Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
GENERAL MOTORS CORPORATION
......................................................................
(Name of Registrant as Specified In Its Charter)
......................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
GENERAL MOTORS
Notice of Annual Meeting
of Stockholders
and Proxy Statement
[GM LOGO]
Annual Meeting
June 5, 2001
Hotel du Pont
11th & Market Streets
Wilmington, Delaware
4000-PS-01
GENERAL MOTORS CORPORATION
NOTICE OF ANNUAL MEETING
April 19, 2001
Dear Stockholder:
You are invited to attend the annual meeting of stockholders of General
Motors Corporation, which will be held at 9:00 a.m. local time on Tuesday, June
5, 2001, at the Hotel du Pont, 11th & Market Streets, Wilmington, Delaware. The
purposes of the meeting are to provide for stockholders to vote upon the
following matters:
* The election of directors for the ensuing year;
* The ratification of the Board of Directors' proposal for the
selection of independent public accountants for the ensuing year;
* Ten stockholder proposals (if they are properly presented at the
meeting).
If you were a record holder of Common Stock, $1 2/3 par value ("Common
Stock"), or Class H Common Stock, $0.10 par value ("Class H Common Stock"), at
the close of business on April 6, 2001, you will be entitled to vote at the
meeting. You have a variety of options as to how to vote by proxy. You can vote
by proxy through the Internet at www.eproxyvote.com/gm, by calling GM's
toll-free telephone number 1-877-779-8683, or by calling collect at
1-201-536-8073 from outside the continental United States and Canada, or by
mailing your signed proxy card to GM's tabulator in the envelope provided.
Please read the attached Proxy Statement carefully and submit your proxy with
voting instructions as soon as possible. A list of stockholders entitled to vote
at the meeting will be available for examination at the General Motors Global
Headquarters, Renaissance Center, Detroit, Michigan, for ten days before the
meeting between 9:00 a.m. and 5:00 p.m., and at the Hotel du Pont during the
annual meeting.
The annual meeting will include a report on the state of the business, and
thereafter focus on electing directors, voting on the selection of independent
public accountants, stockholder proposals, and related discussion. After that,
we will provide time for questions and comments.
To request admission tickets, please enclose a note in the envelope with
your proxy. You may order two admission tickets. If you hold your stock through
a broker, bank, or other record holder, please bring evidence of ownership to
the meeting and we will provide you with admission tickets. If you vote
electronically and wish to attend the meeting, please use the return envelope
provided to order your tickets, but do not enclose your proxy. Please include
your return address so we can mail the tickets to you. If you do not receive
your tickets in time, you may request tickets at the door. To permit as many
stockholders as possible to participate, only stockholders or valid proxy
holders may speak at the meeting.
In addition to the annual meeting, we hold regional Stockholder Forums.
These meetings provide a less formal way for you to discuss General Motors
business and related issues with top management. The time and location of these
meetings will be announced in Stockholder News.
IF YOU VOTE BY MAIL, PLEASE SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES ON THE ENCLOSED PROXY/VOTING INSTRUCTION CARD. IF YOUR VOTE IS THE SAME
AS THE BOARD OF DIRECTORS' RECOMMENDATIONS, YOU DO NOT HAVE TO MARK ANY BOXES.
JUST SIGN AND DATE THE PROXY/VOTING INSTRUCTION CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE.
Sincerely,
/s/ Nancy E. Polis /s/ John F. Smith, Jr.
Secretary Chairman
TABLE OF CONTENTS
General Information for Stockholders Page
Proxy Procedure...................................................... ii
Proxy Statement Proposals............................................ ii
Directors............................................................ iii
Selecting Candidates to Serve on the Board of Directors.............. iii
Director Compensation................................................ iii
Committees of the Board of Directors................................. iv
Householding of Annual Meeting Materials............................. v
Proxy Statement
ITEM NO. 1--Nomination and Election of Directors.................... 2
Information about Nominees for Director.............................. 2
Report of the Executive Compensation Committee....................... 9
Executive Compensation Tables........................................ 15
Audit Committee Report............................................... 23
ITEM NO. 2--Ratification of the selection of Deloitte & Touche LLP
as independent public accountants for the year 2001..... 24
ITEM NO. 3--Stockholder proposal that GM report on accidents
related to Internet or cell phone use in cars........... 24
ITEM NO. 4--Stockholder proposal to nominate at least two
candidates for each open Board position................. 26
ITEM NO. 5--Stockholder proposal to prohibit sale and purchase
transactions with companies in China that use slave
or forced labor......................................... 28
ITEM NO. 6--Stockholder proposal for stockholder advisory vote
on membership of Board Audit Committee.................. 30
ITEM NO. 7--Stockholder proposal that GM spin-offs retain GM's
good corporate governance standards..................... 32
ITEM NO. 8--Stockholder proposal to require stockholder approval
of "poison pill"........................................ 33
ITEM NO. 9--Stockholder proposal to double director compensation
in years when market share increases.................... 35
ITEM NO. 10--Stockholder proposal to require independent
directors on key Board committees....................... 36
ITEM NO. 11--Stockholder proposal to require stockholder approval
of "golden parachutes".................................. 38
ITEM NO. 12--Stockholder proposal to retain an investment banker
to explore the sale of GM............................... 40
Expenses of Solicitation............................................. 42
Other Matters........................................................ 42
Exhibit A -- Text of the Audit Committee Charter..................... A-1
i
GENERAL INFORMATION FOR STOCKHOLDERS
PROXY PROCEDURE
Although you may not be able to attend the annual meeting in person, you
have the opportunity to vote by using the proxy solicited by the Board of
Directors, which is enclosed with this document. After you sign and return your
proxy card or vote through the Internet or by telephone, the Proxy Committee
will vote your shares according to your instructions. You can indicate your
choices by marking the enclosed proxy card. If you sign and return your proxy
card and do not specify a choice, your shares will be voted as the Board of
Directors has recommended. If you prefer, you may also vote by ballot at the
annual meeting, which will cancel any proxy you previously gave.
By signing and returning the proxy card or by voting through the Internet
or by telephone, you will authorize the Proxy Committee to vote your shares of
common stock as you direct and on any proposals that General Motors does not
know about now but that may be presented properly at the meeting. The Proxy
Committee is composed of four executive officers of the Corporation: J. F.
Smith, Jr., G. R. Wagoner, Jr., H. J. Pearce, and J. M. Devine, each of whom is
authorized to act on behalf of the Committee.
As a matter of policy, GM believes your vote should be private. Therefore,
we use an independent specialist to receive, inspect, count, and tabulate
proxies. Representatives of the independent specialist also act as judges at the
annual meeting.
PROXY STATEMENT PROPOSALS
At the annual meeting each year, the Board of Directors submits its
nominees for election as directors. In addition, GM's By-laws require that at
each annual meeting the stockholders approve the independent public accountants
selected by the Audit Committee and the Board of Directors. The Board of
Directors also may submit other matters for your approval at the annual meeting.
In addition to these matters presented by the Board of Directors, you may
be asked to vote on one or more stockholder proposals. We have been asked from
time to time why the Board opposes the stockholder proposals included in the
Proxy Statement.
THE BOARD DOES NOT DISAGREE WITH ALL STOCKHOLDER PROPOSALS SUBMITTED TO THE
CORPORATION. WHEN WE AGREE WITH A PROPOSAL AND THINK IT IS IN THE BEST INTERESTS
OF THE CORPORATION AND ITS STOCKHOLDERS, IT USUALLY CAN BE IMPLEMENTED WITHOUT A
STOCKHOLDER VOTE. THE STOCKHOLDER PROPOSALS THAT APPEAR IN THE PROXY STATEMENT
ARE ONLY THOSE WITH WHICH THE BOARD OF DIRECTORS DISAGREES AND BELIEVES IT MUST
OPPOSE IN FULFILLING ITS OBLIGATIONS TO REPRESENT AND SAFEGUARD THE BEST
INTERESTS OF STOCKHOLDERS AS A WHOLE.
The deadline for including a proposal in the Corporation's Proxy Statement
for the 2002 Annual Meeting is December 19, 2001. Any proposals intended to be
presented at the 2002 meeting must be received by the Corporation on or before
that date. Please send proposals to the Secretary, General Motors Corporation,
MC 482-C38-B71, 300 Renaissance Center, P.O. Box 300, Detroit, Michigan
48265-3000.
ii
DIRECTORS
The Board of Directors held a total of eleven meetings in 2000. It is
currently composed of 13 members. Dennis Weatherstone is not standing for
reelection pursuant to the Director Retirement Policy. If you elect all 12
nominees at the 2001 annual meeting, the Board will be composed of nine
directors who have never been employed by General Motors and three who are
currently officers of the Corporation.
In addition to being members of the Board, most directors served on one or
more of its six standing Committees, which cover a total of 29 memberships.
(Please refer to "Committees of the Board of Directors" commencing on page iv
for information concerning each Committee's responsibility and current
membership.) Directors spend a considerable amount of time preparing for Board
and Committee meetings and, from time to time, are called upon for their counsel
between meetings. In 2000, average attendance at Board and Committee meetings
was 92%.
SELECTING CANDIDATES TO SERVE ON THE BOARD OF DIRECTORS
Under the Corporation's By-laws, each year prior to the annual meeting of
stockholders the Committee on Director Affairs recommends the Board's nominees
to serve as GM directors for the next year. The Board is soliciting proxies to
elect these individuals. Except for John F. Smith, Jr., G. Richard Wagoner, Jr.,
and Harry J. Pearce, who are employees of the Corporation, all candidates
nominated by the Board of Directors have been determined to be "Independent
Directors" as defined under Section 2.12 of the Corporation's By-laws. (If you
would like a copy of GM's By-laws, please write to the Secretary, General Motors
Corporation, MC 482-C38-B71, 300 Renaissance Center, P.O. Box 300, Detroit,
Michigan 48265-3000.)
To recommend an individual for Board membership, write to the Secretary at
the address given above. If you intend to nominate a candidate for director at
the annual meeting or to introduce any other matter (aside from a stockholder
proposal under Rule 14a-8 of the Securities and Exchange Commission's proxy
rules, which is discussed on page ii), you must give the Corporation written
notice. Such notice must be received by the Secretary of the Corporation not
more than 180 days and not less than 120 days before the date of the annual
meeting. For the 2002 Annual Meeting, such notice must be received between
December 6, 2001 and February 4, 2002.
DIRECTOR COMPENSATION
Only non-employee directors receive payment for serving on the Board. Since
Messrs. Smith, Wagoner, and Pearce are employees of the Corporation, they are
not compensated as directors. Non-employee directors are not eligible to
participate in the executive incentive program, Savings-Stock Purchase Program,
or any of the Retirement Programs for General Motors employees. Other than as
described in this section, there are no separate benefit plans for directors.
Compensation paid to non-employee directors is as follows:
* Annual retainer -- $120,000 (a)
* Retainer for Committee chair -- $ 5,000
* Per diem for special services -- $ 1,000
iii
(a) Under the General Motors Compensation Plan for Non-Employee Directors (the
"Plan"), non-employee directors are required to defer $60,000 of the above
annual retainer in restricted units of GM common stocks or receive stock
options valued at $60,000. In addition, under the Plan directors may also
elect to defer all or a portion of the remaining compensation in cash or
units of GM common stocks.
Restricted Stock Units under the Plan are credited with dividend
equivalents in the form of additional stock units of the same class. Amounts
deferred under the Plan are generally not available until after the director
retires from the Board at age 70. After the director leaves the Board, payment
under the Plan is made in cash based on the number of stock units and the market
price of the related GM common stocks at the time of payment.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE met five times in 2000. The Committee reviews the scope and
results of audits, the notice and application of accounting principles, and the
effectiveness of internal controls. In its oversight role, it assures that
management fulfills its responsibilities in preparing the financial statements.
All members of the Audit Committee are independent directors as defined by the
Corporation's By-laws and New York Stock Exchange rules.
Membership: Dennis Weatherstone (Chair) Karen Katen
John H. Bryan Eckhard Pfeiffer
Nobuyuki Idei Lloyd D. Ward
CAPITAL STOCK COMMITTEE met five times in 2000. The Committee oversees the
relationship between General Motors and its wholly owned subsidiary, Hughes
Electronics Corporation, to ensure that transactions between the two companies
are in the best interests of each corporation and are fair to the holders of
both classes of GM's common stock.
Membership: Eckhard Pfeiffer (Chair) Thomas E. Everhart
John H. Bryan Dennis Weatherstone
COMMITTEE ON DIRECTOR AFFAIRS met six times in 2000. The Committee
researches and recommends candidates for membership on the Board and conducts
continuing studies of the size, composition, and compensation of the Board. The
Committee is also responsible for implementing and periodically reviewing GM's
guidelines for corporate governance and proposing improvements.
Membership: J. Willard Marriott, Jr. (Chair) Thomas E. Everhart Karen Katen
Percy N. Barnevik George M. C. Fisher
EXECUTIVE COMPENSATION COMMITTEE met seven times in 2000. The Committee
determines the compensation of senior executives, including all officers of the
Corporation, and approves any benefit or incentive compensation plan of the
Corporation or its major subsidiaries which affects employees subject to its
review. The members of the Committee are not eligible to participate in any of
the compensation plans or programs it administers.
Membership: John H. Bryan (Chair) J. Willard Marriott, Jr. Dennis Weatherstone
George M. C. Fisher Eckhard Pfeiffer
iv
INVESTMENT FUNDS COMMITTEE met four times in 2000. The Committee serves as
the named fiduciary of all GM's and its subsidiaries' benefit plans governed by
the Employee Retirement Income Security Act (ERISA).
Membership: Percy N. Barnevik (Chair) Nobuyuki Idei John F. Smith, Jr.
George M. C. Fisher J. Willard Marriott, Jr.
PUBLIC POLICY COMMITTEE met four times in 2000. The Committee fosters GM's
commitment to operate its business worldwide in a manner consistent with the
rapidly changing demands of society. Topics reviewed by this Committee include
research and development, automotive safety, environmental and energy matters,
diversity, health care, education, communications, employee health and safety,
trade, and philanthropic activities. The Committee provides public policy
guidance to management to support GM's progress in growing the business globally
within the framework of GM's core values.
Membership: Karen Katen (Chair) Thomas E. Everhart
Percy N. Barnevik Lloyd D. Ward
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The Securities and Exchange Commission recently approved a new rule
concerning the delivery of annual reports and proxy statements. It permits us to
send a single set of these reports to any household at which two or more
stockholders reside if we believe they are members of the same family. Each
stockholder will continue to receive a separate proxy card. This procedure,
referred to as householding, reduces the volume of duplicate information you
receive and reduces our expenses. General Motors plans to institute this
procedure for all relevant accounts for the 2002 proxy season; if you agree to
householding, you will help reduce printing and mailing costs for GM. A notice
will be sent to stockholders who will be affected by householding before the
annual report and proxy statement are mailed in 2002.
This year, a limited number of brokerage firms have instituted
householding. If your family has multiple GM accounts, you may have received
householding notification from your broker earlier this year. Please contact
your broker directly if you have questions, require additional copies of the
proxy statement or annual report, or wish to revoke your decision to household,
and thereby receive multiple reports. These options are available to you at any
time.
v
G E N E R A L M O T O R S C O R P O R A T I O N
300 RENAISSANCE CENTER, P.O. BOX 300, DETROIT, MICHIGAN 48265-3000
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 5, 2001
This Proxy Statement is provided in connection with the solicitation of
proxies, by order of the Board of Directors of General Motors Corporation, to be
used at the annual meeting of stockholders of the Corporation. The accompanying
proxy card enclosed with this Statement represents your holdings of Common Stock
and Class H Common Stock in the registered account name shown. We expect that
this Proxy Statement and the enclosed proxy will be mailed, or will be available
through the Internet for those stockholders who elected to receive their proxy
materials electronically, on or after Thursday, April 19, 2001, to each
stockholder entitled to vote.
