” under Rule 16b-3 of the Exchange Act and an “outside director” under Section 162(m) of the Internal Revenue Code.

 

 

 

GOVERNANCE
AND CORPORATE
RESPONSIBILITY

 

 

 

Members: Patricia F. Russo (Chair), Joseph Jimenez, and Carol M. Stephenson

Meetings held in 2016: 5

 

 

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Patricia F. Russo,

Chair

 

 

Key Responsibilities

 

u  Reviews the Company’s corporate governance framework, including all significant governance policies and procedures;

 

u  Oversees Company policies and strategies related to corporate responsibility, sustainability, and political contributions;

 

u  Reviews the appropriate composition of the Board and recommends Board nominees;

 

u  Oversees the self-evaluation process of the Board and Committees;

 

u  Recommends compensation of non-employee directors to the Board; and

 

u  Reviews and approves related party transactions and any potential Board conflicts of interest, as applicable.

  

 

Key Activities in 2016

 

u  Oversaw shareholder engagement program on environmental, social, governance, and executive compensation issues;

 

u  Reviewed the Board leadership structure and determined a combined Chairman and CEO role remained in the best interest of shareholders;

 

u  Reviewed the Company’s sustainability and corporate responsibility initiatives;

 

u  Reviewed the Company’s global corporate philanthropy initiatives;

 

u  Recommended and oversaw implementation of “best practice” corporate governance initiatives, including proxy access; and

 

u  Enhanced orientation and continuing education opportunities for directors.

 

Our Board has determined that each member of our Governance Committee is independent in accordance with the NYSE listing standards and our Corporate Governance Guidelines.

 

 

 

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FINANCE

 

 

Members: James J. Mulva (Chair), Joseph J. Ashton, Jane L. Mendillo, Patricia F. Russo, and Thomas M. Schoewe

Meetings held in 2016: 5

 

 

 

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James J. Mulva,

Chair

 

 

Key Responsibilities

 

u  Assists the Board in its oversight of financial policies, strategies, and capital structure;

 

u  Reviews the Company’s cash management as well as proposed capital plans, capital expenditures, dividend actions, stock splits and repurchases, issuances of debt or equity securities, and credit facility and other borrowings;

 

u  Reviews any significant financial exposures and contingent liabilities of the Company, including foreign exchange, interest rate, and commodities exposures, and the use of derivatives to hedge those exposures; and

 

u  Reviews the regulatory compliance, administration, financing, investment performance, risk and liability profile, and funding of the Company’s U.S. employee benefit plans, including pension obligations.

 

  

 

Key Activities in 2016

 

u  Reviewed capital allocation framework and approved, along with the full Board, an additional $5.0 billion in share repurchases;

 

u  Approved, along with the full Board, the Company’s 2017 Budget, Medium Term Plan, and Automotive Capital Plan and GM Financial’s Annual Funding Plan;

 

u  Reviewed progress against GM Financial’s full captive strategy;

 

u  Reviewed pension funding and investment strategy; and

 

u  Reviewed Company’s foreign exchange exposure and overall risk management and hedging strategy.

 

All members of the Finance Committee are non-employee directors, a majority of whom have been determined by our Board to be independent in accordance with the NYSE listing standards and our Corporate Governance Guidelines.

 

 

 

RISK

 

 

Members: Michael G. Mullen (Chair), Joseph J. Ashton, Linda R. Gooden, James J. Mulva, and Thomas M. Schoewe

Meetings held in 2016: 5

 

 

 

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Admiral Michael G. Mullen,

Chair

 

 

Key Responsibilities

 

u  Assists the Board in its oversight of the Company’s risk management framework and practices;

 

u  Reviews the tone and culture within the Company regarding risk, including open risk discussions and the integration of risk management in the Company’s behaviors, decision-making, and processes;

 

u  Reviews management’s evaluation of strategic and operating risks the Company faces including risk concentrations, mitigating measures and the types and levels of risk which are acceptable in the pursuit and protection of value;

 

u  Reviews the impact of the Company’s programs and practices regarding vehicle and workplace safety; and

 

u  Reviews risks related to the Company’s public policy positions in the U.S. and internationally.

 

  

 

Key Activities in 2016

 

u  Reviewed GM’s key enterprise risks and mitigation plans for selected risks;

 

u  Reviewed selected strategic risk pilots focused on cross functional and interrelated risks, including the Global Emerging Markets pilot that focused on risks associated with “Process, People and Culture” within the joint venture environment;

 

u  Participated in risk assessment and reviewed results of GM risk assessment, top risks, and risk topics for Board oversight for 2017;

 

u  Reviewed workplace safety program and roadmap; and

 

u  Reviewed GM public policy risks and positioning on a global basis.

 

All members of the Risk Committee are non-employee directors, a majority of whom have been determined by our Board to be independent in accordance with the NYSE listing standards and our Corporate Governance Guidelines.

 

 

EXECUTIVE

 

 

Our Board has an Executive Committee composed of the Chairman & CEO, the Independent Lead Director, and the Chairs of our other standing Committees. The Executive Committee is chaired by Ms. Barra and empowered to act for the full Board in intervals between Board meetings, with the exception of certain matters that the Board has not delegated. The Executive Committee meets as necessary, and all actions by the Executive Committee are reported and ratified at the next succeeding Board meeting. The Executive Committee did not meet in 2016.

 

 

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Access to Outside Advisors

The Board and each Board Committee can select and retain the services of outside advisors at the Company’s expense.

Board and Committee Meetings and Attendance

In 2016, our Board held a total of 8 meetings and the Committees held a total of 29 meetings. Each director standing for re-election attended at least 94% of the total meetings of the Board and Committees on which he or she served in 2016. Directors are expected to attend our annual meeting of shareholders, which is held in conjunction with a regularly scheduled Board meeting. All directors in office at such time attended the 2016 Annual Meeting.

Board and Committee Oversight of Risk

Our Board has the overall responsibility for risk oversight, with a focus on the most significant risks facing the Company. Effective risk management is the responsibility of the CEO and other members of the Company’s management, specifically the Executive Leadership Team. As part of the risk management process, each of the Company’s business units and functions is responsible for identifying risks that could affect achievement of business goals and strategies, assessing the likelihood and potential impact of significant risks, and prioritizing the risks and actions to be taken to mitigate such risks, as appropriate.

Our Board implements its risk oversight function both as a whole and through delegation to Board Committees, particularly the Risk Committee. The Board receives regular reports from our management on particular risks within the Company, through review of the Company’s strategic plan, and through regular communication with its Committees. Management provides comprehensive reports to the Risk Committee on the key strategic, operating, vehicle and workplace safety, financial, and compliance risks facing the Company, including management’s response to managing and mitigating such risks, as appropriate. The Company’s Chief Compliance Officer also regularly reports to the Audit Committee.

The Chair of the Risk Committee coordinates with the Chairs of other Board Committees in their review of the Company risks that have been delegated to these Committees to support them in coordinating the relationship between risk management policies and practices and their respective oversight accountabilities. Each of the other Board Committees, which meet regularly and report back to the Board, is responsible for oversight of risk management practices for categories of risks relevant to its functions.

 

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Our Board believes that its structure for risk oversight provides for open communication between management and the Board and its Committees, which effectively supports management’s enterprise risk management programs. In addition, strong independent directors chair the Committees involved in risk oversight, and all directors are involved in the risk assessment and ongoing risk reviews.

 

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Succession Planning and Leadership Development

 

One of our Board’s primary responsibilities is to oversee the development of the appropriate management talent to successfully pursue our strategies. Management succession is regularly discussed by the directors with the CEO and during the Board’s executive sessions. The Board reviews candidates for all senior management positions to confirm that qualified candidates are available for all positions and that development plans are being utilized to strengthen the skills and qualifications of candidates. Our Independent Lead Director oversees the process for CEO succession and leads, at least annually, the Board’s discussion of CEO

succession planning. Our CEO provides the Board with recommendations for and evaluations of potential CEO successors and reviews with the Board development plans for these successors. Directors engage with potential CEO and senior management talent at Board and Committee meetings and in less formal settings to enable directors to personally assess candidates. The Board reviews management succession in the ordinary course of business as well as contingency planning in the event of an emergency or unanticipated event.

 

Board and Committee Evaluations

The Board and each Committee conducts an annual self-evaluation to assess effectiveness and consider opportunities for improvement. As part of the evaluation process, each director completes a written questionnaire and is also interviewed by the Chairman and, if requested or needed, the Independent Lead Director. The results of the written questionnaires are compiled anonymously by the Corporate Secretary in the form of summaries for the full Board and each Committee. The feedback received from the questionnaires and interviews is reviewed and discussed by the Governance Committee (as it relates to both the Board and all Committees) and each other Committee (as it relates to such Committee). Following review and discussion by the Committees, the Chairman and Chair of the Governance Committee summarize the results of the evaluations and report to the full Board for discussion and any action items. In addition, the Chairman and, if applicable, the Independent Lead Director, provides feedback from the individual director interviews to the full Board.

Matters considered in evaluations include the following:

 

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The effectiveness of the Board’s leadership structure and the Board Committee structure;

 

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Board and Committee skills, composition, diversity, and Board succession planning;

 

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Board and Committee culture and dynamics, including the effectiveness of discussion and debate at Board and Committee meetings;

u  

The quality of Board and Committee agendas and the appropriate Board and Committee priorities;

 

 

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Dynamics between the Board and management, including the quality of management presentations and information provided to the Board and Committees; and

 

 

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The contributions and performance of individual directors, including the Chairman, Independent Lead Director, and Committee Chairs.

 
 

Annual Evaluation of CEO

 

The CEO reports annually to the Board regarding achievement of previously established goals and objectives. The non-management directors, meeting separately in executive session, annually conduct a formal evaluation of the CEO, which is communicated to the CEO by the Independent Lead Director. The evaluation is based on both objective and subjective criteria, including, but not limited to: the Company’s financial performance, accomplishment

of ongoing initiatives in furtherance of the Company’s long-term strategic objectives, and development of the Company’s top management team. The results of the evaluation are considered by the Compensation Committee in its deliberations when determining the compensation of the CEO, as further described in the “Compensation Discussion and Analysis” section in this Proxy Statement.

