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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:
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☐		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)

 

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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...

 

 

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

 

 

 

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 [            ] Eastern Time on [            ], 2017, at the [            ]. 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 four 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,

 

		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 four 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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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 [            ] , 2017 and is first being mailed to shareholders on or about [            ], 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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PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

 

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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.

 

 

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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.

 

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•

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.

 

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•

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.

 

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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.

 

 

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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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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 four nominees for election to the Board at the Annual Meeting. 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.

 

 

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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.

 

		Significant leadership experience over an extended period, especially as CEO; extraordinary leadership qualities; and the ability to identify and develop those qualities in others.
		Leadership in automotive or related industry. Expertise in key businesses and proven knowledge of key customers and risks associated with the business.
		Experience in managing significant manufacturing operations.
		Understanding of technology and innovation through academia or industry experience.
		Relevant risk management oversight and experience.
		Global business and cultural experience.
		Expertise in complex financial and accounting matters.
		Knowledge of global government relations, public policy, and regulatory matters.
		Marketing experience, including digital marketing, brand and product awareness; social media experience.
		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.

 

				Mary T. Barra, Chairman & Chief Executive Officer, General Motors Company (since January 2016)
				Age: 55  •  Director Since: 2014  •  Committees: Executive (Chair) Current Public Company Directorships: General Dynamics Corporation

 

 

 

 

 

 

 

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

 

 

 

 

		Joseph J. Ashton, Retired Vice President, United Auto Workers (since 2014)
		Age: 68  •  Director Since: 2014  •  Committees: Finance, Risk Current Public Company Directorships: None

 

 

 

 

 

 

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

 

 

 

 

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

 

 

 

 

 

 

 

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		Jane L. Mendillo, Retired President & Chief Executive Officer, Harvard Management Company (since 2014)
		Age: 58  •  Director Since: 2016  •  Committees: Audit, Finance Current Public Company Directorships: Lazard Ltd

 

 

 

 

		Admiral Michael G. Mullen, Former Chairman, Joint Chiefs of Staff (since 2011)
		Age: 70  •  Director Since: 2013  •  Committees: Audit, Executive, Risk (Chair) Current Public Company Directorships: Sprint Corporation

 

 

 

 

 

 

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

 

 

 

 

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

 

 

 

 

 

 

 

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

 

 

 

 

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

 

 

 

 

 

 

 

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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

 

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

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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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:

 

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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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

 

 

Board Size

 

 

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“Winning With Integrity” and Code of Ethics

 

 

Corporate Governance Guidelines

 

 

Director Independence

 

 

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Board Leadership Structure

 

 

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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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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
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
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
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
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
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.

 

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

 

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:

 

Annual Evaluation of CEO

 

 

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Director Orientation and Continuing Education

 

 

Director Service on Other Public Company Boards

 

 

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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CORPORATE GOVERNANCE

 

 

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:

 

Certain Relationships and Related Party Transactions

 

 

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.

 

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Factors Used in Assessing Related Party Transactions

 

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

 

 

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

 

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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.

 

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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 GOVERNANCE

 

 

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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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

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

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Defined terms:

 

 

Executive Compensation Table of contents

 

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EXECUTIVE COMPENSATION

 

 

Compensation Principles

Compensation Elements

 

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2016 Compensation Structure

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

 

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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.

 

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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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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

 

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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.

 

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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:

 

 

 

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

 

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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.

 

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Summary of Outstanding Performance Awards Granted in Prior Years

 

 

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Performance Results and Compensation Decisions

 

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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.

 

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

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

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

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Compensation Policies and Governance Practices

 

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Stock Ownership Requirements

 

 

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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.

 

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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.”

 

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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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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.

 

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Compensation Committee and Consultant Independence

 

 

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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.

 

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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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Executive Compensation Tables

 

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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
			2014				691,667