You may give instructions to grant or withhold authority to vote for
election of all the Board of Directors' nominees, or any individual nominee, and
to vote for or against, or abstain from voting upon, each of the
eleven proposals. After you have signed and returned the enclosed proxy card or
voted through the Internet or by telephone, you may revoke your proxy at any
time until it is voted at the annual meeting by sending a written notice of
revocation or a subsequent proxy card, voting subsequently through the Internet
or by telephone, or by voting in person at the annual meeting. The shares
represented by a proxy will be voted unless the proxy card is received late or
in a form that cannot be voted.
If you participate in stock plans for employees -- the General Motors
Savings-Stock Purchase Program for Salaried Employees in the United States (the
"GM S-SPP"), the General Motors Personal Savings Plan for Hourly-Rate Employees
in the United States (the "GM PSP"), the General Motors Canadian Stock-Savings
Program for Salaried Employees (the "GM Canadian Plan"), the General Motors
Group RRSP and Savings Plan for Hourly Employees (the "GM RRSP"), the Delphi
Automotive Systems stock plans for employees -- Delphi Automotive Systems
Corporation Savings-Stock Purchase Program for Salaried Employees in the United
States (the "Delphi S-SPP"), the Delphi Personal Savings Plan for Hourly Rate
Employees in the United States (the "Delphi PSP"), the Hughes Non-Bargaining
Employees Thrift and Savings Plan (the "Hughes Non-Bargaining Plan"), the Hughes
Bargaining Employees Thrift and Savings Plan (the "Hughes Bargaining Plan"), the
Saturn Individual Savings Plan for Represented Members (the "Saturn ISP"), the
GMAC Mortgage Group Savings Incentive Plan (the "GMAC Plan"), the Raytheon
Savings and Investment Plan (the "Raytheon Plan"), the L-3 Communications Master
Savings Plan (the "L-3 Plan") -- your proxy card will also serve as a voting
instruction for the Trustees, plan committees, or independent fiduciaries of
those plans. If you do not provide voting instructions with respect to stock in
the GM S-SPP, the Hughes Non-Bargaining Plan and the Hughes Bargaining Plan, or
the Delphi S-SPP, those shares may be voted by the Trustee, plan committee, or
independent fiduciary at its discretion. If you do not provide voting
instructions with respect to stock held in the GM PSP, the GM Canadian Plan, the
GM RRSP, the Delphi PSP, the Saturn ISP, the GMAC Plan, the Raytheon Plan, and
the L-3 Plan, the shares will not be voted.
If you participate in any of these plans or maintain other accounts under
more than one name (e.g., with and without a middle initial), you may receive
more than one set of proxy materials. To be sure that all shares are counted,
you must sign and return every proxy card you receive or alternatively vote all
these shares through the Internet or by telephone.
1
Brokers, dealers, banks, voting trustees, and their nominees who want a
supply of the Corporation's proxy soliciting material to send to beneficial
owners should write to:
General Motors Corporation
c/o Morrow & Co., Inc.
445 Park Avenue, 5th Floor
New York, NY 10022-2606
The Board of Directors designated April 6, 2001, as the record date for
determining stockholders entitled to vote at the annual meeting. On that date,
the Corporation had 548,593,916 shares of Common Stock and 875,634,331 shares of
Class H Common Stock outstanding and entitled to vote. Each share of Common
Stock entitles the holder to one vote, and each share of Class H Common Stock
entitles the holder to 0.2 vote.
Except for Item 1, or otherwise noted, each proposal in this Proxy
Statement will be approved if it receives a majority of the votes present,
either in person or by proxy, at the meeting. Item 1, the election of directors,
is somewhat different: the 12 candidates who receive the most votes will be
elected to the 12 available memberships on the Board. If you submit your proxy
or attend the meeting but choose to abstain from voting on any proposal, you
will be considered present at the meeting and not voting in favor of the
proposal. Since most proposals pass only if they receive favorable votes from a
majority of votes present at the meeting, the fact that you are abstaining and
not voting in favor of a proposal will have the same effect as if you had voted
against the proposal. (In contrast, a "broker non-vote," where a broker
withholds authority to cast a vote as to a certain proposal, is deemed not
present at the meeting with regard to that proposal.)
ITEM NO. 1
----------
Nomination and Election of Directors
The Proxy Committee will vote your shares for the 12 nominees described in
the following section unless you withhold such authority. Each director will
serve until the next annual election of directors and until a successor is
elected and qualified or until the director's earlier resignation or removal. If
any nominees for director become unavailable before the annual meeting, which we
do not anticipate, the Board of Directors may decrease the number of directors
to be elected or designate substitute nominees, who would receive the votes of
the Proxy Committee.
Pursuant to the Director Retirement Policy of the Board of Directors,
Dennis Weatherstone is not standing for reelection. Mr. Weatherstone joined the
General Motors Board of Directors in 1986 while serving as Chairman of the
Executive Committee and director, J.P. Morgan & Co., Incorporated and its wholly
owned subsidiary Morgan Guaranty Trust Company of New York. He is currently
Chair of the Audit Committee and a member of the Capital Stock and Executive
Compensation Committees.
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information about each nominee's principal occupation or
employment and other affiliations and about the Common Stock and Class H Common
Stock beneficially owned as of February 28, 2001, has been furnished to the
Corporation by the nominees for director. In addition to the affiliations
mentioned on the following pages, the nominees are active in many local and
national cultural, charitable, professional, and trade organizations.
2
PERCY N. AGE 60 JOINED GM BOARD 1996 COMMITTEES -- Investment Funds
BARNEVIK (Chair), Director Affairs,
Public Policy
Chairman, ABB Ltd., Zurich, Switzerland, serving electric
power generation, transmission, and distribution customers as
well as industrial and environmental control markets, since
1996. Held additional offices of Chairman and Chief Executive
Officer (March-December 1996) and President and Chief
Executive Officer (1988-96)
DIRECTORSHIPS -- ABB Ltd., Chairman of Investor AB, Chairman
of AstraZeneca PLC, and Chairman of Sandvik AB
AFFILIATIONS -- Representative of the European Commission to the
ASEM (Asia-Europe) Vision Group; Chairman of the EU Enlargement
Work Group; Vice Chairman of the World Economic Forum Foundation
Board, Member of The European Round Table of Industrialists, the
Advisory Board of the Council on Foreign Relations, the Center
for Strategic and International Studies, The Business Council, US
Academy of Arts and Sciences, Business Advisory Council to the
President of South Africa, Advisory Councils at the Graduate
Business School of Stanford University, Wharton School of
Business Administration, and Humboldt University (Berlin)
JOHN H. AGE 64 JOINED GM BOARD 1993 COMMITTEES -- Executive
BRYAN Compensation (Chair), Audit,
Capital Stock
Chairman, Sara Lee Corporation, Chicago, IL, since 1976. Held
additional office of Chairman and Chief Executive Officer
(1976-2000)
DIRECTORSHIPS -- Sara Lee Corporation, BP Amoco Corporation
p.l.c., Bank One Corporation, and Goldman Sachs Group Inc.
AFFILIATIONS -- Member of The Business Council, President's
Committee on the Arts and Humanities; Chairman, National Trust
Council of the National Trust for Historic Preservation; Member
of the Board of Directors and past Chairman of Catalyst; Trustee
of the University of Chicago and life Trustee of
Rush-Presbyterian-St. Luke's Medical Center; Chairman of the
Board of Trustees of the Art Institute of Chicago
THOMAS E. AGE 69 JOINED GM BOARD 1989 COMMITTEES -- Capital Stock,
EVERHART Director Affairs, Public Policy
President Emeritus and Professor of Electrical Engineering and
Applied Physics, Emeritus, California Institute of Technology,
Pasadena, CA
DIRECTORSHIPS -- Hughes Electronics Corporation, Reveo, Inc.,
Saint-Gobain Company, Raytheon Company, and Agilent
Technologies
AFFILIATIONS -- Member of the Board of Trustees of California
Institute of Technology, the Corporation for National Research
Initiatives (CNRI), National Academy of Engineering Council,
Council on Competitiveness, and the Harvard University Board of
Overseers; Senior Scientific Advisor to the W. M. Keck
Foundation; Former Chairman of General Motors Science Advisory
Committee
3
GEORGE M. AGE 60 JOINED GM BOARD 1996 COMMITTEES -- Director Affairs,
C. FISHER Executive Compensation,
Investment Funds
Retired Chairman and Chief Executive Officer, Eastman Kodak
Company, Rochester, NY, since January 1, 2001. Held offices of
Chairman (January-December 2000), Chairman and Chief Executive
Officer (January 1997-January 2000), and Chairman, President,
and Chief Executive Officer (December 1993-January 1997)
DIRECTORSHIPS -- AT&T Corporation, Delta Air Lines, Inc., and
Eli Lilly & Company
AFFILIATIONS -- Member of The Business Council and the
President's Advisory Council for Trade Policy and Negotiations
NOBUYUKI IDEI AGE 63 JOINED GM BOARD 1999 COMMITTEES -- Audit,
Investment Funds
Chairman and Chief Executive Officer, Sony Corporation, Tokyo,
Japan, since June 2000. Held offices of President and Chief
Executive Officer (June 1999-May 2000), Co-Chief Executive
Officer (1998-99), and President and Representative Director
(1995-98)
DIRECTORSHIPS -- Sony Corporation
AFFILIATIONS -- Former Chairman of the Information Technology
Strategy Council
KAREN KATEN AGE 51 JOINED GM BOARD 1997 COMMITTEES -- Public Policy
(Chair), Audit, Director Affairs
Corporate Executive Vice President, Pfizer Inc., New York, NY,
and President, Worldwide Pfizer Pharmaceuticals Group, since
April 1, 2001. Held offices of Corporate Senior Vice President
(1999-April 2001) and Executive Vice President, Pfizer
Pharmaceuticals Group and President, Pfizer U.S.
Pharmaceuticals Group (1995-April 2001)
DIRECTORSHIPS -- Harris Corporation
AFFILIATIONS -- Member of the International Council of J.P.
Morgan Chase & Co. and the Pharmaceutical Research and
Manufacturers Association of America; Member of the Board of
the National Pharmaceutical Council; Trustee of the University
of Chicago and council member of the Graduate School of
Business; Member of the Board of the National Alliance for
Hispanic Health, the American Bureau for Medical Advancement
in China, the Columbia University School of Nursing Board of
Visitors, Catalyst, and National Board of Trustees of the
American Cancer Society Foundation
4
J. WILLARD AGE 69 JOINED GM BOARD 1989 COMMITTEES -- Director Affairs
MARRIOTT, JR. (Chair), Executive Compensation,
Investment Funds
Chairman and Chief Executive Officer, Marriott International,
Inc., Washington, DC, since October 1993. Held additional
office of Chairman, Chief Executive Officer, and President
(October 1993-March 1997)
DIRECTORSHIPS -- Marriott International, Inc. and Host
Marriott Corporation
AFFILIATIONS -- Director of the Naval Academy Endowment Trust;
Member of the Board of Trustees of the National Geographic
Society, the Board of Directors of Georgetown University, the
Executive Committee of the World Travel & Tourism Council, and
The Business Council
HARRY J. AGE 58 JOINED GM BOARD 1996
PEARCE
Vice Chairman, Board of Directors since January 1, 1996, with
responsibility for Corporate Relations and Diversity,
Economics, the Enterprise Activities Group, Environment and
Energy, Government Relations, Office of the Secretary,
Corporate Strategy and Knowledge Development, Allison
Transmission Division, Electro-Motive Division, GM Defense,
and Hughes Electronics Corporation; Joined General Motors
Corporation in 1985
DIRECTORSHIPS -- Hughes Electronics Corporation, Marriott
International, Inc., and MDU Resources Group, Inc.
AFFILIATIONS -- Chairman, U.S. Air Force Academy's Board of
Visitors; Trustee of Northwestern University and Howard
University; Chairman, The Marrow Foundation; President, Leukemia
& Lymphoma Society Foundation; Member of the Board of Directors
of The Bone Marrow Foundation
ECKHARD AGE 59 JOINED GM BOARD 1996 COMMITTEES -- Capital Stock
PFEIFFER (Chair), Audit, Executive
Compensation
Chairman, Intershop Communications AG/Inc., and Chairman,
ricardo.de AG (1999-2000); Retired President and Chief
Executive Officer, Compaq Computer Corporation, Houston,
Texas, since 1999; held offices of President and Chief
Executive Officer (1991-99)
DIRECTORSHIPS -- Hughes Electronics Corporation;
Telefonaktiebolaget LM Ericsson; Intershop Communications, AG;
NXView Technologies; IFCO Systems, N.V.; Syntek Capital AG
AFFILIATIONS -- Advisory Board of Deutsche Bank; the Executive
Board, Southern Methodist University, Cox School of Business;
Board of Visitors M.D. Anderson Cancer Center; The
Business Council
5
JOHN F. AGE 63 JOINED GM BOARD 1990 COMMITTEE -- Investment Funds
SMITH, JR.
Chairman, General Motors Corporation since January 1, 1996,
Chief Executive Officer (1992-May 31, 2000), and President
(1992-98); Joined General Motors Corporation in 1961
DIRECTORSHIPS -- Hughes Electronics Corporation, The Procter &
Gamble Company, and Delta Air Lines
AFFILIATIONS -- Member of the U.S.-Japan Business Council;
Chairman of Catalyst; Member of the Chancellor's Executive
Committee of the University of Massachusetts, the Board of
Trustees of Boston University, and the Board of Directors of
The Nature Conservancy
G. RICHARD AGE 48 JOINED GM BOARD 1998
WAGONER, JR.
President and Chief Executive Officer since June 1, 2000,
President and Chief Operating Officer (October 1998-May 31,
2000), Executive Vice President and President GM's North
American Operations (July 1994-October 1998); Joined General
Motors Corporation in 1977
DIRECTORSHIPS -- Hughes Electronics Corporation
AFFILIATIONS -- Chairman of the Board of Visitors for Duke
University's Fuqua School of Business; Chairman, SAE A World
in Motion Executive Committee; Member of the Board of Trustees
for Detroit Country Day School
LLOYD D. WARD AGE 52 JOINED GM BOARD 2000 COMMITTEES -- Audit, Public
Policy
Chairman and Chief Executive Officer, iMotors, San Francisco,
CA, a direct seller of certified used vehicles, since January
2001; Chairman and Chief Executive Officer, Maytag
Corporation, Newton, Iowa (August 1999-November 2000),
President and Chief Operating Officer (1998-99), and Executive
Vice President and President Maytag Appliances (1996-98);
President, PepsiCo's Central Division of Frito-Lay (1992-96)
DIRECTORSHIPS -- iMotors and J.P. Morgan Chase & Co.
AFFILIATIONS -- Member, Executive Leadership Council,
Washington, D.C.
6
SECURITY OWNERSHIP OF DIRECTORS, NAMED EXECUTIVE OFFICERS, AND CERTAIN OTHERS
The beneficial ownership of all classes of common stock of the Corporation
for each nominee for Director, each Named Executive Officer, and all current
directors and officers of the Corporation as a group is shown in the following
table. Information is as of February 28, 2001.
Each of the individuals/groups listed below owns less than one percent of
the outstanding shares and voting power of any class of common stock of the
Corporation, except as follows:
* State Street Bank and Trust Company (acting in various fiduciary
capacities for various employee benefit plans) beneficially owns 14.2% of
the outstanding shares and voting power of the Common Stock and 5.3% of
the outstanding shares and voting power of the Class H Common Stock
(12.0% of the combined voting power of the Common Stock and Class H
Common Stock).
* Fiat S.p.A. beneficially owns 5.6% of the outstanding shares and voting
power of the Common Stock (4.2% of the combined voting power of the
Common Stock and Class H Common Stock).
* U.S. Trust Corporation (an independent trustee for GM's employee pension
VEBA plan trust) beneficially owns 20.8% of the outstanding shares and
voting power of the Class H Common Stock (5.3% of the combined voting
power of the Common Stock and Class H Common Stock).
In most cases, each individual has sole voting and investment power with
respect to the shares he or she beneficially owns. Where this is not the case,
voting and investment power is clarified in a footnote. The shares listed below
do not include any Common Stock or Class H Common Stock held by the pension and
profit sharing plans or endowment funds of other corporations or by educational
and charitable institutions of which certain directors and officers serve as
directors or trustees.