 

 

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Director Orientation and Continuing Education

 

All new directors participate in the Company’s director orientation program, which generally commences promptly after the meeting at which a new director is elected. The Governance Committee oversees this orientation program to familiarize new directors, through a review of background material, meetings with senior management and plant and facility tours. The orientation allows new directors to become familiar with the Company’s business and strategic plans; significant financial matters; core values, including ethics, compliance programs and corporate governance practices; and other key policies and practices, including, but not limited to, sustainability, vehicle and workplace safety, public policy and governance relations, risk management, and investor relations. The orientation also includes tours of GM plant(s), the Design Studio at the Warren Technical Center, dealer visits and/or auto show events.

The aforementioned orientation program and GM’s ongoing education program(s) are set forth in a policy, adopted by

the Board upon recommendation of the Governance Committee, to build upon current practices and expectations set forth in the Board’s Corporate Governance Guidelines regarding the orientation process for newly appointed directors and ongoing director education. After initial orientation programs are completed, the objective of the policy is to keep directors updated with information about the Company and its operations, corporate governance, and other matters relevant to board service. Board members are encouraged to visit GM facilities, dealers, auto shows, and other key corporate and industry events to enhance their understanding of the Company and its competitors in the auto industry. In addition, all directors are encouraged to attend, at our expense, director continuing education programs sponsored by governance organizations and other institutions. Consistent with prior practices, the Governance Committee annually reviews each director’s orientation and external education activities.

 

 

Director Service on Other Public Company Boards

 

The Board recognizes that service on other public company boards provides valuable governance and leadership experience that benefits the Company. The Board also believes, however, that it is critical that directors dedicate sufficient time to their service on the Company’s Board. Directors are expected to advise the Chairman of the Board, Independent Lead Director, or Chair of the Governance Committee in advance of accepting an invitation to serve on another board of directors or any audit committee of another public company board. This provides an opportunity to assess the impact of joining another board, based on various factors relevant to the specific situation, including the nature and extent of a director’s other professional obligations and the time commitment attendant to the new position. Directors who are engaged in active, full-time employment, for example, would have

less time to devote to Board service than a director whose principal occupation is serving on boards. Our Corporate Governance Guidelines provide that, without obtaining the approval of the Board:

 

  A director may not serve on the boards of more than four other public companies (excluding nonprofits and subsidiaries); and

 

  No member of the Audit Committee may serve on more than two other public company audit committees.

All directors are in compliance with this policy. In general, management may not serve on the board of more than one other public company or for-profit entity and must obtain the approval of the Governance Committee prior to accepting an invitation to serve on an outside board.

 

 

Compensation Committee Interlocks and Insider Participation

During 2016, and as of the date of this Proxy Statement, none of the members of the Compensation Committee was or is an officer or employee of the Company, and no executive officer of the Company served or serves on the compensation committee or board of any company that employed or employs any member of the Company’s Compensation Committee or Board of Directors.

 

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Shareholder Protections

Our Board is committed to governance structures and practices that increase shareholder value and protect important shareholder rights. Our Governance Committee regularly reviews these structures and practices, which include the following:

 

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Supermajority of independent directors serving on the Board, with key committees (including Audit, Compensation, and Governance) composed entirely of independent directors;

 

 

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Annual election of all directors;

 

 

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One-share, one-vote standard;

 

 

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Majority voting standard for the election of directors in uncontested elections, coupled with a director resignation policy;

 

 

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Shareholder right to call for a special meeting;

 
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Proxy access permitting a shareholder, or a group of up to 20 shareholders, owning at least 3% of the Company’s outstanding voting shares continuously for at least three years, to nominate and include in the Company’s proxy materials director nominees (two individuals or 20% of the Board, whichever is greater);

 

 

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No poison pill;

 

 

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Executive sessions without management present; and

 

 

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Director-Shareholder Engagement Policy that contemplates proactive and productive engagement with shareholders.

 
 

Certain Relationships and Related Party Transactions

 

 

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Our code of business conduct and ethics, “Winning with Integrity,” requires all our employees and directors to avoid any activity that is in conflict with our business interests. In addition, our Board has adopted a written policy regarding the review and approval or ratification of “related party transactions.” Under this Policy, directors and executive officers must report any potential related party transactions (including transactions involving immediate family members of director or executive officers) to the General Counsel or Corporate Secretary.

For purposes of our Policy, a related party transaction includes transactions in which our Company is a participant, the amount involved exceeds $120,000, and a “related party” has or will have a direct or an indirect material interest. Related parties of our Company consist of directors (including nominees for election as directors), executive officers, shareholders beneficially owning more than 5% of the Company’s voting securities (“Significant Shareholders”), and the immediate family members of these individuals.

When the Governance Committee is notified of a potential related party transaction it will determine whether the transaction does in fact constitute a related party transaction requiring compliance with this Policy and whether to approve a transaction.

 

u   Factors Used in Assessing Related Party Transactions

 

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Whether the terms of the related party transaction are fair to the Company and on the same basis as if the transaction had occurred on an arms-length basis;

 

 

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Whether there are any compelling business reasons for the Company to enter into the related party transaction and the nature of alternative transactions, if any;

 

 

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Whether the related party transaction would impair the independence of an otherwise independent director;

 
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Whether the Company was notified about the related party transaction before its commencement, and if not, why preapproval was not sought and whether subsequent ratification would be detrimental to the Company; and

 

 

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Whether the related party transaction would present an improper conflict of interest for any director or executive officer of the Company, taking into account the specific facts and circumstances of such transaction.

 
 

Any member of the Governance Committee who has a potential interest in any related party transaction will recuse himself or herself and abstain from voting on the approval or ratification of the related party transaction, but may participate in all or a portion of the Governance Committee’s discussions of the related party transaction, if requested by the Chair of the Governance Committee. As required under SEC rules, we will disclose all related party transactions in our Proxy Statement.

 

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The following is the only related party transaction that occurred over 2016.

The son of John Quattrone, Senior Vice President, Global Human Resources, is employed by the Company in a non-executive position and in 2016 received compensation of approximately $137,000 and customary Company benefits. His total compensation is similar to the total compensation provided to other employees of the same level with similar responsibilities. The terms of his employment with GM were approved by the Governance Committee pursuant to the Company’s Related Party Transactions Policy.

Public Policy Engagement

 

 

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Our Board has adopted a U.S. Corporate Political Contributions and Expenditures Policy (“Political Contributions Policy”). The Political Contributions Policy, together with other policies and procedures of the Company, guides GM’s approach to political contributions. We participate in the political process to help shape public policy and address legislation that impacts GM, our industry, and our shareholders. GM has a history of supporting and will continue to support public policies that work to drive or are necessary to furthering the achievement of our long-term, sustainable growth. As specified in its Charter, the Governance Committee oversees this policy and annually reviews the Company’s engagement in the public policy process. The Committee also annually reviews all corporate political contributions as well as GM Political Action Committee (“GM PAC”) contributions and expenditures (which are funded entirely by voluntary employee contributions). The report includes information about contributions to political organizations known as “section 527 organizations;” corporate contributions to individual candidates for state and local office; and portions of dues or similar payments to trade associations and social welfare organizations, to the extent the dues or other payments equal or exceed $50,000 and are attributable to political purposes. In addition, on our website at gm.com/investors, under “Corporate Governance” a link to the Federal Election Commission website is provided, which details employee contributions to the federal GM PAC and the GM PAC’s contributions to candidates, party committees, and other PACs.

Shareholder Engagement

 

u   Engagement History and Commitment

Our Board believes that fostering long-term and enterprise-wide relationships with our shareholders and maintaining their trust and goodwill is a core GM objective. In 2016, to demonstrate openness to investor feedback and input, our Board adopted a Director-Shareholder Engagement Policy, which contemplates both proactive engagement, in which shareholders are identified by the Board for selective engagement, and reactive engagement, with shareholders that seek to provide input to the Board and executive management on various matters. Following the 2016 Annual Meeting of Shareholders, members of the Board, including our Independent Lead Director and Compensation Committee Chair, met with 11 of our largest shareholders, representing approximately 25% of our outstanding common stock. These engagements routinely covered GM’s strategic priorities; governance matters, such as Board leadership, succession planning and refreshment; executive compensation, including the link between corporate strategy and executive compensation; and corporate responsibility, environmental, social, and other current and emerging issues, so that the Board and management could understand and address the issues that are important to our shareholders. Additionally, during 2016, one or more members of management were involved in more than 50 in-person and telephonic meetings on these topics with investors representing more than 45% of shares outstanding.

 

u   Outreach and Our 2016 Say-on-Pay Vote

During these engagements members of our Board and management discussed, among other things, GM’s strategy and performance and the alignment of strategy and performance with executive compensation. The Compensation Committee evaluated feedback from these engagements and considered other factors used in assessing GM’s executive compensation programs. Please see page 44 in this Proxy Statement for more information.

 

 

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Corporate Responsibility, Environmental and Sustainability Matters

We have a long-standing commitment to our shareholders and communities to operate in an environmentally and socially responsible manner. We are reducing our global carbon footprint, optimizing the efficiency and safety of our workplace, helping our customers reduce their own environmental footprints, and engaging with our suppliers to help them operate in more sustainable ways. To do this, we provide solutions all over the world in the form of improved and new types of products, innovation for existing products and services, and advanced technologies and manufacturing.

Placing the customer at the center of everything we do extends to both how we build our products and how we serve and improve our communities. When it comes to sustainability, we pursue outcomes that create value for all of our stakeholders.

 

 

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SECURITY OWNERSHIP INFORMATION

Security Ownership of Directors, Named Executive Officers, and Certain Other Beneficial Owners

The beneficial ownership as of March 15, 2017, of our common stock by each director, each nominee for election to the Board, each NEO, and all directors and executive officers as a group is shown in the following tables, as well as ownership of Deferred Share Units and Deferred Salary Stock Units. Each of the individuals listed in the following tables owns less than 1% of the outstanding shares of our common stock; all directors and officers as a group own less than 1% of the outstanding shares. None of the shares shown in the following tables as beneficially owned by directors and executive officers is hedged or pledged as security for any obligation.