Shares Deferred
Beneficially Owned Stock Units Total Shares
----------------------- ----------------- -----------------------
Class H Class H Class H
Common Common Common Common Common Common
Directors Stock Stock Stock Stock Stock Stock
--------- ---------- ---------- ------- ------- ---------- ----------
# # # # # #
P. N. Barnevik (c)............ 9,628 1,188 2,697 1,503 12,325 2,691
J. H. Bryan (c)............... 6,603 1,266 9,622 3,191 16,225 4,457
T. E. Everhart (d)............ 1,702 420 13,871 37,126 15,573 37,546
G. M. C. Fisher (d)........... 4,752 792 1,256 12,381 6,008 13,173
N. Idei (c)................... 4,250 2,250 1,601 587 5,851 2,837
K. Katen (c).................. 4,000 3,000 3,074 1,802 7,074 4,802
J. W. Marriott, Jr. (c)....... 752 15,792 12,455 20,100 13,207 35,892
H. J. Pearce (e).............. 64,290 142,452 34,017 37,476 98,307 179,928
E. Pfeiffer (d)............... 4,512 4,752 5,551 10,428 10,063 15,180
J. F. Smith, Jr. (e).......... 245,970 150,176 76,655 76,006 322,625 226,182
G. R. Wagoner, Jr. (e)........ 80,712 52,702 36,818 26,885 117,530 79,587
L. D. Ward (c)................ 1,000 -0- 987 359 1,987 359
Total Value Stock Options(b)
of Common --------------------
and Class H
Class H Common Common
Directors Shares(a) Stock Stock
--------- ------------- ---------- -------
$ # #
P. N. Barnevik (c)............ 718,174 -0- -0-
J. H. Bryan (c)............... 966,157 5,908 1,236
T. E. Everhart (d)............ 1,681,520 1,093 -0-
G. M. C. Fisher (d)........... 618,978 5,908 1,236
N. Idei (c)................... 376,290 -0- -0-
K. Katen (c).................. 486,047 2,311 816
J. W. Marriott, Jr. (c)....... 1,517,869 -0- -0-
H. J. Pearce (e).............. 9,320,697 642,371 633,081
E. Pfeiffer (d)............... 880,690 4,606 1,236
J. F. Smith, Jr. (e).......... 22,329,911 1,586,453 -0-
G. R. Wagoner, Jr. (e)........ 8,070,937 763,686 -0-
L. D. Ward (c)................ 114,085 -0- -0-
7
Shares Deferred
Beneficially Owned Stock Units Total Shares
------------------------ ----------------- ------------------------
Class H Class H Class H
Common Common Common Common Common Common
Directors Stock Stock Stock Stock Stock Stock
--------- ---------- ----------- ------- ------- ---------- -----------
# # # # # #
Other Named Executives
----------------------
J. D. Finnegan (e)............ 15,292 2,996 28,744 8,117 44,036 11,113
R. L. Zarrella (e)............ 41,867 8,933 10,321 3,939 52,188 12,872
All directors and officers
of the Corporation as
a group (e)................. 1,191,231 680,831 511,109 239,981 1,702,340 920,812
State Street Bank and
Trust Company............... 80,458,406 46,594,533 -0- -0- 80,458,406 46,594,533
225 Franklin Street
Boston, MA 02110
Fiat S.p.A.................... 32,053,422 -0- -0- -0- 32,053,422 -0-
Via Nizza 250
10126 Turin, Italy
U.S. Trust Corporation........ -0- 181,891,754 -0- -0- -0- 181,891,754
114 West 47th Street
New York, NY 10036
Total Value Stock Options(b)
of Common --------------------
and Class H
Class H Common Common
Directors Shares(a) Stock Stock
--------- ------------- ---------- -------
$ # #
Other Named Executives
----------------------
J. D. Finnegan (e)............ 2,599,931 77,409 0
R. L. Zarrella (e)............ 3,074,472 279,625 0
All directors and officers
of the Corporation as
a group (e)................. 111,643,577 6,876,067 723,300
State Street Bank and
Trust Company............... 5,346,340,271 -0- -0-
225 Franklin Street
Boston, MA 02110
Fiat S.p.A.................... 1,709,088,461 -0- -0-
Via Nizza 250
10126 Turin, Italy
U.S. Trust Corporation........ 4,123,486,063 -0- -0-
114 West 47th Street
New York, NY 10036
(a) The total value is based on the February 28, 2001 closing market prices of
$53.32 for Common Stock and $22.67 for Class H Common Stock.
(b) This column reports the number of shares that may be acquired through
exercise of stock options within 60 days from February 28, 2001. The shares
reported in this column reflect adjustments to the original option grants
resulting from the recapitalization of the Class H stock in December 1997,
the spin-off of Delphi Automotive Systems in 1999, and a 3-for-1 Class H
stock split in the form of a 200% stock dividend in 2000. Additional
information regarding stock options is provided on pages 17 and 18.
(c) Deferred Stock Units -- These amounts have been deferred under the General
Motors Corporation Compensation Plan for Non-Employee Directors. For more
information about this plan, please refer to the section on Director
Compensation commencing on page iii.
(d) Deferred Stock Units -- Includes amounts described in footnote (c) above as
well as amounts deferred under the Hughes Electronics Corporation
Compensation Plan for Non-Employee Directors. The only material difference
between the Hughes Plan and the General Motors Corporation Compensation Plan
for Non-Employee Directors is that all stock amounts refer exclusively to
Class H Common Stock.
(e) Shares beneficially owned include shares credited under the General Motors
Savings-Stock Purchase Program ("GM S-SPP"). This program is available to
all salaried employees and provides that participants may contribute up to
20% of eligible salary, subject to maximum limits established by the
Internal Revenue Code ("IRC"). Deferred Stock Units include shares under the
General Motors Benefit Equalization Plan-Savings ("BEP-S"). This Plan is a
non-qualified "excess benefits" plan that is exempt from ERISA and the IRC
limitations and provides executives with the full GM matching contribution
without regard to the IRC limitations. Amounts credited under the Plan are
maintained in share units of the Corporation's Common Stock. Following
termination of employment, an employee may elect to receive a complete
distribution of amounts in the BEP-S account, which will be paid in cash.
Deferred units also include undelivered incentive awards that will vest upon
the occurrence of certain events and that are subject to forfeiture under
certain circumstances.
8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities law requires that the executive officers and directors
of the Corporation must report to the SEC and the Corporation, within certain
periods, how many shares of the Corporation's equity securities they own and if
they conducted any transactions in that stock. Based upon information furnished
by these stockholders, the Corporation believes that all required filings for
2000 and prior years have been timely made, except as follows: in 2000, T. E.
Everhart and J. W. Marriott, Jr., Directors of the Corporation, and D. J.
Herman, a Vice President of the Corporation, each inadvertently filed one
monthly report involving one transaction after the due date. All transactions
have now been reported.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Messrs. Bryan, Fisher,
Marriott, Pfeiffer, and Weatherstone. Mr. Marriott is the Chairman and Chief
Executive Officer of Marriott International, Inc. Harry J. Pearce, an executive
officer of the Corporation, is a director of Marriott International, Inc.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
This is a report on the compensation paid to the Corporation's executives,
including the Named Executive Officers. The Named Executive Officers for 2000
are:
John F. Smith, Jr......... Chairman of the Board of Directors
G. Richard Wagoner, Jr.... President and Chief Executive Officer (CEO)
Harry J. Pearce........... Vice Chairman of the Board of Directors
John D. Finnegan.......... Executive Vice President and Chairman, General Motors
Acceptance Corporation (GMAC)
Ronald L. Zarrella........ Executive Vice President and President, GM North America
COMPENSATION PHILOSOPHY -- The executive compensation program for General
Motors and its major subsidiaries is based on the belief that the interests of
executives should be closely aligned with those of GM's stockholders. Under this
philosophy:
* A significant portion of each executive's total compensation is linked
directly to accomplishing specific, measurable results that are intended
to create value for the stockholders in both the short- and long-term.
* Executives are motivated to improve the overall performance and
profitability of the Corporation, as well as the business sector to which
they are assigned, and they will be rewarded only when and if the
specific, measurable goals that were previously established by Management
and the Committee have been achieved.
* Each executive's individual performance and contribution will be
reflected through differentiated salary adjustments and the amount of
incentive awards paid, if any.
9
* Any long-term incentive awards are paid in GM common stocks to further
reinforce the link between the executives' and stockholders' interests.
* In years of strong performance, executives can earn a highly competitive
level of compensation. As a result, the Corporation will be able to
attract, retain, and motivate the leadership talent it needs to maintain
and grow its businesses successfully. Conversely, in years of below
average performance, an executive will receive compensation that is less
than competitive benchmarks.
STOCK OWNERSHIP GUIDELINES -- The Corporation feels strongly that the best
way to reinforce the link between the executives' interests and your interests
is to require that executives own a significant amount of GM stock. As a result,
our Committee has established formal stock ownership guidelines for all
Corporate officers, including the Named Executive Officers, as well as other
select senior executives. Because of our strong commitment to this principle, we
have established significant ownership requirements with which we expect senior
executives to comply. The guidelines are as follows:
Minimum Aggregate
Position Value Equivalent
-------- -----------------
GM Chairman, President & CEO, and Vice Chairmen........... 5.0 times base salary
Executive Vice Presidents and Senior Vice Presidents...... 4.0 times base salary
Group Vice Presidents..................................... 3.0 times base salary
Vice Presidents........................................... 2.0 times base salary
COMPENSATION DEDUCTIBILITY POLICY -- In 1997, GM stockholders approved a
new incentive compensation program effective until 2002. This program includes
provisions that allow the Corporation to comply with regulations under Section
162(m) of the Internal Revenue Code. As a result, the Corporation will be able
to take a tax deduction for performance-based compensation in excess of $1
million per taxable year paid to each of the Named Executive Officers. The Code
does not permit companies to take a tax deduction for salary paid in excess of
$1 million. The portion of the salaries reported for Messrs. Smith and Pearce
that exceeds $1 million will be deferred until after retirement. If compliance
with Section 162(m) regulations conflicts with the Corporation's compensation
philosophy or what is believed to be the best interests of the Corporation and
its stockholders, we may conclude that paying non-deductible compensation is
more consistent with the compensation philosophy and in the Corporation's and
your best interests.
TYPES OF COMPENSATION -- Aside from benefits, which will be reviewed in the
tables following this report, there are three major components to an executive's
total compensation package:
* Base Salary
* Annual Incentives
* Long-Term Incentives
In determining the proper amount for each compensation component, we review
the compensation paid for similar positions at other large corporations with
which GM competes for executive talent. Since the job market for these
executives is not limited to the auto industry alone, a group consisting of
several large, global industrial/service corporations was identified as our
"comparator group." Each year we review the compensation paid at these
companies, as well as their corporate performance, and other factors in
determining the appropriate performance measures and compensation levels for our
executives. We also rely on information and advice provided by outside
consultants.
10
Base Salary -- Under the Corporation's compensation program, base salaries
for GM executives are targeted to be at the upper end of the third quartile of
the salaries paid for similar positions at our comparator group of companies.
The base salaries of individual executives can and do vary from this salary
benchmark based on such factors as individual performance, potential for future
advancement, responsibilities, and length of time in their current position.
We believe that continuity in the Corporation's senior leadership group
serves the Corporation best. To encourage continuity, each Named Executive
Officer has agreed that if he leaves the Corporation he will not work for a
competitor for the next two years. This is the Corporation's only contractual
arrangement with these executive officers.
Annual Incentives -- All executives are eligible to be considered for
annual incentive awards. Payment, if any, however, is based on GM's overall
performance against the objectives we established in advance, as well as
individual performance. We may choose to make adjustments to awards to reflect
the impact of unplanned events.
When we establish the target award and performance objectives, we also set
a minimum performance level that must be achieved before any awards can be paid.
If this minimum level is not met, there will be no annual incentive payout. The
maximum award was approved by stockholders as part of the 1997 Annual Incentive
Plan. When we establish this payout range, we assess the degree of performance
necessary to achieve the objective by reviewing both past and projected
performance levels, as well as external marketplace conditions such as the
economic outlook, competitive performance levels, projected automotive industry
volumes, projected market share, and quality improvements. We do not assign a
specified weight to these factors, but rather we use our judgment to establish a
targeted performance level and related payout range that we believe are in your
best interests. The size of final awards depends on the actual level of
performance achieved in comparison with the pre-established objectives.
As was the case in recent years, management recommended that the Committee
continue to raise the bar and establish very aggressive performance targets for
2000. We agreed and tied the payment of annual incentive awards to meeting
specific levels of net income, Return On Net Assets ("RONA"), market share, and
quality that are based upon the Corporation's business plans. Following a review
with management, we used our discretion and set the specific levels that served
as profitability, market share, and quality targets. At the end of 2000, we
reviewed the Corporation's overall operating performance. Financial results for
net income and RONA were below target levels. In addition, for certain
geographic regions/operating units, we reviewed performance against
pre-established targets for quality and market share within those regions/units.
Several regions were below target expectations. Thus, the final annual incentive
awards that were determined and paid in cash in early 2001 were above threshold
but below the target level established for 2000.
Stock Options -- All executives are eligible to be considered for stock
option grants. Executives may receive stock options under the provisions of the
1997 Stock Incentive Plan. Options are granted to emphasize the importance of
improving stock price performance over the long-term and to encourage executives
to own GM stock. These options are granted at 100% of the average price of the
stock on the date of grant. In this way executives can be rewarded only if the
stock price increases, which will benefit both you and the executive. Our Plan
does not allow the re-pricing of options.
When we grant options, we follow competitive long-term incentive
compensation practices. The size of these grants and other long-term awards
discussed below is intended to place executives at the upper end of the third
quartile of long-term incentives granted to similar executive positions at
comparator companies. When we determine the size of new grants to each Named
Executive Officer, we consider the number of option shares each executive has
previously been granted. In addition to his responsibilities at GM, Mr. Pearce
also has oversight responsibility for Hughes Electronics
11
Corporation and, therefore, we determined that his grant would be denominated
partially in Common Stock and partially in Class H Common Stock.
Other Long-Term Incentives -- Stock Performance Program awards under the GM
Performance Achievement Plan are normally only granted to the Corporation's
senior executives. Similar to annual incentive awards, these awards are
typically made annually; however, the payout, if any, depends upon the
performance of GM related to other companies in the S&P 500 Index [ranking of GM
Common Stock within the S&P 500] over a three-year period. In recent years,
payout of these awards depended on achieving pre-established RONA targets.
Although the Corporation continues to place strong emphasis on meeting its RONA
targets, it has revised its focus for long-term incentive awards effective with
the 1999 grant to measure returns to stockholders of the Corporation's $1 2/3
Common Stock. Under this new methodology, using Total Shareholder Return (TSR),
executives were granted target awards in the form of shares of the Corporation's
common stocks for the 2000-2002 performance period. The final number of shares
to be delivered at the end of the three-year performance period, if any, will
depend on where GM ranks (based on market price appreciation plus the
compounding effect of reinvested dividends) in relation to other companies in
the S&P 500 Index. If the Corporation's ranking in the S&P 500 over the
three-year period falls below the 25th percentile, no payment will be made. If
the Corporation ranks within the top 10% of the companies in the S&P 500, the
maximum payout level would be achieved. Between threshold and maximum, payout
percentages will be related to the ranking position. By establishing awards in
this fashion, executives will be highly motivated to increase stock price
performance, which would be to their benefit as well as yours.
In 2000, in order to motivate the executive workforce to intensify its
focus on improving the Corporation's profit margin (net income as a percent of
net sales), we made a special Net Margin grant to the entire executive team
worldwide. Payment of this grant, which is not subject to individual performance
adjustments, depends on increasing the Corporation's four-quarter rolling
average Corporate Net Margin to at least 5% prior to the end of 2003. If this
goal is achieved, these awards will be paid in stock following the end of the
quarter in which the 5% Net Margin is achieved. If the 5% level is not achieved
prior to December 31, 2003, no awards will be paid.
AWARDS TO CHIEF EXECUTIVE OFFICERS
On January 1, 2000, Mr. John F. Smith, Jr. was Chairman and CEO. Effective
June 1, 2000, he stepped down from his position as CEO, but remains Chairman of
the Board and an executive officer. Effective June 1, 2000, GM President
G. Richard Wagoner, Jr. assumed the additional responsibility of CEO. Prior to
year-end, we met to determine the 2000 compensation levels for Messrs. Smith and
Wagoner.
During this review we observed that the Corporation exceeded the aggressive
RONA targets we established in 1998 for the three-year (1998-2000) long-term
incentive awards; however, reflecting an extremely competitive global market and
fourth-quarter slowdown, we noted that the Corporation did not achieve the
financial, market share, and quality targets we established for annual incentive
awards in early 2000. In evaluating this performance we recognized both
individuals' highly effective leadership and commitment to flexibility,
creativity, and innovation while embracing the Corporation's cultural priorities
to act as one company, embrace stretch targets, move with a sense of urgency,
and enhance product and customer focus. We specifically noted that 2000 global
revenues were at an all-time record and earnings were the second highest in the
Corporation's history.
12
We also noted many positive developments toward addressing current business
priorities, including an aggressive strategy to expand the number of innovative
products and services. Among the many achievements, we specifically noted the
introduction of eight all new models in 2000 and plans to introduce 11 more in
2001 and also observed that GM has 19 vehicles in development on 24-month cycles
-- more than any other automaker.
We considered the industry leading position of OnStar as the premier
provider of sophisticated global positioning and wireless technologies directly
to our vehicles and commented on GM's leadership in the global automotive sector
in e-business activities such as GM's global customer Web site activities
(GMBuyPower.com). We further noted the joint venture to form a business to
business (B2B) purchasing automotive exchange on the Internet (Covisint) which
promises to be the world's largest Internet marketplace. We also observed GM's
progress in its order-to-delivery (OTD) initiative, which will result in the
Corporation responding more quickly to consumer demands.
Finally, we reviewed the aggressive growth in Asia Pacific, particularly in
China, as demonstrated in the success of the Shanghai-GM joint venture. We
recognized progress in our alliance with Fuji Heavy Industries and expansion of
our alliances with Isuzu and Suzuki. We also observed the establishment of a
comprehensive alliance with Fiat Automotive, formed in Europe and Latin America,
that will play a significant role in improving the Corporation's long-term cost
competitiveness.
After our evaluation, we determined Messrs. Smith and Wagoner's
compensation as follows:
Base Salary -- In recognition of his continued strong leadership and
performance, Mr. Smith's salary was increased by 5% to $2,050,000 effective
January 1, 2000, after an interval of 24 months since his last increase.
Reflecting his outstanding performance and promotion to CEO, effective June 1,
2000 we increased Mr. Wagoner's salary to $1,700,000.
Annual Incentives -- In early 2000, we established an individual award
target for Mr. Smith based on achievement of specified levels of net income,
RONA, market share, and quality, in line with the Corporation's compensation
philosophy. Similarly, we also established a target award for Mr. Wagoner as
Chief Operating Officer (COO) utilizing the same performance measures. Following
his promotion to CEO, we increased the size of the original target award to
Mr. Wagoner to recognize his additional responsibilities. At the end of the year
we reviewed these awards in relation to the established performance measures,
noting that they were down from 1999 levels and below the targets we established
for 2000. Final awards for both Messrs. Smith and Wagoner were above threshold
but below target.
Stock Options -- As part of the Corporation's continuing compensation
review process, we reviewed the size of the options granted to Mr. Smith in
comparison with option grants to CEOs of our comparator group of companies.
After considering the number of options previously granted to him, we set the
size of his 2000 stock option grant at 400,000 shares of Common Stock. At the
same time, we established a 200,000 share grant for Mr. Wagoner based on a
comparison of awards with COOs of other companies and after considering the
number of options previously granted to him. In June 2000, following his
promotion to CEO, we re-examined Mr. Wagoner's option status and granted him an
additional option for 50,000 shares in recognition of his new responsibilities.
Other Long-Term Incentives -- The Performance Achievement Plan (PAP) target
awards are disclosed starting on page 18. The regular awards cover the
three-year period 2000-2002. The awards for both Messrs. Smith and Wagoner were
denominated and will be paid in shares of GM Common and Class H Common stocks in
one installment, if they are
13
earned. The special one-time net margin grant was denominated and will be paid
in shares of GM Common Stock and will also be paid in one installment, if it is
earned. The sizes of all target awards were developed in line with the
methodology discussed above.
The cumulative GM RONA for the 1998-2000 performance period, which
concluded at year-end 2000, was above target but below maximum. This was
achieved despite the extremely aggressive three-year target performance level we
established in early 1998. The final awards for Messrs. Smith and Wagoner were
paid above target but below maximum payout level.
During 2000, the Committee met with the Board of Directors in an executive
session to review the Corporation's performance and the performance of Messrs.
Smith and Wagoner and other members of senior management, including the Named
Executive Officers. We explained our compensation determinations for the Named
Executive Officers to the Board and the Board concurred with our decisions. In
early 2001, the Board of Directors also set 2001 objectives for Messrs. Smith
and Wagoner.
EXECUTIVE COMPENSATION COMMITTEE
John H. Bryan, Chair Eckhard Pfeiffer
George M. C. Fisher Dennis Weatherstone
J. Willard Marriott, Jr.
14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows the pre-tax compensation paid during the last three
fiscal years to Chairman J. F. Smith, Jr., President and CEO G. R. Wagoner, Jr.,
and each of the three other most highly compensated executive officers
during 2000.
Annual Compensation Long-Term Compensation
-------------------------------------- ----------------------
Payouts
Other Awards ----------
Annual ---------- Long-Term All Other
Name and Compen- Stock Incentive Compen-
Principal Position Year Salary Bonus(1) sation(2) Options(3) Payouts(4) sation(5)
------------------ ---- ------ -------- --------- ---------- ---------- ---------
$ $ $ Class # Shares $ $
J. F. Smith, Jr.
Chairman............ 2000 2,050,000 1,169,000 74,797 Com. 400,000 3,120,000 128,557
1999 1,950,000 4,840,000 105,330 Com. 420,700 5,250,000 108,518
1998 1,950,000 1,080,000 56,540 Com. 360,600 1,600,000 103,600
G. R. Wagoner, Jr.
President & CEO..... 2000 1,554,000 784,000 N.A. Com. 250,000 1,616,000 80,675
1999 1,350,000 2,597,000 N.A. Com. 210,350 2,250,000 60,950
1998 1,087,000 475,000 N.A. Com. 120,200 850,000 49,375
H. J. Pearce
Vice Chairman....... 2000 1,408,000 684,000 N.A. Com. 150,000 1,360,000 81,505
Cl. H 100,227
1999 1,350,000 2,597,000 N.A. Com. 157,762 2,250,000 66,930
Cl. H 87,025
1998 1,163,000 475,000 N.A. Com. 112,687 850,000 56,758
Cl. H 54,095
J. D. Finnegan
Executive VP........ 2000 883,000 428,000 N.A. Com. 100,000 800,000 43,366
1999 638,000 991,000 N.A. Com. 48,080 1,120,000 28,266
1998 454,000 350,000 N.A. Com. 36,060 280,000 20,293
R. L. Zarrella
Executive VP........ 2000 958,000 456,000 N.A. Com. 110,000 920,000 51,310
1999 900,000 1,180,000 58,897 Com. 96,160 1,505,000 39,291
1998 768,000 460,000 N.A. Com. 54,090 500,000 33,453
(1) Bonus awards were granted under the General Motors 1997 Annual Incentive
Plan. They were paid in cash in January of the following year.
(2) Amounts include $21,626 (2000) and $31,495 (1999) for Mr. Smith and $34,084
(1999) for Mr. Zarrella related to use of company aircraft.
(3) All options have been adjusted to reflect the spin-off of Delphi Automotive
Systems in May 1999. Class H options have been adjusted to reflect a 3-for-1
stock split in the form of a 200% stock dividend paid on June 30, 2000.
(4) Amounts reflect long-term incentive payouts under the General Motors 1997
and 1992 Performance Achievement Plans. These awards cover three-year
performance periods (1998-2000, 1997-1999, and 1996-1998) and are paid in
the form of shares of the Corporation's Common and Class H stocks. These
awards for the Named Executive Officers vest in installments. The 1998-2000
and 1997-1999 payouts have two installments. The 1996-1998 payout for
15
Messrs. Smith, Wagoner, and Pearce has four installments and the payout for
Messrs. Finnegan and Zarrella has two installments. The first installment
vests at the time the final award is determined and the second installment
vests on December 31 of the same year. The third and fourth installments of
the 1996-1998 grant vest on December 31 of 2000 and 2001, respectively.
In addition, the 1999 payout included a special One-Time RONA grant that
paid out following the attainment of the established 12.5% RONA target in
the third quarter of 1999. The special RONA grant vested and was paid in one
installment of GM Common Stock in 1999.
Dividend equivalents are paid on unvested shares.
The following table sets forth the number of shares that were vested and
paid and the number of shares that remain unvested and unpaid as of
December 31, 2000.
Second Installment of 1997-1999 Grant
1998-2000 Grant and Third Installment of 1996-1998 Grant
------------------------------ ------------------------------------------
Shares
Shares Vested Shares Shares Vested Value of Shares Vested Unvested
in 2001 Unvested Dec. 31, 2000 Dec. 31, 2000 Dec. 31, 2000
-------------- -------------- ------------------ ---------------------- --------------
Com. Cl. H Com. Cl. H Com. Cl. H Com. Cl. H Com. Cl. H
------ ------ ------ ------ -------- -------- ----------- --------- ------ ------
$50.94 $23.00
# # # # # # $ $ # #
J. F. Smith, Jr.......... 23,968 13,357 23,967 13,356 24,404 17,148 1,243,140 394,404 38,960 40,434
G. R. Wagoner, Jr........ 12,414 6,918 12,414 6,917 10,991 7,968 559,882 183,264 19,202 19,968
H. J. Pearce............. 9,795 7,277 9,794 7,277 10,246 10,230 521,931 235,290 17,275 26,097
J. D. Finnegan........... 6,146 3,425 6,145 3,424 5,560 2,346 283,226 53,958 -0- -0-
R. L. Zarrella........... 7,068 3,939 7,067 3,939 7,712 3,171 392,849 72,933 -0- -0-
(5) This column shows contributions by the Corporation under various savings
plans and imputed income for endorsement split-dollar life insurance. In the
event of death, the Corporation would be reimbursed for its premiums from
the life insurance policy. Additional information regarding the savings
plans will be found in footnote (e) on page 8. The following table details
the savings and split-dollar amounts.
J. F. Smith, Jr. G. R. Wagoner, Jr. H. J. Pearce J. D. Finnegan R. L. Zarrella
---------------- ------------------ ------------ -------------- --------------
Savings Plans.........2000 $98,400 $74,600 $67,600 $42,400 $46,000
1999 81,900 56,700 56,700 26,775 37,800
1998 81,900 45,675 48,825 19,075 32,235
Life Insurance*.......2000 30,157 6,075 13,905 966 5,310
1999 26,618 4,250 10,230 1,491 1,491
1998 21,700 3,700 7,933 1,218 1,218
* Reflects split-dollar life insurance policies, except for Mr. Finnegan, and
the 1999 and 1998 policies for Mr. Zarrella that reflect basic life insurance
policies.
16
OPTIONS AND SAR GRANTS IN 2000
The following table shows the stock options granted to the Named Executive
Officers in 2000. They were granted in a combination of non-qualified and
Incentive Stock Options (ISOs) on January 10, 2000 and, for Mr. Wagoner, June 2,
2000. These options become exercisable in three equal annual installments
commencing on the first anniversary of the date of grant. The ISOs expire ten
years from the date of grant, and the non-qualified options expire two days
later.
Individual Grants
-------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Grant Date
Options Employees Exercise Expiration Present
Name Granted in 2000 Price Date Value(1)
---- ---------- ---------- -------- ---------- ----------
# Shares % $/Share $
$1-2/3 Par
Common Stock Options
--------------------
J. F. Smith, Jr............... 400,000 2.66 75.50 1/11/10 8,464,000
G. R. Wagoner, Jr............. 200,000 1.33 75.50 1/11/10 4,232,000
50,000 0.33 70.10 6/2/10 1,001,500
H. J. Pearce.................. 150,000 1.00 75.50 1/11/10 3,174,000
J. D. Finnegan................ 100,000 0.66 75.50 1/11/10 2,116,000
R. L. Zarrella................ 110,000 0.73 75.50 1/11/10 2,327,600
Class H Stock Options (2)
-------------------------
H. J. Pearce.................. 100,227 0.30 34.44 1/11/10 1,410,200
(1) These values were determined based on the Black-Scholes option-pricing model
at the time of grant. The following assumptions were used in the
calculation:
* Expected price volatility -- 28% (33% for the Class H grant) for the
January 10 grants and 30% for the June 1 grant.
* Options will be exercised in the fifth year.
* An interest rate based upon the corresponding yield of a government
bond maturing five years from the date of grant.
* Dividends at the rate in effect on the date of grant.
* No adjustments for nontransferability.
(2) The number of shares and exercise price of the Class H options granted to
Mr. Pearce have been adjusted to reflect the recapitalization of the Class H
stock in December 1997, the spin-off of Delphi Automotive Systems in May
1999, and the 3-for-1 Class H stock split in the form of a 200% stock
dividend paid on June 30, 2000.
The fact that we use the Black-Scholes model does not necessarily mean we
believe or acknowledge that it can accurately determine the value of options.
The ultimate value of the option, if any, will depend on the future market price
of the Corporation's common stocks and the optionee's individual investment
decisions, neither of which can be predicted with any degree of certainty.
17
AGGREGATE OPTION/SAR EXERCISES IN 2000 AND
OPTION/SAR VALUES AT DECEMBER 31, 2000
The following table provides information concerning the options exercised
by each of the Named Executive Officers in 2000 as well as the value of options
held by such executives at the end of the year. The year-end value is based on
the closing prices of General Motors common stocks on December 31, 2000 (Common
-- $50.94; Class H -- $23.00). SARs are not granted under the General Motors
Stock Incentive Plan.
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Dec. 31, 2000 Dec. 31, 2000
Class of Acquired Value Exercisable/ Exercisable/
Name Stock on Exercise Realized Unexercisable Unexercisable
---- -------- ----------- -------- ----------------------- ----------------------
# Shares $ # Shares $
J. F. Smith, Jr......... Common 154,291 7,475,399 1,192,688 / 800,663 9,530,474 / 552,866
G. R. Wagoner, Jr....... Common -0- -0- 586,838 / 430,294 4,978,946 / 174,287
H. J. Pearce............ Common -0- -0- 502,221 / 292,734 4,036,754 / 163,395
Class H -0- -0- 458,553 / 328,368 5,636,712 / 2,155,548
J. D. Finnegan.......... Common 43,602 1,692,108 16,032 / 144,067 -0- / 52,283
R. L. Zarrella.......... Common 31,399 1,842,965 192,876 / 192,133 1,518,086 / 78,426
LONG-TERM INCENTIVE AWARDS
The following table shows target long-term incentive awards granted to
Named Executive Officers in 2000. The awards cover the 2000-2002 performance
period and were granted under the General Motors 1997 Performance Achievement
Plan. If the minimum or threshold performance level is met or exceeded, the
percentage of the target award that will eventually be paid to participants will
depend on the Corporation's ranking on total shareholder return related to
companies in the S&P 500 Index over the three-year period. If the minimum
performance level is not met, no awards will be paid. In 2000, in addition to
the regular long-term incentive awards, a special one-time Net Margin grant was
made under the 1997 Performance Achievement Plan. Payment of this award, which
is not subject to performance adjustments, is contingent upon increasing the
Corporation's four-quarter rolling average net margin to at least 5% prior to
the end of 2003. If the margin target is met on or before December 31, 2003, the
special award will be paid out in GM Common Stock. If the margin target is not
met, the special award will expire on December 31, 2003 and no payment will be
made. There are no maximums or minimums for this award.