Non-Employee Directors

 

Director(1)

 

  

 

Shares of Common

Stock Beneficially

Owned

 

      

Deferred Share

Units(2)

 

 

 

Joseph J. Ashton

 

    

 

500

 

 

 

      

 

14,872

 

 

 

 

Linda R. Gooden

 

    

 

1,000

 

 

 

      

 

7,701

 

 

 

 

Joseph Jimenez

 

    

 

32,330

 

 

 

      

 

12,944

 

 

 

 

Jane L. Mendillo

 

    

 

1,600

 

 

 

      

 

4,648

 

 

 

 

Michael G. Mullen

 

    

 

750

 

 

 

      

 

14,813

 

 

 

 

James J. Mulva

 

    

 

28,343

 

 

 

      

 

35,973

 

 

 

 

Patricia F. Russo

 

    

 

2,300

 

 

 

      

 

23,943

 

 

 

 

Thomas M. Schoewe

 

    

 

7,645

 

 

 

      

 

20,354

 

 

 

 

Theodore M. Solso

 

    

 

5,000

 

 

 

      

 

48,801

 

 

 

 

Carol M. Stephenson

 

    

 

800

 

 

 

      

 

43,207

 

 

 

 

(1)

c/o General Motors Company, 300 Renaissance Center, Detroit, Michigan 48265.

 

(2)

Represents the unit equivalents of our common stock under the Director Compensation Plan described on page 23.

Named Executive Officers and All Directors and Executive Officers as a Group

 

     

 

Beneficial Ownership

           

Name(1)

 

  

 

Shares of
Common Stock

Beneficially

Owned

 

      

Right to

Acquire(2)

 

      

Total Number

of Shares

 

 

 

Mary T. Barra

 

    

 

389,885

 

 

 

      

 

1,041,215

 

 

 

      

 

1,431,100

 

 

 

 

Charles K. Stevens, III

 

    

 

118,052

 

 

 

      

 

249,458

 

 

 

      

 

367,510

 

 

 

 

Daniel Ammann

 

    

 

275,953

 

 

 

      

 

390,456

 

 

 

      

 

666,409

 

 

 

 

Mark L. Reuss

 

    

 

208,052

 

 

 

      

 

331,888

 

 

 

      

 

539,940

 

 

 

 

Alan Batey

 

    

 

103,892

 

 

 

      

 

234,274

 

 

 

      

 

338,166

 

 

 

 

All Directors and Executive Officers as a Group

(24 persons, including the foregoing)

 

     1,490,111          3,574,473          5,064,584  

 

(1)

c/o General Motors Company, 300 Renaissance Center, Detroit, Michigan 48265.

 

(2)

Includes shares which the named individual or group has the right to acquire through the exercise of vested stock options, and shares which the named individual or group has the right to acquire through the vesting of restricted stock units and stock options within 60 days of March 15, 2017.

 

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SECURITY OWNERSHIP INFORMATION

 

 

Certain Beneficial Owners

The beneficial ownership, as of March 15, 2017, of our common stock by each person or group of persons who is known to be the beneficial owner of more than 5% of our outstanding shares is shown in the following table.

 

Name and Address of Beneficial Owner of Common Stock

  

Number of

Shares(1)

      

Percent of

Outstanding
Shares(1)

 

 

UAW Retiree Medical Benefits Trust, as advised by its fiduciary and investment

advisor Brock Fiduciary Services LLC

200 Walker Street

Detroit, MI 48207

 

  

 

 

 

140,150,000

 

 

    

 

 

 

9.3

 

 

The Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

 

  

 

 

 

87,108,503

 

 

    

 

 

 

5.8

 

 

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

 

  

 

 

 

78,315,411

 

 

    

 

 

 

5.2

 

(1)

Number of shares and percentage of outstanding shares reported by each beneficial owner in filings with the SEC. The Company is permitted to rely on the information set forth in these filings and has no reason to believe that the information is incomplete or inaccurate or that the beneficial owner should have filed an amended report and did not. Each beneficial owner reported as follows:

 

Entity/ Filing

 

 

Sole Voting Power

 

   

Shared Voting Power

 

   

Sole Dispositive

Power

 

   

Shared Dispositive

Power

 

 

 

UAW Retiree Medical Benefits Trust

(Sch. 13G, filed Feb. 11, 2014)

 

 

 

 

 

 

 

 

 

 

 

140,150,000

 

 

 

 

 

 

 

 

 

 

 

 

140,150,000

 

 

 

The Vanguard Group

(Sch. 13G, filed Feb. 13, 2017)

 

 

 

 

 

2,201,872

 

 

 

 

 

 

250,968

 

 

 

 

 

 

84,718,214

 

 

 

 

 

 

2,390,289

 

 

 

BlackRock, Inc.

(Sch. 13G, filed Jan. 30, 2017)

 

 

 

 

 

65,837,512

 

 

 

 

 

 

72,791

 

 

 

 

 

 

78,242,620

 

 

 

 

 

 

72,791

 

 

Stockholders Agreement

 

Pursuant to the Stockholders Agreement dated October 15, 2009, between the Company and the UAW Retiree Medical Benefits Trust (the “VEBA Trust”), the VEBA Trust will vote its shares of our common stock on each matter presented to the shareholders at the Annual Meeting in the same

proportionate manner as the holders of our common stock other than our directors and executive officers. The VEBA Trust will be subject to the terms of the Stockholders Agreement until it beneficially owns less than 2% of the shares of our common stock then issued and outstanding.

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Federal securities laws require that our directors and executive officers and shareholders that own more than 10% of our common stock report to the SEC and the Company certain changes in ownership and ownership information within specified periods. Based solely on a review of the reports furnished to us or filed with the SEC and upon information furnished by these people, we

believe that during 2016 all of our Directors and officers timely filed all reports they were required to file under Section 16(a), except Mr. Karl-Thomas Neumann, for whom we filed one late report due to a broker error that delayed reporting to us of one transaction pursuant to Mr. Neumann’s 10b5-1 trading plan.

 

 

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EXECUTIVE COMPENSATION

 

LOGO

 

Compensation Discussion and Analysis (CD&A)   

Compensation Overview

     42  

Compensation Principles

     49  

Compensation Elements

     49  

Performance Measures

     50  

Performance Results and Compensation Decisions

     54  

Compensation Policies and Governance Practices

     60  

Compensation Committee Report

     61  
 

 

Defined terms:

 

  AFCF – Automotive Free Cash Flow

 

  DB – Defined Benefit

 

  DC – Defined Contribution

 

  DSV – Driving Stockholder Value

 

  EBIT – Earnings Before Interest and Taxes

 

  EPS – Earnings Per Share

 

  LTIP – Long-Term Incentive Plan

 

  GAAP – Generally Accepted Accounting Principles
  NEO – Named Executive Officer

 

  OEM – Original Equipment Manufacturer

 

  PSU – Performance Share Unit

 

  ROIC – Return on Invested Capital

 

  RSU – Restricted Stock Unit

 

  STIP – Short-Term Incentive Plan

 

  TSR – Total Shareholder Return
 

 

Executive Compensation Table of contents

 

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EXECUTIVE COMPENSATION

 

 

Compensation Overview

 

  u   Our Company Performance

In 2016, we continued progress toward our goal of making GM the most valued automotive company for our shareholders. The results below demonstrate how we are positioning GM as an industry leader both now and in the future:

 

  u  

Achieved record global sales, earnings, and margins;

 

 

  u  

Continued strong vehicle sales with deliveries of more than 10 million units globally;

 

 

  u  

Increased EPS-Diluted to $6.00 and EPS-Diluted-Adjusted by 21.9% year-over-year to $6.12;(1)

 

 

  u  

Returned $4.8 billion to shareholders through share repurchases and dividend payments;

 

 

  u  

Generated greater than 10% EBIT-Adjusted margins in North America for the second straight year;

 

 

  u  

Strengthened global Chevrolet and Cadillac brands; in the U.S., GM grew retail market share faster than any other full-line automaker; and globally sold the most Cadillacs since 1986;

 

 

  u  

Increased average transaction prices in the U.S. to $35,704, nearly $4,300 per vehicle more than the industry average;

 
  u  

Achieved approximately $2 billion in material, logistics, manufacturing, and SG&A cost performance for the second straight year; increased the cost efficiency target for 2015-2018 from $5.5 billion to $6.5 billion;

 

 

  u  

Increased our focus on mobility efforts through the acquisition of Cruise Automation, investment in Lyft, and growth of the Maven brand;

 
  u  

Began real-world Autonomous Vehicle testing in Arizona, California, and Michigan;

 

 

  u  

Expanded connectivity available in North America, South America, China, and Europe;

 

 

  u  

Partnered with IBM to bring OnStar and Watson together for unparalleled connectivity experience; and

 

 

  u  

Continued to transition GM Financial into a full captive finance company for all GM brands.

 
 

 

  (1)

Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for a reconciliation of this non-GAAP measure to its closest comparable GAAP measure.

 

 

  u   Our Vehicle Launches

We launched 42 vehicles across the globe in 2016, including some of the key vehicles below:

 

    Buick LaCrosse (GM China, GM North America)

 

    Cadillac XT5 (GM China, GM North America)

 

    Chevrolet Cruze (GM China, GM International, GM North America, GM South America)

 

    GMC Acadia (GM North America)

 

  Cadillac CT6 (GM China, GM North America)

 

  Chevrolet Bolt EV (GM North America)

 

  Chevrolet Malibu (GM China, GM International, GM North America)

 

  Opel / Vauxhall Astra Wagon (GM Europe)
 

 

  u   Our Named Executive Officers

 

Mary T. Barra

 

 

LOGO

 

 

Chairman & Chief Executive Officer

Charles K. Stevens, III

 

 

LOGO

 

 

Executive Vice President & Chief Financial Officer

Daniel Ammann

 

 

LOGO

 

 

President

Mark L. Reuss

 

 

LOGO

 

 

Executive Vice President, Global Product Development, Purchasing and Supply Chain

Alan Batey

 

 

LOGO

 

 

Executive Vice President & President, North America

 

 

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EXECUTIVE COMPENSATION

 

 

We ended 2016 with the following key financial results:

 

 

LOGO

 

  (1)

Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for a reconciliation of this non-GAAP measure to its closest comparable GAAP measure.