18
Estimated Future Payouts
Under Non-Stock Price-Based Plans
Number of -----------------------------------------------------------------------------
Shares, Units or
Other Rights Threshold Target Maximum
------------------- Performance ------------------- ------------------- -------------------
Name Common Class H Period Common Class H Common Class H Common Class H
---- ------ ------- ----------- ------ ------- ------ ------- ------ -------
Shs. Shs. Shs. Shs. Shs. Shs. Shs. Shs.
J. F. Smith, Jr....... 23,130 13,800 2000-2002 11,565 6,900 23,130 13,800 46,260 27,600
G. R. Wagoner, Jr..... 11,020 6,570 2000-2002 5,510 3,285 11,020 6,570 22,040 13,140
H. J. Pearce.......... 10,330 8,220 2000-2002 5,165 4,110 10,330 8,220 20,660 16,440
J. D. Finnegan........ 7,710 4,620 2000-2002 3,855 2,310 7,710 4,620 15,420 9,240
R. L. Zarrella........ 8,260 4,950 2000-2002 4,130 2,475 8,260 4,950 16,520 9,900
Special
One-Time
Net Margin
Name Grant
---- ----------
Shs.
J. F. Smith, Jr....... 23,234
G. R. Wagoner, Jr..... 27,240
H. J. Pearce.......... 19,228
J. D. Finnegan........ 14,421
R. L. Zarrella........ 14,421
RETIREMENT PROGRAM
The retirement program for General Motors' executives in the United States
consists of the General Motors Retirement Program for Salaried Employees and two
non-qualified plans. Together, these plans are referred to here as the "GM
Salaried Program."
The General Motors Retirement Program for Salaried Employees is a
tax-qualified plan subject to the requirements of the Employee Retirement Income
Security Act (ERISA). It is comprised of two parts -- a non-contributory part
(known as Part A) and a contributory part (known as Part B). The contributory
portion (Part B) of this tax-qualified plan provides benefits under a formula
based on the number of "Years of Part B Credited Service" and upon the average
of the highest five years of base salary (up to the maximum allowable under the
Internal Revenue Code) received during the final ten years of service. Amounts
paid under Part B are subject to certain Code limitations that may change from
time to time. Part B also provides employees with an annual retirement benefit
equal to the sum of 100% of the Part B contributions the executives made after
October 1, 1979, and smaller percentages of the contributions they made before
that date. If employees elect not to contribute to Part B of the tax-qualified
plan, they are entitled to receive only Part A basic retirement benefits equal
to a flat dollar amount per year of credited service (essentially equivalent
provisions of the General Motors Hourly-Rate Employees Pension Plan). Benefits
under the tax-qualified plan vest after five years of credited service and are
payable at the normal retirement age of 65, either in the form of a single life
annuity or in a reduced amount in joint and survivor form.
Supplemental Executive Retirement Program (SERP). If executives make Part B
contributions to the tax-qualified plan, they may also be eligible to receive a
non-qualified Regular SERP benefit. The sum of the tax-qualified plan's benefits
plus the Regular SERP benefit and will provide an eligible executive with total
annual retirement benefits equal to:
* [2% times Years of Part B Credited Service] times Average Annual Base
Salary
* Less [2% times years of credited service] times the maximum annual Social
Security benefit in the year of retirement payable to a person retiring
at age 65 ($18,432 for a 65 year old retiring in 2001).
19
Table I shows the regular form of the estimated total annual retirement
benefit payable under the GM Salaried Program (based on Average Annual Base
Salary as of December 31, 2000) that would be paid annually in 12 equal monthly
installments as a single life annuity to executives retiring in 2001 at age 65.
If executives elect to receive such benefits in the form of a 65% joint and
survivor annuity, the single life annuity amounts shown would generally be
reduced by 5% to 7.5%, depending upon the age differential between spouses.
TABLE I
PROJECTED TOTAL ANNUAL RETIREMENT BENEFITS FROM ALL PARTS OF THE GM SALARIED
PROGRAM
ASSUMING AN EXECUTIVE QUALIFIES FOR REGULAR SERP BENEFITS (a)
Years of Part B Credited Service
Average Annual --------------------------------------------
Base Salary 15 25 35 45
-------------- -------- --------- --------- ---------
$ $ $ $ $
530,000 153,470 255,784 358,098 460,411
916,000 269,270 448,784 628,298 807,811
1,302,000 385,070 641,784 898,498 1,155,211
1,688,000 500,870 834,784 1,168,698 1,502,611
2,074,000 616,670 1,027,784 1,438,898 1,850,011
2,460,000 732,470 1,220,784 1,709,098 2,197,411
(a) The Average Annual Base Salary and the Years of Part B Credited Service
(shown in parenthesis) as of December 31, 2000 for each of the Named
Executive Officers were as follows; John F. Smith, Jr. - $1,890,000 (40
years); G. Richard Wagoner, Jr. - $1,168,333 (23 years); Harry J. Pearce -
$1,164,167 (24 years); John D. Finnegan - $530,000 (25 years); and Ronald L.
Zarrella - $793,917 (10 years). The Annual Base Salaries for the most recent
year(s) considered in the calculation reported here are shown in the Summary
Compensation Table on page 15 in the column labeled "Salary."
Executives may be eligible to receive an Alternative SERP benefit in lieu
of the Regular SERP benefit if they satisfy certain criteria, including not
working for any competitor or otherwise acting in any manner which is not in the
best interests of the Corporation. Eligible executives will receive the greater
of the Regular SERP benefit detailed above or an Alternative SERP benefit. The
sum of the tax-qualified plan's benefits plus the Alternative SERP benefit will
provide an eligible executive with total annual retirement benefits equal to:
* 1.5% times Years of Part B Credited Service (up to a maximum of 35 years)
* Times the executive's highest Average Annual Total Direct Compensation
(highest five years of salary plus highest five years of bonus in the ten
years preceding retirement -- each calculated independently)
* Less 100% of the maximum annual Social Security benefit in the year of
retirement payable to a person age 65.
Table II shows the alternative form of the estimated total annual
retirement benefit payable under the GM Salaried Program based upon Average
Annual Total Direct Compensation as of December 31, 2000. These amounts would be
paid annually in 12 equal monthly installments as a single life annuity to
executives retiring in 2001 at age 65. The amounts shown would be reduced in the
same way as under the regular form if the executive elects joint and survivor
benefits.
20
TABLE II
PROJECTED TOTAL ANNUAL RETIREMENT BENEFITS FROM ALL PARTS OF THE GM SALARIED
PROGRAM
ASSUMING EXECUTIVE QUALIFIES FOR ALTERNATIVE SERP BENEFITS (a)
Average Annual Eligible Years of Part B Credited Service
Total Direct ----------------------------------------------------------
Compensation 15 20 25 30 35
-------------- ---------- ---------- ---------- ---------- ----------
$ $ $ $ $ $
1,003,000 207,243 282,468 357,693 432,918 508,143
2,456,000 534,168 718,368 902,568 1,086,768 1,270,968
3,909,000 861,093 1,154,268 1,447,443 1,740,618 2,033,793
5,362,000 1,188,018 1,590,168 1,992,318 2,394,468 2,796,618
6,815,000 1,514,943 2,026,068 2,537,193 3,048,318 3,559,443
8,268,000 1,841,868 2,461,968 3,082,068 3,702,168 4,322,268
(a) The Average Annual Total Direct Compensation and the Eligible Years of Part
B Credited Service (shown in parenthesis) which may be considered in the
Alternative SERP calculation as of December 31, 2000 for each of the Named
Executive Officers was as follows: John F. Smith, Jr. - $4,403,000 (35
years); G. Richard Wagoner, Jr. - $2,429,333 (23 years); Harry J. Pearce -
$2,438,167 (24 years); John D. Finnegan - $1,002,800 (25 years); and
Ronald L. Zarrella - $1,435,117 (10 years). The Annual Total Direct
Compensation for the most recent year(s) considered in the calculation above
will be found in the Summary Compensation Table on Page 15 in the columns
labeled "Salary" and "Bonus."
The Board of Directors has delegated to the Committee discretionary
authority to grant additional eligible years of credited service to selected key
executives under such terms and conditions as the Committee shall determine for
purposes of computing the regular and alternative forms of SERP for such
executives. Both the regular and alternative forms of the SERP benefit are
provided under a program that is non-qualified for tax purposes and not
pre-funded. SERP benefits under the regular and alternative forms can be reduced
or eliminated for both retirees and active employees by the Committee and/or the
Board of Directors.
PERFORMANCE PRESENTATION
The following graphs compare five-year cumulative return to stockholders
for each of the two classes of General Motors common stocks against the Standard
& Poor's (S&P) 500 Composite Stock Index and comparator data. Except as
explained below, each line represents an assumed initial investment of $100 on
January 1, 1996 and reinvestment of dividends over the period.
For General Motors Common Stock, a comparison is made with Ford Motor
Company and DaimlerChrysler Corporation. The data for DaimlerChrysler assumes an
initial investment in Chrysler Corporation and conversion of Chrysler stock to
DaimlerChrysler as a result of its merger with Daimler.
GM Class H Common Stock was registered under Section 12 of the Exchange Act
in late December 1997 and, for purposes of this chart, it is assumed that an
initial $100 investment was made on December 31, 1997. Since 1999, the
21
Class H stock was compared with the S&P 500 and the C.E. Unterberg-Towbin
Satellite Index, which consists of satellite manufacturing and satellite
services companies that are more directly comparable with Hughes Electronics.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
GENERAL MOTORS COMMON STOCK, S&P 500 INDEX, FORD, AND DAIMLERCHRYSLER
GM COMMON DAIMLER
DATE STOCK S&P 500 FORD CHRYSLER
1/1/96 100 100 100 100
1/1/97 109 123 117 135
1/1/98 129 164 184 144
1/1/99 157 211 345 215
1/1/00 198 255 324 179
12/31/00 143 232 272 98
COMPARISON OF CUMULATIVE RETURN
GENERAL MOTORS CLASS H COMMON STOCK, S&P 500 INDEX,
AND C. E. UNTERBERG-TOWBIN SATELLITE INDEX
C.E.
GM CLASS H UNTERBERG-TOWBIN
DATE STOCK S&P 500 SATELLITE INDEX
1/1/98 100 100 100
1/1/99 107 129 107
1/1/00 260 156 250
12/31/00 187 141 130
22
AUDIT COMMITTEE REPORT
The Audit Committee of the General Motors Board of Directors (the
Committee) is a standing committee comprised of six independent directors. It
operates under a written charter adopted by the Board of Directors. The members
of the Committee are Dennis Weatherstone (Chair), John H. Bryan, Nobuyuki Idei,
Karen Katen, Eckhard Pfeiffer, and Lloyd D. Ward. The Committee annually
recommends to the Board of Directors the selection of the Corporation's
independent accountants. That recommendation is subject to ratification by the
Corporation's stockholders.
Management is responsible for the Corporation's internal control and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States of America and issuing a report thereon. As provided in its
Charter, the Committee's responsibilities include the monitoring and oversight
of these processes.
Consistent with its Charter responsibilities, the Committee has met and
held discussions with management and the independent accountants. In this
context, management represented to the Committee that the Corporation's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America. The Committee has
reviewed and discussed the consolidated financial statements with management and
the independent accountants and discussed with the independent accountants
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Corporation's independent accountants have also provided to the
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with the independent accountants that firm's independence.
The Audit Committee has also considered whether the provision of non-audit
services is compatible with maintaining the independent accountants'
independence.
Based upon the Committee's discussions with management and the independent
accountants as described in this report and the Committee's review of the
representation of management and the report of the independent accountants to
the Committee, the Committee recommended that the Board of Directors include the
audited consolidated financial statements in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 2000 filed with the Securities and
Exchange Commission.
Dennis Weatherstone (Chair)
John H. Bryan
Nobuyuki Idei
Karen Katen
Eckhard Pfeiffer
Lloyd D. Ward
23
ITEM NO. 2
----------
The By-laws of the Corporation provide that the selection of independent
public accountants by the Audit Committee and the Board of Directors shall be
submitted for ratification by the stockholders at the annual meeting. In
accordance with the By-laws, the firm of Deloitte & Touche LLP has been selected
as independent public accountants for the year 2001 and this selection is being
presented to you for ratification. Representatives of Deloitte & Touche LLP will
attend the annual meeting and will have the opportunity to make a statement if
they desire to do so. They will also be available to answer any questions that
you may have.
Deloitte & Touche LLP has audited the Corporation's books annually since
1918. It has offices or affiliates in or convenient to most of the localities in
the United States and other countries where the Corporation operates and
is considered to be well qualified. The firm uses the work and reports of other
independent auditors who have examined the financial statements of subsidiaries
or investments included in the financial statements of the Corporation. Deloitte
& Touche LLP rotates its personnel assigned to General Motors at least once
every five years. The Audit Committee reviews and approves in advance any
instance where the supervising partner responsible for the General Motors
account is assigned for more than three years. If you do not ratify the
selection of Deloitte & Touche LLP as independent public accountants, the Audit
Committee will seek other accountants. Because of the difficulty and expense of
making any change in public accountants so long after the beginning of the
current year, however, it is likely that the appointment would stand for 2001
unless there were compelling reasons for making an immediate change.
During the 2000 calendar year, Deloitte & Touche LLP and its affiliates
provided GM with audit and other services. The fees for such services totaled
$17 million for audit fees, $2 million for financial information systems design
and implementation fees, and $77 million for all other fees.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT
THE BOOKS, RECORDS, AND ACCOUNTS OF THE CORPORATION AND ITS SUBSIDIARIES FOR THE
YEAR 2001. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS YOU SPECIFY A DIFFERENT CHOICE.
ITEM NO. 3
----------
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue,
N.W., Suite 215, Washington, DC 20037, owner of 102 shares of Common Stock, has
given notice that she intends to present for action at the annual meeting the
following resolution:
"WHEREAS, General Motors intends to include Internet access as well as cell
phones in some of its car models, and when driving this will lead to distraction
and accidents, be it
"RESOLVED: 'That General Motors provide each year, in its Proxy Statement and/or
Annual Report as well as its Environmental, Health and Safety Report, a detailed
report of accidents caused by driver distraction due to driver use of the
internet or cell phones in General Motors cars.'
24
"REASONS: 'Roads are becoming more and more cluttered. A certain percentage of
Internet users are 'addicted' to the use of cyberspace and could create
hazardous situations like holding up traffic at lights or pulling off to park on
shoulders if they access the Internet while driving.'
'In addition, the risks of potential driver distractions, like using cell phones
while driving, are already well known and causing considerable amounts of
accidents.'
'Stockholders are entitled to know full details on those accidents as well as
GM's program to reduce driver distraction and accidents.'
'If you AGREE, please mark your proxy FOR this proposal.' "
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
General Motors agrees that driver distraction is an important issue.
However, distractions can come in many forms besides using a cell phone while
driving. Common driver distractions range from noisy children in the back seat
to eating fast food when driving. While any driver distraction may be implicated
in a collision, determining what actually "caused" the collision is not a simple
task.
In general, vehicle manufacturers can thoughtfully integrate cell phone and
telematics technologies into a vehicle with safeguards that make them
appropriate for in-vehicle use. Comparable stand alone technologies may not
contain similar safeguards.
General Motors has taken a leadership role in addressing the issue of
driver distraction. Since its outset in 1996, GM's OnStar System has been based
on hands free, voice activated technology that has enabled its users to keep
their hands on the steering wheel and eyes on the road.
In April 2000, in part as a result of its experience with OnStar, GM became
the first and so far only automaker to announce a set of common sense
safety-driven principles to guide the research and development of future
information delivery systems in our vehicles. Our systems will be designed to do
four things:
* Keep the driver's eyes on the road and hands on the wheel;
* Minimize the number of steps required for the driver to perform any task;
* Create a common interface for how drivers interact with the system; and
* Utilize a lock-out protocol to prohibit especially demanding tasks while
driving -- for example, such tasks as programming a navigation screen or
using the type of computer screen that should be used only when the
vehicle is in park.