 

 

  (2)

Assumes dividends are reinvested in common stock.

 

 

  u   Compensation Governance and Best Practices

 

 

WHAT WE DO

 

ü  

Provide short-term and long-term incentive plans with performance targets aligned to business goals

ü  

Conduct annual advisory vote for shareholders to approve executive compensation

ü  

Maintain a Compensation Committee composed entirely of independent directors

ü  

Require stock ownership for all senior leaders (approximately 300)

ü  

Conduct rigorous shareholder engagement by members of the Executive Compensation Committee, our Independent Lead Director, and management

ü  

Include non-compete and non-solicitation terms in all grant agreements with all senior leaders

ü  

Retain an independent executive compensation consultant to the Compensation Committee

ü  

Maintain a Securities Trading Policy requiring directors, executive officers, and all other senior leaders to trade only during established window periods after contacting the GM Legal Staff prior to any sales or purchases of common stock

ü  

Require equity awards to have a double-trigger (termination of employment and change in control) to initiate protection provisions of outstanding awards

ü  

Complete incentive compensation risk reviews annually

ü  

Maintain a strong clawback policy to apply to actions that damage GM’s reputation

 

 

WHAT WE DON’T DO

 

û  

Provide gross-up payments to cover personal income taxes or excise taxes pertaining to executive or severance benefits

û  

Allow directors or executives to engage in hedging or pledging of GM securities

û  

Reward executives for excessive, inappropriate, or unnecessary risk-taking

û  

Allow the repricing or backdating of equity awards

 

 

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EXECUTIVE COMPENSATION

 

 

 

  u   Shareholder Engagement Initiatives

We view shareholder engagement as an important and continuous cycle. Following the 2016 Annual Meeting of Shareholders, members of the Board, including our Independent Lead Director and Compensation Committee Chair, met with 11 of our largest shareholders, representing approximately 25% of our outstanding common stock. Additionally, during 2016, one or more members of management were involved in more than 50 in-person and telephonic meetings with investors representing more than 45% of shares outstanding. These discussions, say-on-pay voting results, and other factors are key drivers in assessing our compensation programs.

 

LOGO

 

 

SHAREHOLDER SAY-ON-PAY

The Compensation Committee seeks to align the Company’s executive compensation program with the interests of the Company’s shareholders. The Compensation Committee considers the results of the annual Say-On-Pay vote, input from management, input from its independent compensation consultant, and investor engagement initiatives when setting compensation for our executives. In 2016, 61.7% of our shareholders voted in favor of our compensation programs. This support was lower than the previous three years where shareholders supported compensation programs, with over 96% voting in favor during 2013 (98.7%), 2014 (96.9%) and 2015 (97.8%). During 2016, we held several discussions with some of our largest shareholders, as described above. In the sections below you will read what we heard, how we responded, and how our compensation plans have been modified to better align with the interests of shareholders.

 

The Company values investor feedback and will continue investor engagement initiatives to align our executive compensation programs with shareholder expectations. While we generally received positive feedback from shareholders during our engagement efforts, we made changes to our compensation plans that were effective at the start of 2017 in order to further align the interests of our senior leaders with those of our shareholders.

 

 

What We Heard

 

  

 

How We Responded

 

Maintain pay for performance

  

We continue to pay for performance with 72% of our CEO’s compensation structure and on average 67% of other NEOs compensation structure linked to performance against pre-established measures. We set challenging goals for 2016 and the Company responded with all-time record performance in several key areas including revenue, EBIT-adjusted, Adjusted AFCF, and EPS-Diluted-Adjusted.

 

Align compensation to the interests of shareholders

  

Executives have the majority of their total compensation in the form of equity. Our STIP and PSUs both have metrics that create long-term shareholder value. Additionally in 2017, PSUs will feature both Relative ROIC-Adjusted and Relative TSR as performance measures for determining the amount of the award. Time-based RSUs previously provided to senior leaders have been replaced in 2017 with stock options to further align the interests of our senior leaders with those of our shareholders.

 

Limit one-time broad-based awards

  

We granted one-time DSV stock options in 2015 to introduce and secure non-compete and non-solicitation terms with all senior leaders in a highly competitive environment for automotive talent. Some investors expressed concerns with the DSV award but generally understood the need to secure these terms to retain talent. We did not grant any one-time, broad-based awards in 2016.

 

Look at performance relative to automotive industry peers

  

In 2017, our PSUs will measure both Relative ROIC-Adjusted and Relative TSR against the Company’s OEM Peers to motivate our leaders to perform at the top of the industry regardless of business cycles.

 

Simplify compensation plans

  

We continue to evaluate both short-term and long-term compensation plans so that our executives’ line of sight is aligned with creating shareholder value. In 2017, STIP will be simplified to focus senior leaders on financial performance and will include an individual performance assessment measured against operational performance measures.

 

 

 

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  u   Compensation Program Evolution

Our compensation programs have continued to align to shareholders by focusing our leaders on the key areas that both drive the business forward and align to the short-term and long-term interests of our shareholders. The Compensation Committee regularly reviews and discusses plan performance at each Compensation Committee meeting. The Compensation Committee considers many factors when electing to make plan changes for future incentive plans including forecasted results, market trends, and investor feedback. The table below shows how the compensation program has continued to evolve to align with shareholders.

 

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EXECUTIVE COMPENSATION

 

 

The Company held engagements with investors and received feedback on changes to both the STIP and LTIP. The 2017 STIP continues a focus on important financial measures (75% of STIP) and individual performance (25% of STIP), the total payout will be 0% to 200% of target based on actual performance against pre-established goals. The Compensation Committee will determine individual performance using a rigorous assessment process measuring performance against pre-established operational and other measures. There will no longer be an additional individual performance modifier for the 2017 STIP.

The key change to the 2017 LTIP is to replace time-based RSUs with stock options as a way to further align our most senior leaders with our shareholders’ interest in stock price appreciation. Additionally, the Company changed PSU performance measures from ROIC-Adjusted with a global market share modifier to Relative ROIC-Adjusted (50% of total LTIP) and Relative TSR (25% of total LTIP) against OEMs in the Dow Jones Automobiles and Parts Titans 30 Index, listed below.

 

 

Dow Jones Automobiles & Parts Titans 30 Index – OEM Peer Group

 

 

Toyota Motor Company

 

   Volkswagen AG    Suzuki Motor Corp.          

 

Daimler AG

 

   Bayerische Motoren Werke AG    Fiat Chrysler Automobiles NV          

 

Ford Motor Company

 

   Nissan Motor Co. Ltd    Tesla, Inc.          

 

Honda Motor Co. Ltd.

 

   Renault SA    Mazda Motor Corp.          

 

General Motors Co.(1)

 

   Hyundai Motor Co.    Kia Motors Corp.          

 

  (1)

General Motors performance will be determined on a continuous ranking for performance relative to OEM Peers following the completion of the performance period.

 

The percentile rank required for each performance level relative to OEM peers and associated payouts for PSUs are displayed below.

 

 

LOGO

Focusing performance on key financial measures and individual operational performance measures in the short-term, combined with performance in both Relative ROIC-Adjusted and Relative TSR compared to our other OEM peers in the long-term, will provide direct alignment of our executive compensation with the interests of our shareholders and continue to focus our senior leaders on making the investments that will provide for profitable long-term growth.

 

  u   Peer Group for Compensation Comparisons

The Compensation Committee annually reviews the peer group for compensation comparisons and makes updates as needed to align with both the established criteria and Company strategy. We do not limit our peer group to our industry alone, because we believe compensation practices for NEOs at other large U.S.-based multinationals affect our ability to attract and retain diverse talent around the globe.

 

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EXECUTIVE COMPENSATION

 

 

 

In 2016, we maintained the same compensation peer group from 2015. Based on the guidelines established by the Compensation Committee for our peer group selection, companies must satisfy each of the following criteria to be considered for the peer group:

 

    Revenue greater than $25 billion

 

    Significant international revenue

 

    Capital intensive operations

Additionally, the Compensation Committee considers the following factors when selecting our peer group:

 

    Companies with comparable R&D expenditures as a percent of revenue

 

    Durable goods manufacturer

 

    Business/production complexity

 

    Consumers are the end-user

 

    Strong brand reputation
 

 

Company

 

 

Industry

 

  

Revenue
> $25B

 

  

Significant
International
Revenue

 

  

Capital Intensive
Operations

 

 

3M Company

 

 

Industrial Conglomerates

 

  

 

X

 

   X

 

   X

 

 

The Boeing Company

 

 

Aerospace and Defense

 

   X

 

   X

 

   X

 

 

 

Caterpillar Inc.

 

Construction Machinery and

Heavy Trucks

 

  

 

X

  

 

X

  

 

X

 

Deere & Company

 

Agricultural and Farm Machinery

 

   X

 

   X

 

   X

 

 

The Dow Chemical Company

 

Diversified Chemicals

 

   X

 

   X

 

   X

 

 

Du Pont

 

Diversified Chemicals

 

   X

 

   X

 

   X

 

 

Ford Motor Company

 

Automobile Manufacturers

 

   X

 

   X

 

   X

 

 

General Electric Company

 

Industrial Conglomerates

 

   X

 

   X

 

   X

 

 

HP, Inc.

 

Technology Hardware,

Storage, and Peripherals

 

  

 

X

  

 

X

  

 

X

 

Honeywell International Inc.

 

Aerospace and Defense

 

   X

 

   X

 

   X

 

 

IBM Corporation

 

IT Consulting and Other Services

 

   X

 

   X

 

   X

 

 

Intel Corporation

 

Semiconductors

 

   X

 

   X

 

   X

 

 

Johnson & Johnson

 

Pharmaceuticals

 

   X

 

   X

 

   X

 

 

Johnson Controls Inc.

 

Auto Parts and Equipment

 

   X

 

   X

 

   X

 

 

PepsiCo, Inc.

 

Soft Drinks and Food

 

   X

 

   X

 

   X

 

 

Pfizer Inc.

 

Pharmaceuticals

 

   X

 

   X

 

   X

 

 

The Procter & Gamble Company

 

Household Products

 

   X

 

   X

 

   X

 

 

United Technologies Corp.

 

Aerospace and Defense

 

   X

 

   X

 

   X

 

 

  u   How We Use Comparator Data to Assess Compensation

We use executive compensation surveys comprised of a broad array of industrial companies to benchmark relevant market data for executive positions. In addition, we benchmark proxy statement disclosures of our peer group and adjust this data to reflect GM’s size and market expected compensation trends. Further, we review the competitive market position of each of our executives compared with the market data.

We review each element of compensation compared to the market and generally target our total direct compensation (Base Salary, STIP, and LTIP) for the executive group on average to be at or near the market median. However, an individual element or an individual’s total direct compensation may be positioned above or below the market median because of his or her specific responsibilities, experience, and performance.

 

 

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EXECUTIVE COMPENSATION

 

 

 

  u   How We Plan Compensation

 

 

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  u   Performance-Based Compensation Structure

Our NEOs are focused on optimizing long-term financial returns for our shareholders through increasing profitability, increasing margins, putting the customer at the center of everything we do, growing the business, and driving innovation.

The performance-based structure for 2016 incorporates both short-term and long-term incentives established from financial and operational metrics for fiscal year 2016 and beyond. In addition to base salary and an annual STIP award, this structure, shown graphically below, includes a LTIP award made up of both PSUs and RSUs to focus our executives on long-term Company performance. The Compensation Committee believes a majority of compensation should be in the form of equity to align the interests of executives with those of shareholders.

 

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EXECUTIVE COMPENSATION

 

 

Compensation Principles

The compensation provided to our senior leaders is guided by the following principles:

 

 

Aligned with Shareholders – Compensation paid should align directly with the long-term interests of our shareholders, and our executives should share with them in the performance and value of common stock;

 

 

Performance-Based – Compensation paid should be based on a balance of financial and operational goals reflecting strong financial performance relative to our OEM competitors. The goals should be aggressive but achievable, within our executives’ control and should reward commitments met;

 

 

Recognize Individual Performance – Compensation paid should motivate executives to perform at their best, reflecting their clear line of sight and contributions as well as their behaviors and demonstration of GM’s core values. Individual performance must be aligned with Company performance and desired behaviors;

 

Simple Design – Our compensation plan should be easy to understand and communicate and minimize unintended consequences;

 

 

Avoidance of Incentive to Take Excessive Risk – Compensation structure should avoid incentives to take unnecessary and excessive risk. Compensation should be paid over a period of time that takes into account the potential risk over the same time period;

 

 

Appropriate Allocation of Compensation Components – The structure should appropriately allocate total compensation to fixed and variable pay elements resulting in an appropriate mix of short-term and long-term pay elements; and

 

 

Comparable Target Compensation – Overall target compensation should be competitive (market median) with that paid to individuals at peer group companies so that it attracts, motivates, and retains talent.

 

Compensation Elements

 

u   2016 Compensation Structure

Each NEO’s 2016 compensation structure included the following pay elements:

 

 

Base Salary – NEOs are paid a market-competitive base salary that reflects each NEO’s contribution, background, performance as well as the knowledge and skills he or she brings to the role;

 

 

STIP – The STIP is an annual cash incentive plan. The STIP rewards each NEO based on the achievement of annual Company financial and operational performance goals and individual performance. The potential Company payout ranges from 0% to 200% of target, based on actual Company performance;

 

 

PSUs – PSUs are equity awards designed to align each NEO’s interests with the long-term interests of the Company and its shareholders. PSUs can be earned at a level from 0% to 200% of target, based on the actual Company performance against ROIC-Adjusted and Global Market Share targets over the three-year performance period beginning January 1, 2016; and

 

 

RSUs – RSUs are time-based equity awards vesting ratably over a three-year period. RSUs align the interests of NEOs with shareholders and help to retain top talent.

 

u   Perquisites, Benefits, and Other Compensation

We provide perquisites, benefits, and other compensation to our NEOs consistent with market practices. The following perquisites, benefits, and other compensation were provided to NEOs in 2016:

 

 

Personal Air Travel – Ms. Barra is prohibited by Company policy from commercial air travel due to security reasons identified by an independent third-party security consultant. As a result, the Company pays the costs associated with the use of private aircraft for both business and personal use. Ms. Barra is permitted to be accompanied by guests for personal travel and incurs imputed income for all passengers, including herself, at the U.S. Internal Revenue Service (the “IRS”) Standard Industry Fair Level rates. Other NEOs may travel on private aircraft in certain circumstances with prior approval from the CEO or the Senior Vice President Global Human Resources, and also incur imputed income for any personal travel.

 

 

Company Vehicle Programs – NEOs are eligible to participate in the Executive Company Vehicle Program and are allowed to use evaluation vehicles for the purpose of providing feedback on Company products. Additionally, NEOs are eligible to use driver services provided by the Company and in accordance with Company policies.

 

 

Security – NEOs may receive security services, including home security systems and monitoring, for specific security-related reasons identified by independent third-party security consultants.

 

 

Financial Counseling – NEOs are eligible to receive financial counseling, estate planning, and tax preparation services through approved providers.

 

 

Executive Physicals – NEOs are eligible to receive executive physicals with approved providers.

 

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u   2016 Target Compensation

Our target total direct compensation for each NEO in 2016 was as follows:

 

     

Annual Base

Salary

($)

 

    

STIP

($)

 

    

Target Total Cash

Compensation

($)

 

            

 

LTIP

 

    

Target Total Direct

Compensation

($)

 

 

Name

 

                  

PSUs

($)

 

    

RSUs

($)

 

    

 

Mary T. Barra

 

  

 

 

 

 

2,000,000

 

 

 

 

  

 

 

 

 

4,000,000

 

 

 

 

  

 

 

 

 

6,000,000

 

 

 

 

           

 

 

 

 

9,750,000

 

 

 

 

  

 

 

 

 

3,250,000

 

 

 

 

    

 

19,000,000

 

 

 

 

Charles K. Stevens, III

 

    

 

1,100,000

 

 

 

    

 

1,375,000

 

 

 

    

 

2,475,000

 

 

 

             

 

2,587,500

 

 

 

    

 

862,500

 

 

 

    

 

5,925,000

 

 

 

 

Daniel Ammann

 

    

 

1,450,000

 

 

 

    

 

1,812,500

 

 

 

    

 

3,262,500

 

 

 

             

 

3,525,000

 

 

 

    

 

1,175,000

 

 

 

    

 

7,962,500

 

 

 

 

Mark L. Reuss

 

    

 

1,200,000

 

 

 

    

 

1,500,000

 

 

 

    

 

2,700,000

 

 

 

             

 

2,925,000

 

 

 

    

 

975,000

 

 

 

    

 

6,600,000

 

 

 

 

Alan Batey

 

    

 

950,000

 

 

 

    

 

1,187,500

 

 

 

    

 

2,137,500

 

 

 

             

 

2,025,000

 

 

 

    

 

675,000

 

 

 

    

 

4,837,500

 

 

 

Performance Measures

 

u   How We Set Performance Targets

Annually, the Compensation Committee approves the performance measures for the STIP and LTIP. The Compensation Committee reviews recommendations from management, receives input from the Compensation Committee consultant, evaluates the annual budget and mid-term business plan, and reviews prior-year performance to approve value-creating goals tied to long-term shareholder value.

 

u   2016 STIP Performance Measures for NEOs

The STIP aligns with our plans to create the world’s most valued automotive company and to increase shareholder value. The STIP rewards NEOs for performance linked to the Company’s achievement of annual financial goals, operational performance goals, and individual performance. The STIP is an annual cash incentive award intended to be deductible as performance-based compensation under U.S. Internal Revenue Code (“IRC”) Section 162(m) and is funded for each covered NEO once the Company achieves the threshold of positive EBIT-Adjusted.

The Compensation Committee annually reviews and approves STIP goals to assess the difficulty in level of achievement and overall linkage to shareholders through the achievement of the business plan and strategic objectives. For the 2016 STIP, all targets were set at or above final 2015 performance. The Committee elected to adjust the weights to increase EBIT-Adjusted to 40% and decreased Global Market Share to 10% to continue to focus leaders on profitability over market share. Setting challenging but achievable targets motivates our leadership team to deliver results that will benefit shareholders for the long-term.

Actual STIP awards, if any, are determined following the completion of the plan year to reflect the achievement against the performance measures displayed below. Awards can be further adjusted following a final assessment of individual performance. The table below describes each STIP performance measure, its weighting, its target, and the behaviors each measure drives:

 

STIP Measure

 

 

Weight

 

   

Target

 

   

Leadership Behaviors

 

 

EBIT-Adjusted

 

   

 

40

 

 

  $

 

11.3

 

 

 

 

Focus on operating profit and driving strong profitability

 

 

Adjusted AFCF (1)

 

   

 

25

 

 

  $

 

6.0

 

 

 

 

Focus on driving strong cash flow in the business

 

 

Global Market Share

 

   

 

10

 

 

   

 

11.3

 

 

 

Focus on continuing to grow in the global marketplace

 

 

Global Quality

 

   

 

25

 

 

   

 

Various Metrics

 

(2)  

 

 

Focus on designing, engineering, and building the highest-quality products

 

 

(1)

Adjusted AFCF for incentive purposes excludes payments related to certain recall-related expenses attributable to events occurring in 2014.

 

(2)

Global Quality is based on performance against the following measures: Loyalty (10% Weight), 12 Months-In-Service Warranty Frequency (15% Weight).