In October 2000, GM announced its "SenseAble Driving" campaign, which
includes three elements:
(1) a nationwide research program aimed at understanding and quantifying
common perceptions and misperceptions about driver distraction;
25
(2) development of an interactive computer demonstration to bring messages
about driver distraction home graphically, especially to young drivers;
and
(3) cooperating with state drivers' licensing agencies across the country
to spread the message that drivers should drive with eyes on the road,
hands on the wheel, and mind on the task of driving, with a 6-month
pilot program initiated in Michigan in late March 2001. Following the
pilot, the program will be rolled out to other states.
These efforts are aimed at improving drivers' understanding about the
importance of minimizing all forms of distractions while driving. Arming them
with this kind of information will help drivers to make sensible choices about
what they should and should not do while driving.
In light of General Motors track record with its OnStar System, its
adoption of guiding principles for telematics and its SenseAble Driving
campaign, GM has staked out a leadership position that benefits GM customers and
other drivers alike.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 3. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 4
----------
Bartlett Naylor, 1255 N. Buchanan, Arlington, VA 22205, owner of 100 shares
of Common Stock, has given notice that he intends to present for action at the
annual meeting the following resolution:
"Resolved: The shareholders urge our board of directors to take the
necessary steps to nominate at least two candidates for each open board
position, and that the names, biographical sketches, SEC-required declarations
and photographs of such candidates shall appear in the company's proxy materials
(or other required disclosures) to the same extent that such information is
required by law and is our company's current practice with the single candidates
it now proposes for each position.
"Supporting statement:
"Although our company's board appreciates the importance of qualified
people overseeing management, we believe that the process for electing directors
can be improved.
"Our company currently nominates for election only one candidate for each
board seat, thus leaving shareholders no practical choice in most director
elections. Shareholders who oppose a candidate have no easy way to do so unless
they are willing to undertake the considerable expense of running an independent
candidate for the board. The only other way to register dissent about a given
candidate is to withhold support for that nominee, but that process rarely
affects the outcome of director elections. The current system thus provides no
readily effective way for shareholders to oppose a candidate that has failed to
attend board meetings; or serves on so many boards as to be unable to supervise
our company management diligently; or who serves as a consultant to the company
that could compromise independence; or poses other problems. As a result, while
directors legally serve as the shareholder agent in overseeing management, the
election
26
of directors at the annual meeting is largely perfunctory. Even directors of
near bankrupt companies enjoy re-election with 90%+ pluralities. The 'real'
selection comes through the nominating committee, a process too often
influenced, if not controlled, by the very management the board is expected to
scrutinize critically.
"Our company should offer a rational choice when shareholders elect
directors. Such a process could abate the problem of a chair 'choosing' his own
board, that is, selecting those directors he expects will reflexively support
his initiatives, and shedding those who may sometimes dissent. Such a process
could create healthy and more rigorous shareholder evaluation about which
specific nominees are best qualified.
"Would such a process lead to board discontinuity? Perhaps, but only with
shareholder approval. Presumably an incumbent would be defeated only because
shareholders considered the alternative a superior choice. Would such a
procedure discourage some candidates? Surely our board should not be made of
those intolerant of competition. Would such a procedure be 'awkward' for
management when it recruits candidates? Hopefully so. (Management could print a
nominee's name advanced by an independent shareholder to limit such
embarrassment.). The point is to remove the 'final' decision on who serves as a
board director from the hands of management, and place it firmly in those of
shareholders.
"We urge you to vote FOR this proposal."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
Under GM's By-laws, the Board of Directors and its Committee on Director
Affairs are responsible for annually identifying the best candidates for
election to the Board. These duties include evaluating the performance of the
Board of Directors as well as identifying potential new members. In selecting a
slate of candidates each year, the Committee and the Board carefully consider
the performance and qualifications not just of each individual but of the group
as a whole, and nominates the persons that they believe will together best serve
the stockholders. An election of only some of the identified candidates creates
a risk that the resulting Board would lack some types of experience, skills, or
diversity.
The Board believes that if they followed the procedure set forth in the
proposal and nominated twice as many candidates to the Board as there are seats,
they would fail in their duty to GM's stockholders to identify and recommend the
best candidates. As the individuals responsible for advising stockholders in
making voting decisions, they have an obligation to inform stockholders which
candidates they favor. Many well-qualified persons would not be willing to
participate in the type of contested election that the proposal would produce,
however, particularly if the Board did not recommend them.
The proposal suggests that only nominating an excess number of candidates
can ensure that stockholders receive the information necessary for their choice
of director. On the contrary, stockholders are protected in two ways under GM's
current method which is used by virtually all publicly held companies. First, in
making their selections, the Committee and the Board consider issues like
possible conflicts of interest as well as attendance and participation. Second,
the federal securities laws require that all companies include in their proxy
material certain information about each candidate that the Securities and
Exchange Commission has determined is necessary for a stockholder's informed
vote. In situations the
27
proposal contemplates, dissatisfied stockholders may register their disapproval
by withholding votes for some or all nominees or by conducting a proxy contest
to challenge the Board's candidates. The procedure set forth by the proposal
would not be an efficient or effective means of selecting the best directors for
GM.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 4. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 5
----------
Mark Seidenberg, P.O. Box 6102, Woodland Hills, CA 91365, owner of 60
shares of Common Stock and 2 shares of Class H Common Stock, has given notice
that he intends to present for action at the annual meeting the following
resolution:
"RESOLUTION TO CREATE ANTI-SLAVE LABOR POLICY
"The stockowners hereby recommend that the Board of Directors adopt a board
resolution to establish the following policies for all dealings in China:
"1. Goods or services produced in whole or part by slave or forced labor
shall not be acceptable for delivery to the corporation, its subsidiaries,
affiliates, or joint ventures. A suitable certificate of origin shall be
required.
"2. Goods provided by the corporation, its subsidiaries, affiliates, or
joint ventures shall not be sold to or otherwise provided to any facility
utilizing slave or forced labor. A suitable certificate of use shall be
required.
"3. The right of on-site inspection to determine the existence of slave or
forced labor shall be vigorously pursued.
"4. The corporation shall cooperate promptly, energetically, and fully with
the United States government and any international organization in their laws or
policies to discourage the use of slave or forced labor.
"Supporting Statement:
"The outrageous arrest and jailing of American Harry Wu by the Chinese
Communist regime put the spotlight on the immense Chinese 'laogai' forced labor
system.
"Slave and forced labor are widespread in China. China's 1100 laogai camps
and factories include about 8,000,000 slave and forced laborers.
"These slave and forced labor facilities produce a wide range of products,
including sophisticated machinery and electronics, and much of it is intended
for export. This vast problem has prompted the state of California to pass a law
refusing to buy slave-made goods from overseas. The U. S. Department of Energy
has agreed to a similar policy for the National Laboratories (Los Alamos,
Lawrence Livermore, and Lawrence Berkeley) which the University of California
administers.
28
"GM has established multi-million dollar businesses in China But it has not
adopted a board resolution as proposed herein. GM has implemented sporadic
policies regarding slave-made goods and and slave-labor facilities in China, but
they have been equivocal, discretionary, and non-universal.
"I think GM can do without slave labor involvement. If you can imagine any
convincing argument against this policy, I can't. But, believe me, GM's board
will think of something, since it opposes this resolution. Please read the
board's argument to see if it expresses your values. Then vote with your best
judgment."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
GM does not condone involuntary servitude in any form and has in place
numerous policies and practices to support our firm conviction that any decision
to seek employment should be entirely voluntary. During 2000, GM assured the
sponsor of this anti-slave labor proposal that we agree completely with the
condemnation of slave or forced labor.
The policies and practices of our Worldwide Purchasing organization carry
out this firm Corporate position. We refuse to purchase goods produced with
slave or forced labor, and we include in our contracts a clause requiring the
seller to represent that goods GM purchases were not produced with forced labor,
either by the seller or by the seller's supplier. Similarly, when we sell GM's
capital assets, such as machinery and equipment, we require the buyer to declare
that it will not utilize slave, prison or any other form of forced or
involuntary labor in connection with the refurbishment or use of the machinery
and equipment or goods produced with it. Further, GM requires any buyer to
certify in writing its compliance with those terms and conditions.
In May 1999, GM management decided to support the Global Sullivan
Principles as consistent with the policies and principles of this Corporation.
The Global Sullivan Principles (GSP) provide a framework for corporate social
responsibility for companies doing business on a global basis. Included in these
principles is a commitment to ". . . operate without unacceptable worker
treatment such as the exploitation of children, physical punishment, female
abuse, involuntary servitude, or other forms of abuse" and to "Promote the
application of these principles by those with whom we do business." The decision
to support the GSP was reviewed and approved by the Public Policy Committee of
the GM Board of Directors, and acknowledged by the full Board. The GM Board has
already formally expressed its objection to slave labor and other forms of
involuntary servitude and abuse; a new resolution would be redundant.
GM's condemnation of and policies against slave or forced labor are
universal and unequivocal throughout the company's global operations. Suppliers
who violate these policies, or who do not take immediate remedial action if a
violation is identified, are subject to immediate termination of their
contracts.
We share the sponsor's condemnation of slave or forced labor, and value his
concern and input into this critical social issue. The proposal and actions it
calls for, however, would just duplicate existing strong GM policies, effective
actions, and Board resolutions against slave or forced labor and other forms of
worker discrimination and abuse. The proposal is therefore unnecessary and not
in the best interests of the Corporation or its stockholders.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 5. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
29
ITEM NO. 6
----------
Bernard Schlossman and Naomi Schlossman, 10923 Rathburn Ave., Northridge,
CA 91326-2854, owners of 116 shares of Common Stock, have given notice that they
intend to present for action at the annual meeting the following resolution:
"RESOLVED:
"SHAREHOLDER VOTE ON AUDIT COMMITTEE MEMBERS
"General Motors shareholders recommend that shareholders have the opportunity
for an advisory vote on the members of the board audit committee.
"The company generally nominates specific directors for the audit
committee. This proposal recommends that shareholders cast an advisory vote on
the nominees.
"Each nominee's qualifications are to be summarized in the proxy statement
highlighting:
"1) The nominees baseline financial literacy together with
"2) Any conflicts of interest that might cloud his or her independence.
"This proposal addresses the considerable attention currently devoted to
corporate audit committees, flawed financial statements and dubious accounting
treatments. Chairman Arthur Levitt of the Securities and Exchange Commission has
continuing concerns about deficient year-end audits and aggressive accounting
practices that enable companies to manage earnings and meet investment community
expectations.
"Responding to Chairman Levitt's concerns, the New York Stock Exchange and
the National Association of Securities Dealers established The Blue Ribbon
Committee on Improving the Effectiveness of Corporate Audit Committees. The
Committee made a formal report that highlighted the importance of company audit
committee members' independence and baseline financial literacy.
"Vote yes to enhance the independence and qualification of the GM audit
committee members:
"SHAREHOLDER VOTE ON AUDIT COMMITTEE MEMBERS
YES ON 6"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Board of Directors recognizes the vital role of the Audit Committee in
serving as an independent, objective, and skilled overseer of the performance of
the Corporation's financial reporting process and internal control. Accordingly,
the Board has already established standards to guarantee the members'
independence and financial acumen.
30
GM directors and executives contributed to the effort of the Blue Ribbon
Committee on Improving the Effectiveness of Corporate Audit Committees, and
responded vigorously to the Committee's report. The charter of GM's Audit
Committee, which is included as an exhibit to this Proxy Statement, was revised
in 1999 and 2000 to comply with the recommendations of the Blue Ribbon
Committee, the requirements of the Securities and Exchange Commission and the
New York Stock Exchange, and the suggestions of various commentators to ensure
the independence and financial expertise of the members of the Audit Committee.
The charter notes that the Audit Committee shall be comprised of three or more
directors, as determined by the Board of Directors, each of whom shall be an
independent director (as determined in accordance with the Corporation's By-laws
and NYSE Listed Company Manual paragraph 303.01(B)(3)).
As specified by the NYSE, a director who is employed as an executive of
another corporation where any General Motors executive serves on that
corporation's compensation committee may not serve on the audit committee.
Members of the Audit Committee shall have no relationship that, in the judgment
of the Board of Directors, may interfere with the exercise of their independent
judgment as members of the Committee. Also, in accordance with NYSE Listed
Company Manual paragraph 303.01(B)(2), all members of the Audit Committee shall
be "financially literate," i.e., familiar with basic finance and accounting
practices, and at least one member of the Committee shall have accounting or
related financial management expertise.
The standards recommended by authorities such as the Blue Ribbon Committee
and the SEC are therefore already in place at General Motors to make certain
that the Board of Directors selects appropriate members for its Audit Committee.
An "advisory" stockholder vote would not enhance this process, and would not
give the Board unambiguous information that could be used in any practical way
to constitute the next year's Audit Committee. A negative vote might demonstrate
stockholder concern but would not indicate the reason for concern. In contrast,
stockholders can express their concerns about individual members of the
Committee by withholding their votes from the individual as part of the election
of directors; an "advisory vote" against the composition of the Audit Committee
as a whole would not indicate to the Board what response would be suitable.
In designating the members of the Audit Committee, the Board considers a
variety of important factors in addition to the requirements set forth in the
Committee's charter. The Audit Committee should be comprised of a team who work
well together and who complement one another's talents and experience. At the
same time, the Board must select strong teams for other key committees, which
oversee essential areas like executive compensation and director affairs.
Balancing these needs to create a system of well qualified committees to support
the work of the Board is a vital task, and the Board devotes a great deal of
attention and energy to choosing the members of the Audit Committee, as well as
the other committees of the Board. An "advisory vote" is not necessary to
concentrate the Board's focus on this assignment, and it would not provide
useful information to the Board.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 6. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
31
ITEM NO. 7
----------
The Ray T. and Veronica G. Chevedden Family Trust, owner of 2,000 shares of
Common Stock, has given notice that it intends to present for action at the
annual meeting the following resolution:
"RESOLVED:
"ENHANCE SPIN-OFF MANAGEMENT
"GM SPIN-OFFS TO RETAIN GM'S GOOD CORPORATE STANDARDS
"General Motors shareholders request that spin-off companies have:
"* The same corporate governance standards as GM or
"* Shareholders have the opportunity to vote as a separate issue on retaining
GM's standards or adopting a different package of standards for the spin-off
company.
"SUPPORTING STATEMENT:
"Delphi has many corporate governance standards that are regressive
compared to GM -- as measured by the standards of many institutional investors.
These standards are based on the Investor Responsibility Research Center's
Report: Average Voting Results on Significant Corporate Governance Proposals,
Sept. 27, 2000.
"One key regressive rule adopted by Delphi is a POISON PILL not subject to
shareholder vote.
"Delphi also adopted the following company standards that are not
competitive -- according to many institutional shareholders and proxy analysts:
"* No annual election of each director.
"* No cumulative voting.
"* Shareholders may not call special meetings.
"These Delphi standards were reported in the Investor Responsibility Research
Center's Delphi Automotive Systems Annual Meeting Report, 2000.
"This proposal topic won a 13% approval of GM shareholders at the 2000
shareholder meeting. Institutional investors own 41% of GM stock and have a
fiduciary duty to their clients.
"Source of 41% Institutional investor ownership: www.lionshares.com --
accessed April 4, 2001.
"This proposal is also of greater interest this year due to the increased
media attention to a possible spin-off of Hughes Electronics/DirecTV.
"WHAT INCENTIVE IS THERE FOR GOOD CORPORATE GOVERNANCE FOR GM SPIN-OFFS?
"A recent survey by the international management consultancy McKinsey & Co.
shows that institutional investors are prepared to pay an 18% premium for good
corporate governance.