 

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The potential payouts for each performance measure range from 0% to 200% of target, based on actual Company performance with the threshold performance level being 50% of each STIP measure. The STIP calculation and the STIP targets for the 2016 performance period for each NEO are as follows:

 

 

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Name

 

  

Base Salary

 

      

Target as % of

Salary

 

      

Target STIP

 

 

 

Mary T. Barra

 

  

 

 

 

 

$2,000,000

 

 

 

 

    

 

 

 

 

200%

 

 

 

 

    

 

 

 

 

$4,000,000

 

 

 

 

 

Charles K. Stevens, III

 

  

 

 

 

 

$1,100,000

 

 

 

 

    

 

 

 

 

125%

 

 

 

 

    

 

 

 

 

$1,375,000

 

 

 

 

 

Daniel Ammann

 

  

 

 

 

 

$1,450,000

 

 

 

 

    

 

 

 

 

125%

 

 

 

 

    

 

 

 

 

$1,812,500

 

 

 

 

 

Mark L. Reuss

 

  

 

 

 

 

$1,200,000

 

 

 

 

    

 

 

 

 

125%

 

 

 

 

    

 

 

 

 

$1,500,000

 

 

 

 

 

Alan Batey

 

  

 

 

 

 

$   950,000

 

 

 

 

    

 

 

 

 

125%

 

 

 

 

    

 

 

 

 

$1,187,500

 

 

 

 

 

u   2016-2018 LTIP Performance Measures for NEOs

Grants under the LTIP are intended to link the financial interests of NEOs with the long-term interests of shareholders. The structure for NEOs included 75% PSUs and 25% RSUs. PSUs cliff-vest following the three-year performance period, and RSUs vest ratably over three years.

 

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The 2016-2018 PSUs are awarded based on performance against the following Company measures: ROIC-Adjusted and Global Market Share over the three-year performance period. Our 20% ROIC-Adjusted target is an enduring one, based on our commitments to our shareholders and appropriate for the cyclical nature of our industry. The PSU performance measures were chosen to promote both efficient use of capital and long-term growth to create value for the shareholders. The following table shows the PSU performance measures and the leadership behaviors that each drives to make GM the world’s most valued automotive company:

 

LTIP Measure

 

  

Weight

 

  

Target

 

  

Leadership Behaviors

 

ROIC-Adjusted (1)

   100%    20%   

 

Focus on making sound investments that follow the disciplined capital approach of driving 20% or higher returns in world-class vehicles and leading technology

 

 

Global Market Share (2)

 

  

Modifier

 

  

(3)

 

  

Focus on continuing to grow in the global marketplace

 

 

(1)

The three-year average ROIC-Adjusted target is 20% and performance shall be calculated using the GM average annual ROIC-Adjusted for calendar years 2016, 2017, and 2018, where ROIC-Adjusted is calculated as Total Company EBIT-Adjusted divided by Average Total Company Net Assets. EBIT-Adjusted is defined as earnings excluding interest income, interest expense, and income taxes as well as certain additional adjustments. A discussion of EBIT-Adjusted, supplemental detail of all adjustments, and a reconciliation of EBIT-Adjusted (on a consolidated basis) to net income attributable to shareholders is disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K. In addition, a reconciliation of GM’s automotive segments’ EBIT-Adjusted and GM Financial’s EBIT-Adjusted, in each case, to total net sales and revenue is disclosed in Note 23 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Net Assets is determined based on the four-quarter average for the year, adding back average automotive debt and interest liabilities (except capital leases) and automotive net Pension and OPEB liabilities and excluding average automotive net income tax assets.

 

(2)

The three-year average Global Market Share target range performance shall be calculated using the GM average annual global market share for calendar years 2016, 2017, and 2018 as reported by GM Global Sales Reporting and reflected in the Annual Reports on Form 10-K.

 

(3)

The Performance Target for Global Market Share will be disclosed at the end of the three-year performance period, as future Global Market Share measures are not disclosed.

PSUs, if any, vest and are awarded and delivered following the completion of the three-year performance period, January 1, 2016 – December 31, 2018, and may be earned at a level between 0% and 200% of target based on actual Company results. Final PSU awards are calculated as follows:

 

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When determining grant amounts, the Compensation Committee considers individual responsibilities, experience, and performance. Additionally, the Compensation Committee will factor in relevant market compensation comparison data and seek the input from their independent compensation consultant. The NEOs received the following equity grants as part of their 2016 structure:

 

                                  PSUs(1)              RSUs(2)  

Name

  

Total
Units

Granted

       Closing
Price GM
Stock on
Grant Date
($/share)
              

Units

        Granted

    

% of

Total Units

            

Units

        Granted

    

% of

Total Units

 

Mary T. Barra

 

    

 

469,146

 

 

 

      

 

27.71

 

 

 

               

 

351,859

 

 

 

    

 

75

 

 

             

 

117,287

 

 

 

    

 

25

 

 

Charles K. Stevens, III

 

    

 

124,504

 

 

 

      

 

27.71

 

 

 

               

 

93,378

 

 

 

    

 

75

 

 

             

 

31,126

 

 

 

    

 

25

 

 

Daniel Ammann

 

    

 

169,615

 

 

 

      

 

27.71

 

 

 

               

 

127,211

 

 

 

    

 

75

 

 

             

 

42,404

 

 

 

    

 

25

 

 

Mark L. Reuss

 

    

 

140,744

 

 

 

      

 

27.71

 

 

 

               

 

105,558

 

 

 

    

 

75

 

 

             

 

35,186

 

 

 

    

 

25

 

 

Alan Batey

 

    

 

97,439

 

 

 

      

 

27.71

 

 

 

               

 

73,079

 

 

 

    

 

75

 

 

             

 

24,360

 

 

 

    

 

25

 

 

 

(1)

PSUs cliff-vest based on performance following the three-year performance period January 1, 2016 – December 31, 2018.

 

(2)

RSUs vest ratably over a three-year period.

 

u   Summary of Outstanding Performance Awards Granted in Prior Years

 

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Performance Results and Compensation Decisions

 

u   2016 Short-Term Incentive Plan

The Company portion of the 2016 STIP award was calculated based on the Company’s achievement of the following performance measures: EBIT–Adjusted, Adjusted AFCF, Global Market Share, and Global Quality. Actual 2016 Company performance in the combined measures produced an overall payout of 169% based on the achievement of the following levels for each measure, as approved by the Compensation Committee. Both the results for EBIT-Adjusted and Adjusted AFCF were all-time record results for GM:

 

STIP Measure

 

  

Weight

 

      

Threshold

 

      

Target

 

    

Maximum

 

    

Performance

Results

 

    

Performance

Payout

 

 

 

EBIT – Adjusted ($B)

 

    

 

40

 

 

      

 

$  6.5

 

 

 

      

 

$11.3

 

 

 

    

 

$12.6

 

 

 

    

 

$12.5

 

 

 

    

 

77

 

 

 

Adjusted AFCF ($B)(1)

 

    

 

25

 

 

      

 

$  0.0

 

 

 

      

 

$  6.0

 

 

 

    

 

$  7.0

 

 

 

    

 

$  7.6

 

 

 

    

 

50

 

 

 

Global Market Share

 

    

 

10

 

 

      

 

10.8

 

 

      

 

11.3

 

 

    

 

11.5

 

 

    

 

10.8

 

 

    

 

5

 

 

 

Global Quality

 

    

 

25

 

 

      

 

Various Metrics

 

 

 

    

 

 

(2)  

 

    

 

37

 

 

 

Result

 

                                                     

 

169

 

 

 

(1)

Adjusted AFCF for incentive purposes excludes payments related to certain recall-related expenses attributable to events occurring in 2014.

 

(2)

Global Quality Measures for 2016 included: Loyalty (10% Weight – Payout 19%) and 12 Months-in-Service Warranty Frequency (15% Weight – Payout 18%).

Individual performance may also influence final STIP awards. The compensation decision made for each individual executive is discussed beginning on the next page.

 

u   2014-2016 Long-Term Incentive Plan

The 2014-2016 PSU awards vested on February 11, 2017 based on Company performance for the period January 1, 2014 – December 31, 2016 against pre-established performance targets for both ROIC-Adjusted and Global Market Share. The 2014-2016 PSU was the first performance award granted to NEOs under the performance based compensation program that was first introduced in 2014 following the Company exiting TARP in 2013. Actual performance produced an overall vesting of 195% of shares and the following performance was approved by the Compensation Committee:

 

LTIP Measure

 

    

Weight

 

  

Threshold

 

  

Target

 

  

Maximum

 

  

Performance
Results

 

 

Performance
Payout

 

 

 

 

ROIC-Adjusted

 

     100%

 

   16.0%

 

   20.0%

 

   24.0%

 

   23.8%

 

   

 

195

 

 

 

Global Market Share

 

     Modifier

 

             11.3% - 11.7%

 

   11.3%(1)

 

   

 

N/A

 

 

 

 

Result

 

                              

 

195

 

 

 

(1)

Excludes the impact of the Company’s decision to exit unprofitable markets during 2015.

Focusing our leaders on ROIC-Adjusted has resulted in significant performance improvements since calendar year 2012 when ROIC-Adjusted was 16.0%. We ended calendar year 2016 with a ROIC-Adjusted of 28.9%, representing more than an 80% increase in our performance.

 

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u   Compensation Decisions for Mary T. Barra

    Mary T. Barra, Chairman & Chief Executive Officer

 

 

    Ms. Barra’s performance for 2016 was directly aligned with the Company’s 2016     strategic objectives:

    Earn Customers for Life

 

  u   Twelve models launched achieved Consumer Reports’ “Recommended” status in 2016
  u   Buick was the first domestic brand ever included in the top 3 Consumer Reports’ 2016 Annual Auto Reliability Survey

    Grow Our Brands

 

  u   Significantly improved brand momentum for Buick, Chevrolet, and GMC since 2014
  u   Increased sales to 10 million units globally

    Lead in Technology and Innovation

  u   Launched the 2017 Chevrolet Bolt EV which received multiple car of the year awards including, 2016 Motor Trend Car of the Year, 2016 Green Car of the Year, and Car and Driver 10 Best

 

  u   Completed the acquisition of Cruise Automation and began real world testing of autonomous Bolt Electric Vehicles  
  u   12 million OnStar-connected vehicles on the road at year-end 2016  

    Drive Core Efficiencies

 

  u   Announced an increase of cost efficiency targets from $5.5 billion to $6.5 billion in material, logistics, manufacturing, information technology, and SGA costs by 2018 with $4 billion realized through 2016  
  u   Achieved ROIC-Adjusted results of 28.9% for 2016  

    Culture to Win

 

  u   Returned $4.8 billion to shareholders in 2016 through share buybacks of $2.5 billion and dividends of $2.3 billion; since 2012, GM has returned more than $18 billion to shareholders  
  u   Exceeded all budget commitments and continued to drive a culture with the mindset that “Everything can be made better”  

Effective January 1, 2016, the Compensation Committee increased Ms. Barra’s base salary from $1,750,000 to $2,000,000 based on her performance, tenure, leadership, and the competitive market analysis provided by the Compensation Committee’s independent compensation consultant. At the same time, the Compensation Committee increased the STIP target to two times base salary based on the competitive market analysis provided by the Committee’s independent compensation consultant. For 2016, the Compensation Committee awarded Ms. Barra an annual equity grant of $13 million consisting of 75% PSUs and 25% RSUs. These changes placed Ms. Barra in line with the compensation peer group as her targeted total direct compensation remained competitive at the market median.

The total compensation for Ms. Barra in 2016, including salary, STIP and LTIP awards, is displayed below.

 

 

Pay Element

 

 

 

Majority of Pay Is At-Risk

 

  

 

Awarded Value

 

 

 

Base Salary

 

 

 

Only Fixed Pay Element

 

  

 

 

 

 

$  2,000,000

 

 

 

 

 

STIP

 

 

 

Performance to Metrics

 

  

 

 

 

 

$  6,760,000

 

 

 

 

 

PSUs(1)

 

 

 

Performance to Metrics and Stock Price

 

  

 

 

 

 

$  9,750,013

 

 

 

 

 

RSUs(2)

 

 

 

Performance to Stock Price

 

  

 

 

 

 

$  3,250,023

 

 

 

 

 

TOTAL

 

      

 

 

 

 

$21,760,036

 

 

 

 

 

(1)

PSUs are subject to performance vesting, value reflects grant date fair value at target.

 

(2)

RSUs are subject to time-based vesting.

 

 

 

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Awarded value reflects the amount included in the Summary Compensation Table, excluding change in pension value and all other compensation. Realized compensation includes base salary, earned STIP, and all options exercised and stock vested during the year.

 

 

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EXECUTIVE COMPENSATION

 

 

 

u   Compensation Decisions for Charles K. Stevens, III

    Charles K. Stevens, III, Executive Vice President & Chief Financial Officer

 

 

    Mr. Stevens met objectives for 2016 performance against his goals. Performance     highlights include:

 

  u   Returned $4.8 billion to shareholders in 2016 through share buybacks of $2.5 billion and dividends of $2.3 billion; since 2012, GM has returned more than $18 billion to shareholders
  u   Achieved ROIC-Adjusted result of 28.9% for 2016
  u   Continued focus on investor relations management and strengthened investor perceptions towards GM
  u   Delivered on 2016 cost objectives and announced an increase of cost efficiency targets from $5.5 billion to $6.5 billion in material, logistics, manufacturing, information technology, and SGA costs by 2018 with $4 billion realized through 2016
  u   Generated all-time records in Net Revenue, EBIT-Adjusted, EBIT-Adjusted Margins, Adjusted AFCF, and EPS-Diluted-Adjusted

Effective January 1, 2016, the Compensation Committee increased Mr. Stevens’ base salary from $1,000,000 to $1,100,000 based on his individual performance and the competitive market analysis provided by the Compensation Committee’s independent compensation consultant. For 2016, the Compensation Committee awarded Mr. Stevens an annual equity grant of $3.45 million, consisting of 75% PSUs and 25% RSUs.

The Compensation Committee elected to provide an individual STIP adjustment for the 2016 performance year in the amount of $350,000 as a result of his performance, which is included in the STIP awarded value. The total compensation for Mr. Stevens in 2016, including salary, STIP and LTIP awards, is displayed below.

 

 

Pay Element

 

 

 

Majority of Pay Is At-Risk

 

  

 

Awarded Value

 

 

 

Base Salary

 

 

 

Only Fixed Pay Element

 

  

 

 

 

 

$1,100,000

 

 

 

 

 

STIP

 

 

 

Performance to Metrics

 

  

 

 

 

 

$2,673,800

 

 

 

 

 

PSUs(1)

 

 

 

Performance to Metrics and Stock Price

 

  

 

 

 

 

$2,587,505

 

 

 

 

 

RSUs(2)

 

 

 

Performance to Stock Price

 

  

 

 

 

 

$   862,502

 

 

 

 

 

TOTAL

 

      

 

 

 

 

$7,223,807

 

 

 

 

 

(1)

PSUs are subject to performance vesting, values reflect grant date fair value at target.

 

(2)

RSUs are subject to time-based vesting.

 

 

 

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Awarded value reflects the amount included in the Summary Compensation Table, excluding change in pension value and all other compensation. Realized compensation includes base salary, earned STIP, and all options exercised and stock vested during the year.

 

 

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u   Compensation Decisions for Daniel Ammann

    Daniel Ammann, President

 

 

    Mr. Ammann met objectives for 2016 performance against his goals. Performance     highlights include:

 

  u   Continued to support mobility efforts and strengthened the partnership with Lyft
  u   Recorded global sales of more than 10 million vehicles
  u   Completed the acquisition of Cruise Automation to further position GM as a leader for autonomous vehicles
  u   Drove a focus on profitability over market share in all regions

Effective January 1, 2016, the Compensation Committee increased Mr. Ammann’s base salary from $1,200,000 to $1,450,000 based on his individual performance and the competitive market analysis provided by the Compensation Committee’s independent compensation consultant. For 2016, the Compensation Committee awarded Mr. Ammann an annual equity grant of $4.7 million, consisting of 75% PSUs and 25% RSUs.

The Compensation Committee elected to provide an individual STIP adjustment for the 2016 performance year in the amount of $450,000 as a result of his performance, which is included in the STIP awarded value. The total compensation for Mr. Ammann in 2016, including salary, STIP and LTIP awards, is displayed below.

 

 

Pay Element

 

 

 

Majority of Pay Is At-Risk

 

  

 

Awarded Value

 

 

 

Base Salary

 

 

 

Only Fixed Pay Element

 

  

 

 

 

 

$1,450,000

 

 

 

 

 

STIP

 

 

 

Performance to Metrics

 

  

 

 

 

 

$3,513,100

 

 

 

 

 

PSUs(1)

 

 

 

Performance to Metrics and Stock Price

 

  

 

 

 

 

$3,525,017

 

 

 

 

 

RSUs(2)

 

 

 

Performance to Stock Price

 

  

 

 

 

 

$1,175,015

 

 

 

 

 

TOTAL

 

      

 

 

 

 

$9,663,132

 

 

 

 

 

(1)

PSUs are subject to performance vesting, value reflects grant date fair value at target.

 

(2)

RSUs are subject to time-based vesting.

 

 

 

 

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Awarded value reflects the amount included in the Summary Compensation Table, excluding change in pension value and all other compensation. Realized compensation includes base salary, earned STIP, and all options exercised and stock vested during the year.

 

 

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EXECUTIVE COMPENSATION

 

 

 

u   Compensation Decisions for Mark L. Reuss

    Mark L. Reuss, Executive Vice President, Global Product Development,     Purchasing and Supply Chain

 

 

    Mr. Reuss met objectives for 2016 performance against his goals. Performance     highlights include:

 

  u   Launched the 2017 Chevrolet Bolt EV which received multiple car of the year awards including, 2016 Motor Trend Car of the Year, 2016 Green Car of the Year, and Car and Driver 10 Best
  u   Received the IHS Automotive Loyalty Award for the second straight year
  u   Launched 42 vehicles globally
  u   Began real-world testing of Autonomous Vehicles in Arizona, California, and Michigan

Effective January 1, 2016, the Compensation Committee increased Mr. Reuss’ base salary from $1,100,000 to $1,200,000 based on his individual performance and the competitive market analysis provided by the Compensation Committee’s independent compensation consultant. For 2016, the Compensation Committee awarded Mr. Reuss an annual equity grant of $3.9 million, consisting of 75% PSUs and 25% RSUs.

The Compensation Committee elected to provide an individual STIP adjustment for the 2016 performance year in the amount of $370,000 as a result of his performance, which is included in the STIP awarded value. The total compensation for Mr. Reuss in 2016, including salary, STIP and LTIP awards, is displayed below.

 

 

Pay Element

 

 

 

Majority of Pay Is At-Risk

 

  

 

Awarded Value

 

 

 

Base Salary

 

 

 

Only Fixed Pay Element

 

  

 

 

 

 

$1,200,000

 

 

 

 

 

STIP

 

 

 

Performance to Metrics

 

  

 

 

 

 

$2,905,000

 

 

 

 

 

PSUs(1)

 

 

 

Performance to Metrics and Stock Price

 

  

 

 

 

 

$2,925,013

 

 

 

 

 

RSUs(2)

 

 

 

Performance to Stock Price

 

  

 

 

 

 

$   975,005

 

 

 

 

 

TOTAL

 

      

 

 

 

 

$8,005,018

 

 

 

 

 

(1)

PSUs are subject to performance vesting, value reflects grant date fair value at target.

 

(2)

RSUs are subject to time-based vesting.

 

 

 

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u   Compensation Decisions for Alan Batey

    Alan Batey, Executive Vice President & President, North America

 

 

    Mr. Batey met objectives for 2016 performance against his goals. Performance     highlights include:

 

  u   Achieved record earnings in North America
  u   Posted the best retail sales in the U.S. for Chevrolet in 10 years; best for Buick in 11 years; and best for GMC in 12 years
  u   Grew year-over-year retail share faster than any other full-line automaker
  u   Delivered the best retail sales since 2009 in Canada
  u   Delivered the best retail sales year on record in Mexico

Effective January 1, 2016, Mr. Batey’s base salary was $950,000 supported by the competitive market analysis provided by the Compensation Committee’s independent compensation consultant. For 2016, the Compensation Committee awarded Mr. Batey an annual equity grant of $2.7 million, consisting of 75% PSUs and 25% RSUs.

The Compensation Committee elected to provide an individual STIP adjustment for the 2016 performance year in the amount of $400,000 as a result of his performance, which is included in the STIP awarded value. The total compensation for Mr. Batey in 2016, including salary, STIP and LTIP awards, is displayed below.