Wall Street Journal
"To protect your stock value in future GM spin-offs, vote yes:
ENHANCE SPIN-OFF MANAGEMENT
GM SPIN-OFFS TO RETAIN GM'S GOOD CORPORATE STANDARDS
YES ON 7"
32
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
General Motors is proud of its reputation for leadership in improving
corporate governance, as exemplified by the Board's adoption of the Corporate
Governance Guidelines, which have been praised by experts in the field. We
recognize, however, that part of good governance is recognizing that "one size
does not fit all," and that different companies may require different policies
and practices for good governance, depending upon their individual situations.
The Board does not believe that it would be in the best interest of GM and its
stockholders to adopt a blanket policy such as the one set forth by the
proposal.
In forming any new corporation for a spin-off, we anticipate that the
initial policies of the new corporation, along with the provisions of its
charter and By-laws, would be chosen to meet the perceived needs of the company
and its stockholders. In many cases, the consent of GM stockholders would be
required for a spin-off or similar transaction, and GM would be required by
federal securities laws and state corporation laws to describe fully the
charter, By-laws, and corporate policies in the proxy solicitation materials
that GM stockholders would receive. Stockholders would undoubtedly consider the
implications of these initial provisions for corporate governance in deciding
whether to vote in favor of such a transaction. If a spin-off were approved,
stockholders would enter into a continuing relationship with the board and
management of the spun-off company, with opportunities to express their views
about the appropriateness of its policies and practices with regard to corporate
governance.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 7. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 8
----------
John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, CA 90278, owner
of 50 shares of Common Stock, has given notice that he intends to present for
action at the annual meeting the following resolution:
"RESOLVED:
"SHAREHOLDER VOTE ON POISON PILLS
ADOPT PROPOSAL TOPIC THAT WON 57% SHAREHOLDER APPROVAL
AT 24 MAJOR COMPANIES IN 2000
"General Motors Corporation shareholders request a bylaw for shareholder vote to
be required to adopt or maintain a poison pill.
"Currently the General Motors board can adopt a poison pill at any time
without a shareholder vote.
"WHY REQUIRE A SHAREHOLDER VOTE TO ADOPT OR MAINTAIN A POISON PILL?
"* Pills give directors absolute veto power over any proposed business
combination, no matter how beneficial it might be for shareholders.
Power and Accountability
By Nell Minow and Robert Monks
"* Shareholder right to vote on poison pill proposals won an overall 57%
APPROVAL from shareholders at 24 major companies in 2000.
Investor Responsibility Research Center
33
"* According to the Investor Responsibility Research Center this proposal topic
by this same proponent, John Chevedden, Redondo Beach, Calif. won more than
60% shareholder approval at the Delphi Automotive Systems May 2000 annual
meeting.
"* The Council of Institutional Investors (www.cii.org) recommends: Shareholder
approval of all poison pills. General Motors is 41%-owned by institutional
investors. These institutional investors have a fiduciary duty to cast their
vote giving priority to their client's best interest ahead of GM management
recommendations.
"NEGATIVE EFFECTS OF POISON PILLS ON STOCK VALUE
"A study by the Securities and Exchange Commission found evidence that the
negative effect of poison pills to deter profitable takeover bids outweigh
benefits.
"Source: Office of the Chief Economist, Securities and Exchange Commission,
The Effect of Poison Pills on the Wealth of Target Shareholders, October 23,
1986.
"A study by Professor John Pound of Harvard's Corporate Research Project
found higher corporate performance when there was no poison pill.
"Source: Governance Matters: An Empirical Study of the Relationship Between
Corporate Governance and Corporate Performance (June 1991).
"Many institutional investors believe poison pills should be voted on by
shareholders. At a minimum, many institutional investors believe that
shareholders should have the right to vote on the need of such a powerful tool,
which can entrench existing management.
"A poison pill can insulate management at the expense of shareholders. A
poison pill is such a powerful tool that shareholders should be able to vote on
whether it is appropriate.
"I believe the right for a shareholder vote on poison pills will avoid an
unbalanced concentration of power in the directors who could restrict the rights
of shareholders.
"ADOPT PROPOSAL TOPIC THAT WON 57% SHAREHOLDER APPROVAL
AT 24 MAJOR COMPANIES IN 2000
SHAREHOLDER VOTE ON POISON PILLS
YES ON 8"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Board of Directors believes that the action requested in this proposal
is unnecessary and ill-advised. The Board of Directors has not adopted a
shareholder rights plan (sometimes called a "poison pill") and has no present
intention to adopt one. Circumstances could arise in the future, however, where
the adoption of such a plan would be an important tool for protecting the
interests of the Corporation's stockholders in compliance with the fiduciary
duties of the Board of Directors. Requiring stockholder approval for the
adoption of a rights plan would impede the ability of the Board of Directors to
use such a plan for the benefit of stockholders when circumstances warrant.
Rights plans are designed to strengthen the ability of a board of
directors, in the exercise of its fiduciary duties, to maximize shareholder
value and protect stockholders from unfair and abusive takeover tactics. That is
why more than
34
2,000 companies, including more than half of the companies in the S&P 500 Index,
have adopted some type of rights plans.
Contrary to the proponent's suggestion, the ability to adopt a shareholder
rights plan does not give a board of directors absolute veto power over any
business combination. Rather, in upholding the legal validity of shareholder
rights plans, the Delaware Supreme Court has made it clear that a board is
required to act in accordance with its fiduciary duties in adopting and
maintaining a rights plan. As a result, rights plans neither prevent unsolicited
proposals from being made nor prevent companies from being acquired at prices
that are fair and adequate. In fact, a study of takeover data from 1992 through
1996 by Georgeson & Company, a nationally recognized proxy solicitation and
investor relations firm, found that the presence of a rights plan neither
increased the likelihood of defeat of an unsolicited takeover proposal nor
reduced the likelihood of a company becoming a takeover target. The same
Georgeson & Company study found that the premiums paid to acquire companies with
rights plans averaged eight percentage points higher than premiums for companies
without such plans.
In recommending a vote against the proposal, the Board of Directors has not
determined that a rights plan should be adopted by the Corporation. Any such
determination would be made only after careful deliberation, in light of all
circumstances then prevailing and in the exercise of the Board's fiduciary
duties. In this regard, it should be noted that the Board of Directors consists
of a majority of directors who are not employees of the Corporation, and that
the Board is not staggered but is elected in its entirety annually.
The recommendation against the proposal is based on the Board's belief that
it would not be wise to limit the flexibility of the Board of Directors to act
in the best interests of GM stockholders if circumstances arise in the future
that would warrant the adoption of a rights plan.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 8. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 9
----------
John Lauve, 200 North Saginaw, Holly, MI 48442, owner of 412 shares of
Common Stock, has given notice that he intends to present for action at the
annual meeting the following resolution:
"RESOLVED:
"GM must have directors who can stop the decline.
"The stock holders who know this will give them an incentive:
"Double their pay to $240,000 any year the market share increases.
"Also, this year, give each director the gift of a New Oldsmobile.
"REASON: Market share reflects customer acceptance of our product. Below average
cars, result in loss of market share. Find management that can change the record
of decline."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
General Motors strives to set director compensation at a level that will
enable the Board to attract and provide adequate incentives for its members.
GM's director compensation is regularly benchmarked against comparable
corporations and advisors are consulted to ensure that the compensation is
competitive. In recent years, General Motors
35
has increased its emphasis on stock as an important element of director
compensation in order to reinforce the alignment of the directors' interests
with those of the stockholders. GM's current directors are significant owners of
GM stock as disclosed on page 7 of the proxy statement. Changes in market share,
like other elements of performance, are normally reflected in GM's share price,
which directly impacts the value of a directors' holdings.
GM's stockholders can be confident that the members of its Board are
extremely attentive to all the elements that go into the Corporation's success,
including net income, Return On Net Assets, market share, and quality, and also
share the stockholders' determination to achieve significant improvements. The
Board believes that the proposal would not enhance the effectiveness of the
Board, however, and could impair the Board's ability to attract, recruit, and
secure the best qualified candidates for service on the Board.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 9. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 10
-----------
Nick Rossi, P.O. Box 249, Boonville, CA 95415, owner of 525 shares of
Common Stock and 237 shares of Class H Common Stock, has given notice that he
intends to present for action at the annual meeting the following resolution:
"RESOLVED:
"INDEPENDENT DIRECTORS
"General Motors shareholders request a bylaw requiring a transition to
independent directors for each key board committee seat as opens occur. The key
board committees are:
"* Audit
"* Nominating
"* Compensation
"Also, require that any change on this proposal topic be put to shareholder vote
-- as a separate proposal and apply to successor companies.
"SUPPORTING STATEMENT:
"This standard for director independence is:
"A director is deemed independent if his or her only non-trivial professional,
financial or familial connection to the company or its CEO within the past 5
years is their directorship. This is the definition of the Council of
Institutional Investors (www.cii.org). Institutional Investors own 56% of GM
stock.
"This proposal won 20% approval at the 2000 shareholder meeting -- up from
14% approval in 1999 -- for a 44% increase in one year.
"The Council of Institutional Investors also recommends independent
directors for each key board committee seat.
36
"Note the lack of independence by GM directors (Based substantially on the
2000 company proxy):
"1) Three of 13 directors are inside employees:
Smith
Wagoner
Pearce
"2) Three directors have more than 10-year tenure:
Weatherstone 15-year veteran
Marriott 12-years
Everhart 12-years
"Long tenure is bad. It allows directors to develop friendships with management
-- friendships that impair effective oversight.
The Corporate Governance Advisor
"3) Interlocking cross-directors:
Interlocking Directors Company
---------------------- -------
Marriott & Pearce Marriott
"* Corporate governance experts say cross-directors tend to look out for each
others' interest, versus those of shareholders.
Business Week
"4) Director affiliated with a company that does significant business with GM.
Marriott Marriott Hotels
"* It is conflict of interest when a director can use his position on the GM
Board to build business for another company.
"5) Directors own less than 1001 shares:
Marriott 1000 shares (Has had more than 10 years to buy stock)
Ward 1000 shares
"* Directors need a significant stake in the company.
"Additionally there are serious competitive issues that deserve greater
independent attention from directors:
"* A $2 billion write-off will be taken in the 4th quarter to close Oldsmobile
[after 103 years] and for the cost of job cuts.
"* GM will sack 10% of its salaried workers and drastically cut production in
Europe, which has mounting losses.
"* GM is cutting U.S. production by 14% in the 1st quarter.
Business Week Dec. 25, 2000
"Declining sales, increased pressure in Europe and losses at Japanese affiliate
Isuzu are forcing GM to cut its 4th quarter earnings to $1.20 a share, down from
analyst projections of $1.70 a share.
Los Angeles Times Dec. 13, 2000
"GM stock dropped from $94 to $48 in the Year 2000.
Source: Value Line
37
"To ensure proactive oversight from independent GM directors with a stake
in the company vote for:
"INDEPENDENT DIRECTORS
ON KEY COMMITTEES
YES ON 10"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Board of Directors has been, and continues to be, a strong proponent of
board independence, and has already taken effective measures to ensure that its
Audit Committee, Executive Compensation Committee, and Committee on Director
Affairs (which acts as the Nominating Committee) are composed exclusively of
independent directors. General Motors' widely acclaimed Guidelines on
Significant Corporate Governance Issues, adopted by the Board in January 1994
and most recently revised in June 2000, states in Item 22: "Except for the
Investment Funds Committee, committee membership will consist only of
independent Directors as defined in By-law 2.12" (emphasis added). Section 2.12
of the GM By-laws gives a definition of "independent" that is consistent with
those as used by major pension funds:
"[A] director who: (i) is not and has not been employed by the corporation
or its subsidiaries in an executive capacity within the five years
immediately prior to the annual meeting at which the nominees of the board
of directors will be voted upon; (ii) is not (and is not affiliated with a
company or firm that is) a significant advisor or consultant to the
corporation or its subsidiaries; (iii) is not affiliated with a significant
customer or supplier of the corporation or its subsidiaries; (iv) does not
have significant personal services contract(s) with the corporation or its
subsidiaries; (v) is not affiliated with a tax-exempt entity that receives
significant contributions from the corporation or its subsidiaries; and
(vi) is not a spouse, parent, sibling or child of any person described by
(i) through (v)."
In compliance with the Guidelines, the Board of Directors has six standing
committees, five of which are wholly comprised of independent directors as
defined by Section 2.12 of the GM By-laws. This includes the Audit Committee,
the Executive Compensation Committee, and the Committee on Director Affairs. Of
the total 29 committee memberships on the six standing committees, 28 are
considered independent. The Chairman's membership on the Investment Funds
Committee is the sole instance where an employee-director serves on a Board
committee.
The Board of Directors believes that the goal of this proposal has already
been achieved through the Guidelines, and that the proposal is therefore
unnecessary and not in the best interests of the stockholders.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 10. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 11
-----------
John J. Gilbert, 29 E. 64th Street, New York, NY 10021, owner of more than
$2,000 of Common Stock, has given notice that he intends to present for action
at the annual meeting the following resolution:
"RESOLVED:
"SHAREHOLDER OPPORTUNITY TO VOTE ON GOLDEN PARACHUTES
38
"General Motors shareholders recommend Golden Parachutes are to be approved as a
separate ballot item by a shareholder vote. Golden Parachutes are a lucrative
bonus for management after a merger. This proposal applies to golden parachutes
in excess of one year's total pay. Note that senior executives often receive
many times their base salary as their total yearly pay.
"The entire amount of golden parachutes is to be substantially indexed to the
performance of General Motors (GM) stock (and/or the merged company) over the 3
years following the merger completion, compared to the Dow Jones Industrial
Index. This is similar to performance-based stock options.
"This includes that golden parachutes shall not be given for a merger with less
than 50% change in control. Or for a merger approved but not completed.
"SUPPORTING STATEMENT:
"The directors and management must be focused on the long-term benefits to
shareholders in their negotiations of a merger, sale or other business
combination -- rather than the personal benefit of a lucrative golden parachute.
"The recent failed 'merger' involving Chrysler and Daimler is a prime example:
"Since the merger, Daimler-Chrysler stock has plunged leaving the company worth
less than Daimler-Benz was on its own before the deal.
Newsweek Dec. 11, 2000
"Daimler-Chrysler stock has slid to $45 from a high of $108 in 1999.
Business Week Nov. 27, 2000
"A respected proxy advisory service said shareholders should have the
opportunity to independently evaluate, then approve or reject golden parachutes.
"GOLDEN PARACHUTES NEED REASONABLE LIMITS due to the substantial pay
executives already receive. Golden parachutes may reduce incentives to maximize
shareholder value during merger negotiations because management is already
guaranteed specific benefits.
"This proposal topic, for SHAREHOLDER RIGHT TO VOTE ON GOLDEN PARACHUTES,
received a substantial 38% shareholder approval at the May 2000 shareholder
meeting of a major company, Allegheny Energy, Inc. (AYE). Source: Corporate
Governance Bulletin, May-June 2000, Investor Responsibility Research Center,
Washington, D.C.
"To maximize shareholder value vote yes for:
SHAREHOLDER OPPORTUNITY TO VOTE ON GOLDEN PARACHUTES
YES ON 11"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Executive Compensation Committee, an independent Board committee of
non-employee directors, oversees compensation. The Corporation's executive
compensation programs are designed to attract and retain highly qualified
executives and motivate them to maximize stockholder returns. These programs,
which have been developed to be competitive with compensation packages offered
by other comparable employers, link a significant portion of executive
39
compensation to performance and to total stockholder return and are fully
explained in the Executive Compensation Committee report beginning on page 9 of
the proxy statement. The Committee recognizes its responsibility to make
executive compensation decisions in a manner it believes to be in the best
interest of the Corporation and its stockholders.
The Executive Compensation Committee, on an ongoing basis, devotes
considerable time and effort to compensation issues, including the balance to be
struck among the various objectives of that program. The Board of Directors
believes that it is ultimately in the stockholders' best interest that the
responsibility for this ongoing process continue to be vested in the Committee
rather than being preempted and inhibited by rigid and arbitrary limitations,
such as that reflected in the proposed resolution. Further, the Committee has
not approved any golden parachute programs for GM's executives as defined by
this proposal.