 

 

Pay Element

 

 

 

Majority of Pay Is At-Risk

 

  

 

Awarded Value

 

 

 

Base Salary

 

 

 

Only Fixed Pay Element

 

  

 

 

 

 

$   950,000

 

 

 

 

 

STIP

 

 

 

Performance to Metrics

 

  

 

 

 

 

$2,406,900

 

 

 

 

 

PSUs(1)

 

 

 

Performance to Metrics and Stock Price

 

  

 

 

 

 

$2,025,019

 

 

 

 

 

RSUs(2)

 

 

 

Performance to Stock Price

 

  

 

 

 

 

$   675,016

 

 

 

 

 

TOTAL

 

      

 

 

 

 

$6,056,935

 

 

 

 

 

(1)

PSUs are subject to performance vesting, value reflects grant date fair value at target.

 

(2)

RSUs are subject to time-based vesting.

 

 

 

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Awarded value reflects the amount included in the Summary Compensation Table, excluding change in pension value and all other compensation Realized compensation includes base salary, earned STIP, and all options exercised and stock vested during the year.

 

 

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2016 COMPENSATION STRUCTURE (in millions) AWARDED VALUE vs. REALIZED COMPENSATION (in millions) Awarded Value Realized Compensation


Table of Contents

EXECUTIVE COMPENSATION

 

 

Compensation Policies and Governance Practices

 

u   Stock Ownership Requirements

 

In June 2014, the Compensation Committee implemented stock ownership requirements to more closely align the interests of executives with those of our shareholders. The requirements:

 

  cover all senior leaders (approximately 300);

 

  set five years as the time frame to meet ownership requirements;

 

  establish a multiple of each executive’s base salary on the date they are first covered;

 

  make it possible to meet ownership requirements by owning either a multiple of base salary or a required number of shares; and

 

  call for senior leaders to hold shares in order to meet the ongoing ownership requirements.

The table below shows the stock ownership requirement by level in the Company as well as ownership requirements for each of our NEOs.

 

Position

 

  

 

Ownership Requirement
as a Multiple of Salary

 

 

 

  CEO

 

    

 

6x

 

 

 

 

  President

    

 

4x

 

 

 

  Executive Vice President

 

  

 

  Senior Vice President

 

    

 

3x

 

 

 

 

  Senior Executive

 

    

 

1x

 

 

 

As of December 31, 2016, all NEOs have met or are on track to meet stock ownership requirements by their respective dates.

 

 

u   Policy on Recoupment of Incentive Compensation

We have a corporate policy to recover incentive compensation paid to executive officers in cases where financial statements are restated because of employee fraud, negligence, or intentional misconduct. Under this clawback policy, which was last updated in late 2016 and is posted on our website, gm.com/investors, under “Corporate Governance,” if our Board or an appropriate Board Committee determines any bonus, retention award, or short or long-term incentive compensation has been paid to any executive officer based on materially inaccurate misstatement of earnings, revenues, gains, or other criteria, including reputational harm, the Board or Compensation Committee will take the action it deems necessary to recover the compensation paid, remedy the misconduct, and prevent its recurrence. For this purpose, a financial statement or performance metric will be treated as materially inaccurate when an employee knowingly engaged in providing inaccurate information or knowingly failed to timely correct information relating to those financial statements or performance metrics. We will continue to review our policy to ensure it is consistent with all legal requirements and in the best interests of the Company and its shareholders.

 

u   Securities Trading Policy

Our securities trading policy prohibits our employees from buying or selling GM securities when in possession of material nonpublic information. Any sale or purchase of common stock by directors, executive officers, and all other senior leaders must be made during pre-established periods after receiving preclearance by a member of the GM Legal Staff or according to pre-approved Rule 10b5-1 plan.

Trading in GM derivatives (i.e., puts or calls), engaging in short sales, and pledging of GM securities is also prohibited. All GM executive officers are in compliance with the policy of not pledging any shares of common stock. This policy is posted on our website, gm.com/investors, under “Corporate Governance.”

 

u   Tax Considerations

IRC Section 162(m) generally disallows federal tax deductions for compensation in excess of $1 million paid to the CEO and the next three of our highest-paid officers (other than the CFO) whose compensation is required to be reported in the Summary Compensation Table in this Proxy Statement (‘‘Covered Executives’’). Certain performance-based compensation is not subject to this deduction limitation. Generally, we strive to maximize the tax deductibility of compensation arrangements. The Compensation Committee, however, may award compensation that is not fully tax deductible if it deems it appropriate as compensation designed to attract and retain talented executives in the highly competitive market for talent.

STIP awards are paid based on the achievement of performance measures approved by shareholders in 2014 as part of the 2014 STIP. Because the STIP awards are intended to be deductible as performance-based compensation under 162(m), the

 

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Table of Contents

EXECUTIVE COMPENSATION

 

 

Compensation Committee set the maximum award for each Covered Executive at $7.5 million. Incentive amounts equal to the maximum will be funded for each Covered Executive once a threshold level of positive EBIT-Adjusted has been achieved. The Compensation Committee then exercises negative discretion, as needed, to determine actual incentive awards based on other business and individual performance, as described in the “Short-Term Incentive Plan” section of the CD&A.

 

u   Compensation Committee and Consultant Independence

 

Our Compensation Committee is composed entirely of independent directors as determined by the Board under NYSE standards and as defined for various regulatory purposes. Farient Advisors assisted the Compensation Committee in 2016. Farient Advisors is an independent compensation consulting firm that takes direction from and is solely responsible to the Compensation Committee. The Compensation Committee is also aided in its deliberations by in-house legal counsel.

Under its charter, the Compensation Committee has the authority to hire outside consultants and advisors at the Company’s expense. The Compensation Committee retains the services of Farient Advisors for advice on issues related to the compensation of NEOs and other executive compensation-related matters. A representative of Farient Advisors attended all Compensation Committee meetings, either in person or via telephone, consulted with and advised the Compensation Committee members on executive compensation, including the structure and amounts of various pay elements, and developed executive benchmarking data for the Compensation Committee. Farient Advisors provided no services to the Company’s management.

The Compensation Committee annually reviews the performance of the compensation consultant and considers the following factors when assessing consultant independence in accordance with NYSE standards:

 

  Services provided to GM management outside of the services provided to the Compensation Committee;

 

  Fees paid as a percentage of Farient Advisors’ total revenue;

 

  Policies and procedures of Farient Advisors designed to prevent conflicts of interest;

 

  Any business or personal relationships between members of the Compensation Committee and Farient Advisors;

 

  Stock ownership by employees of Farient Advisors; and

 

  Any business or personal relationships between GM and Farient Advisors.

The Compensation Committee reviewed the performance and independence of Farient Advisors and determined that Farient Advisors was independent based on the standards above.

 

 

u   Compensation Risk Assessment

During 2016, the Compensation Committee reviewed and discussed the impact of executive compensation programs on organizational risk. The Compensation Committee discussed plans and reviewed risk mitigation features in each of the plans to evaluate, with the assistance of our audit, legal and risk management organizations, the overall impact compensation programs have on organizational risk. The Compensation Committee determined compensation programs have sufficient risk mitigation features and do not encourage or reward employees for taking excessive or unnecessary risk. The mix of our short-term and long-term compensation programs appropriately reward employees while balancing risk through the delayed payment of long-term awards. As a result of the compensation risk review completed on September 12, 2016, the Compensation Committee determined the overall risk of compensation programs exposing the organization to unnecessary or excessive risks is low.

 

u   Employment and Termination Agreements

The Company has no employment or termination agreements with any of our 2016 NEOs. All NEOs participate in the same Executive Severance Program available to other executive employees.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the CD&A and, based on that review and discussion, has recommended to the Board of Directors that the CD&A be included in this Proxy Statement and incorporated by reference in the GM 2016 Annual Report on Form 10-K.

Compensation Committee

Carol M. Stephenson (Chair)

Joseph Jimenez

James J. Mulva

Patricia F. Russo

 

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Table of Contents

EXECUTIVE COMPENSATION

 

 

Executive Compensation Tables

 

u   Summary Compensation Table

 

Name and

Principal

Position(1)(2)

 

 

Year

 

   

Salary

($)

 

   

Bonus

($)

 

   

Stock

Awards(3)

($)

 

   

Option

Awards(4)

($)

 

   

Nonequity

Incentive Plan

Compensation(5)

($)

 

   

 

Change in

Pension

Value and

NQ Deferred

Compensation
Earnings(6)

($)

 

   

All Other
Compensation(7)

($)

 

   

Total

($)

 

 

Mary T. Barra

Chairman & Chief

Executive Officer

 

 

 

 

 

2016

 

 

 

 

   

 

2,000,000

 

 

 

   

 

 

 

 

   

 

13,000,036

 

 

 

   

 

 

 

 

   

 

6,760,000

 

 

 

   

 

181,777

 

 

 

   

 

640,246

 

 

 

   

 

22,582,059

 

 

 

 

 

 

 

 

2015

 

 

 

 

   

 

1,750,000

 

 

 

   

 

 

 

 

   

 

12,000,004

 

 

 

   

 

11,167,029

 

 

 

   

 

3,062,500

 

 

 

   

 

12,012

 

 

 

   

 

597,118

 

 

 

   

 

28,588,663

 

 

 

 

 

 

 

 

2014

 

 

 

 

   

 

1,567,803

 

 

 

   

 

 

 

 

   

 

11,760,567

 

 

 

   

 

 

 

 

   

 

2,072,000

 

 

 

   

 

349,926

 

 

 

   

 

412,532

 

 

 

   

 

16,162,828

 

 

 

Charles K. Stevens, III

Executive Vice

President & Chief

Financial Officer

 

 

 

 

 

2016

 

 

 

 

   

 

1,100,000

 

 

 

   

 

 

 

 

   

 

3,450,007

 

 

 

   

 

 

 

 

   

 

2,673,800

 

 

 

   

 

135,146

 

 

 

   

 

244,132

 

 

 

   

 

7,603,085

 

 

 

 

 

 

 

 

2015

 

 

 

 

   

 

1,000,000

 

 

 

   

 

 

 

 

   

 

2,875,049

 

 

 

   

 

2,675,437

 

 

 

   

 

1,375,000

 

 

 

   

 

 

 

 

   

 

176,738

 

 

 

   

 

8,102,224