Finally, we do not believe that the experience of this proposal at a
different, unnamed company has any relevance to General Motors stockholders. It
is not true that the GM Board influences votes by appointing trustees for GM
stockholders; the trustees and other fiduciaries for GM's employee benefit
plans, although selected by GM management, have a legal duty to act in the best
interest of the GM employees who participate in those plans.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 11. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 12
-----------
Kenneth Steiner, 14 Stoner Ave., No. 2M, Great Neck, NY 11021, owner of 60
shares of Common Stock, has given notice that he intends to present for action
at the annual meeting the following resolution:
"RESOLVED:
"General Motors shareholders request that the board of directors immediately
engage the services of a nationally recognized investment banker. This
investment banker is to specifically explore the sale of the entire company to
enhance shareholder value.
"We believe that GM shares trade at a significant discount to the sum of the
intrinsic values of its underlying businesses. Our belief, sustained by other
respected analysts in the investment community, is that the company's true,
intrinsic value exceeds the current share price by a premium of over 25%.
"If other shareholders believe, as we do, that the value of the underlying
assets of the company is not reflected in the stock price, then our board and
management have not met their obligation to shareholders. Our board and
management can best add value now by obtaining an independent valuation of the
assets and their deployment to maximize shareholder return.
"GM STRATEGY HAS NOT WORKED TO OBTAIN PROPER SHARE VALUE FOR HUGHES
ELECTRONICS/DIRECTV AND THE AUTOMOTIVE BUSINESS.
"To this point, GM shareholders have shown great patience. However, our board
must now chart a new course. In doing so, it is crucial that they have the
independence, expertise, and focus that a nationally recognized investment
banker, not employed by GM within the last 5 years, can provide to ensure that
the right questions are raised and answered involving the sale of the entire
company.
40
" 'PLUGGING ALONG'
"Shareholders have been patient with unlocking the value of Hughes Electronics,
yet GM's stock fell from $94 to $48 while speculation continued:
"There is growing skepticism on Wall Street as to whether Hughes will be sold,
and even some question whether GM is committed to a sale.
"Richard Wagoner, GM's chief executive, said the work is 'plugging along.'
Wall Street Journal Nov. 22, 2000
"Meanwhile in the automobile business --
"GM'S BIG DECISION: STATUS QUO
"A GM turnaround won't be easy. Wagoner is a quintessential team player, but
what GM really needs is Vince Lombardi.
"There's not much change in direction with Wagoner. In this widely shared view,
GM has simply repeated history by promoting an insider who won't be able to
change the culture he was raised in. Only a charismatic outsider has a chance of
inciting the revolution needed to jump-start GM.
"But despite the recently booming economy and a growing core of upscale car
buyers, GM has been unable to reverse its slide in market share. And for much of
the 1990s, GM trailed Ford in profitability.
"Although GM knows there is a war in the global auto industry, the company often
seems like a gang that can't shoot straight. It continually disappoints
potential customers, particularly the most desirable younger ones, with me-too
products and undifferentiated brands.
Fortune Feb. 21, 2000
"Vote yes:
HIRE INVESTMENT BANKER TO ENHANCE SHAREHOLDER VALUE
OF THE ENTIRE COMPANY
YES ON 12"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Board of Directors believes that implementation of the proposal
described above to immediately engage an investment banker to explore the sale
of the entire Corporation would not enhance stockholder value and in fact would
violate its fiduciary duty to act in the best interests of the Corporation and
its stockholders. The Board believes that the proposal, if adopted, could
actually result in a deterioration in stockholder value. Any public speculation
that the entire Corporation was "for sale" would likely engender uncertainty
among employees and customers, negatively impacting the Corporation's day-to-day
operations, and produce an immediate and ongoing deterioration in the business
and value of the Corporation.
The Board recognizes the preeminence of its fiduciary duties to the
stockholders and believes that this resolution would compromise the ability of
the Board to fulfill its duties. The Board of Directors is elected by the
stockholders to direct the management of the business and affairs of General
Motors. Increasing stockholder value is considered by the
41
Board to be an important component of that duty and is a consideration in all
deliberations of the Board and management. The Board has an established track
record of implementing initiatives designed to enhance stockholder value. Since
early 1997, the Corporation has returned over $36 billion of capital to its GM
$1 2/3 stockholders.
The Board of Directors remains committed to increasing the value of GM for
all stockholders, and will continue to pursue the courses of action that it
believes will best achieve that objective. To assist the Board in doing this,
the Corporation maintains relationships with nationally recognized investment
banking firms and obtains their expert advice on financial and strategic matters
from time to time. For the reasons stated, the Board feels that an immediate
sale of the entire Corporation, as is contemplated by the proposal, would not
maximize returns for existing stockholders.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 12. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
EXPENSES OF SOLICITATION
The Corporation will pay the cost of this solicitation of proxies. General
Motors will solicit proxies by mail and electronic means, and the directors,
officers, and employees of GM may also solicit proxies. These persons will not
receive any additional compensation for such services. In addition, GM has
retained Morrow & Co., Inc., to assist in soliciting proxies for a fee of up to
$50,000, plus reasonable out-of-pocket expenses. The Corporation will reimburse
brokers and other stockholders of record for their expenses in forwarding proxy
material to beneficial owners.
OTHER MATTERS
The enclosed proxy gives the Proxy Committee discretionary authority to
vote your shares in accordance with its best judgment with respect to all
additional matters that might come before the annual meeting. In addition to the
scheduled items of business, the meeting may consider stockholder proposals
omitted from the Proxy Statement and form of proxy pursuant to the Proxy Rules
of the Securities and Exchange Commission and matters related to the conduct of
the meeting. At the time this Proxy Statement went to press, the Board of
Directors was not aware of any such resolution that would be presented for
action at the meeting.
IF YOU VOTE BY MAIL, WE ENCOURAGE YOU TO SPECIFY YOUR CHOICES BY MARKING
THE APPROPRIATE BOXES ON THE ENCLOSED PROXY CARD. YOU DO NOT NEED TO MARK ANY
BOXES IF YOU WISH TO VOTE ACCORDING TO THE BOARD OF DIRECTORS' RECOMMENDATIONS;
JUST SIGN, DATE, AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE. IF YOU VOTE
THROUGH THE INTERNET OR BY TELEPHONE, SIMPLY FOLLOW THE INSTRUCTIONS ON THE
ENCLOSED FORM. THANK YOU FOR YOUR COOPERATION AND YOUR PROMPT RESPONSE.
By order of the Board of Directors,
NANCY E. POLIS, Secretary
April 19, 2001
42
EXHIBIT A
GENERAL MOTORS CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities with respect to the
financial reports and other financial information provided by the Corporation to
the stockholders and others, the Corporation's system of internal controls and
the Corporation's audit, accounting, and financial reporting processes
generally.
In carrying out this function, the Audit Committee shall serve as an
independent and objective monitor of the performance of the Corporation's
financial reporting process and system of internal control; review and appraise
the audit efforts of the Corporation's independent accountants and internal
audit department; and, provide for open, ongoing communication among the
independent accountants, financial and senior management, internal audit
department, and the Board of Directors concerning the Corporation's financial
position and affairs.
COMPOSITION
The Audit Committee shall be comprised of three or more directors, as
determined by the Board of Directors, each of whom shall be an independent
director as determined in accordance with the Corporation's By-laws and NYSE
rules. In accordance with NYSE rules all members of the Audit Committee shall be
"financially literate," i.e., familiar with basic finance and accounting
practices, and at least one member of the Committee shall have accounting or
related financial management expertise.
MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Committee shall meet at least annually, and more
often as warranted, with the General Auditor and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believes should be discussed privately. The Committee shall
maintain a high degree of independence both in establishing its agenda and
directly accessing various members of General Motors and subsidiary management.
The Committee shall meet annually with management, the General Auditor and/or
the audit committee of major subsidiary companies (as designated by the Audit
Committee) regarding their systems of internal control, results of audits, and
accuracy of financial reporting.
RESPONSIBILITIES AND DUTIES
The Committee's responsibility is oversight, and it recognizes that the
Corporation's management is responsible for preparing the Corporation's
financial statements. Additionally, the Committee recognizes that financial
management (including the internal audit staff), as well as the independent
accountants, have more knowledge and more detailed information about the
Corporation than do the members of the Committee; consequently, in carrying out
its oversight responsibilities the Committee is not providing any expert or
special assurance as to the Corporation's financial statements or any
professional certification as to the independent accountants' work.
A-1
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight responsibility. These functions are set
forth as a guide with the understanding that the Committee may diverge from this
guide as appropriate given the circumstances.
* Review with a representative of financial management and the independent
accountants both the financial information contained in the Corporation's
Quarterly Report on Form 10-Q prior to its filing, the Corporation's
earnings announcements prior to release, and the results of the
independent accountants' review of Interim Financial Information
(pursuant to SAS No. 71). The Chair may represent the entire Audit
Committee, either in person or by telephone conference call, for purposes
of this review.
* Review with management and the independent accountants at the completion
of the annual audit of the Corporation's consolidated financial
statements included in the Annual Report on Form 10-K for the last fiscal
year prior to its filing:
(1) the Corporation's annual consolidated financial statements and
related footnotes;
(2) the independent accountants' audit of the consolidated financial
statements and their report;
(3) any significant changes required in the independent accountants'
examination plan;
(4) any serious difficulties or disputes with management encountered
during the course of the audit; and
(5) other matters related to the conduct of the audit which are to be
communicated to the Audit Committee under generally accepted
auditing standards, including discussions relating to the
independent accountants' judgments about such matters as the
quality, not just the acceptability, of the Corporation's accounting
practices and other items set forth in SAS 61 (Communication with
Audit Committees) or other such auditing standards that may in time
modify, supplement, or replace SAS 61.
* On an annual basis, the Audit Committee should ensure receipt of, and
review with the independent accountants, a written statement required by
Independence Standards Board (ISB) Standard No. 1, as may be modified or
supplemented, and discuss with the accountants their independence. The
Committee will recommend that the Board of Directors take appropriate
action on any disclosed relationships that may reasonably be thought to
bear on the independence of the accountants and satisfy itself that the
Corporation has engaged independent accountants as required by the
Securities Acts administered by the Securities and Exchange Commission.
* On an annual basis, the Audit Committee should review the types and
extent of non-audit services to be provided by the independent
accountants to ensure they are compatible with maintaining the principal
accountants' independence.
* The Committee will have prepared, and review the Audit Committee Report
for inclusion in the annual stockholders' meeting proxy statement. The
Audit Committee Report must state whether the Audit Committee:
(1) has reviewed and discussed the audited consolidated financial
statements with management;
(2) has discussed with the independent accountants the matters required
to be discussed by SAS 61, as may be modified, supplemented, or
replaced;
(3) has received the written disclosures from the independent
accountants required by ISB Standard No. 1, as may be modified or
supplemented, and has discussed with the accountants their
independence; and
A-2
(4) has recommended to the Board of Directors, based on the review and
discussions referred to in above items (1) through (3), that the
Corporation's consolidated financial statements be included in the
Annual Report on Form 10-K for the last fiscal year for filing with
the Commission.
* The Audit Committee and Board of Directors are responsible for the
selection, evaluation and, where appropriate, replacement of the
independent accountants. Selection for the ensuing calendar year will be
submitted to the stockholders for ratification or rejection at the annual
meeting of stockholders. Consistent with these responsibilities, it is
recognized that the independent accountants are ultimately accountable to
the Board of Directors and the Audit Committee.
* Review and reassess the adequacy of the audit committee charter on an
annual basis. The charter will be included as an appendix to the annual
stockholders' meeting proxy statement triennially or in the next annual
stockholders' meeting proxy statement after any significant amendment to
the charter.
* In consultation with the independent accountants and the General Auditor,
regularly review the integrity of the Corporation's financial reporting
process and system of internal control.
* Review and concur in the appointment, replacement, reassignment, or
dismissal of the General Auditor. Confirm and assure the objectivity of
the General Auditor.
* Review the performance of the internal audit department including the
objectivity and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans with
the independent accountants.
* Review, as needed, the internal audit department's charter, which shall
define its purpose, authority, and responsibilities.
* Review policies and procedures with respect to officers' expense accounts
and perquisites, including their use of corporate assets and consider the
results of any review of these areas by the internal auditors or the
independent accountants.
* Review legal and regulatory matters that may have a material impact on
the Corporation's consolidated financial statements, related compliance
policies and programs and reports received from regulators.
In addition to the activities described above, the Audit Committee will
perform such other functions as necessary or appropriate under law, the
Corporation's charter and By-laws, and the resolutions and other directives of
the Board of Directors.
The Audit Committee shall have the power to conduct or authorize
investigations into any matters within its scope of responsibilities and shall
be empowered to retain independent counsel, accountants, or others to assist it
in the conduct of any investigation.
The duties and responsibilities of a member of the Audit Committee are in
addition to those duties generally pertaining to a member of the Board of
Directors.
The Audit Committee will report its actions to the Board of Directors with
such recommendations as the Audit Committee may deem appropriate.
A-3
------------------------------------------
RESULTS OF THE ANNUAL MEETING
Final officially certified results of
voting at the annual meeting will be
available on our Web site, www.gm.com. To
obtain a transcript of the meeting,
stockholders should write to GM
Fulfillment Center, Mail Code 480-000-FC1,
30200 Stephenson Hwy., Madison Heights, MI
48071-1621.
------------------------------------------
------------------------------------------
ELECTRONIC DELIVERY OF
ANNUAL MEETING MATERIALS
You can save the Corporation postage and
printing expense by consenting that GM
withhold the annual mailings of your
annual report and proxy statement. With
your consent, you will receive an e-mail
notification when these documents are
available electronically through the
Internet.
Registered stockholders may sign up for
this service through www.econsent.com/gm.
Beneficial stockholders, who hold their
GM stock through a bank or broker, may
sign up at www.investordelivery.com -- if
their bank or broker is among the majority
that participate in electronic delivery.
------------------------------------------
------------------------------------------
IMPORTANT!
If you vote by mail, you are encouraged
to specify your choices by marking the
appropriate boxes on the enclosed proxy.
If you wish to vote in accordance with the
Board of Directors' recommendations,
please sign, date, and return the proxy in
the enclosed envelope. It is not necessary
to mark any boxes.
------------------------------------------
Printed on recycled paper
[GM LOGO]
------------------------------------------
VISIT GM ON THE INTERNET
Explore the world of General Motors
products and services on our corporate Web
site, WWW.GM.COM. Surf our home page to
learn about "The Company," "Automotive,"
and "Beyond Automotive." From the home
page, you can also access our many brand
Web sites from Buick to Vauxhall to
discover the GM vehicle that's just right
for you.
------------------------------------------
GM GENERAL MOTORS CORPORATION
---- PROXY/VOTING INSTRUCTION CARD
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
HOTEL DU PONT, 11TH & MARKET STREETS, WILMINGTON, DELAWARE
TUESDAY, JUNE 5, 2001, 9:00 A.M. LOCAL TIME
The undersigned authorizes John F. Smith, Jr., G. Richard Wagoner, Jr.,
Harry J. Pearce, and John M. Devine, and each of them as the Proxy Committee, to
vote the COMMON STOCK AND CLASS H COMMON STOCK of the undersigned upon the
nominees for Director (P. N. Barnevik, J. H. Bryan, T. E. Everhart,
G. M. C. Fisher, N. Idei, K. Katen, J. W. Marriott, Jr., H. J. Pearce,
E. Pfeiffer, J. F. Smith, Jr., G. R. Wagoner, Jr., and L. D. Ward), upon the
other Items shown on the reverse side, which are described on the pages
identified in the Table of Contents to the Proxy Statement (page i), and upon
all other matters that may come before the 2001 Annual Meeting of Stockholders
of General Motors Corporation, or any adjournment thereof.
This card also provides voting instructions for shares held in the various
employee savings plans as described in the Proxy Statement. IF YOUR
REGISTRATIONS ARE NOT IDENTICAL, YOU MAY RECEIVE MORE THAN ONE SET OF PROXY
MATERIALS. PLEASE SIGN AND RETURN ALL CARDS YOU RECEIVE.
TO VOTE BY INTERNET/TELEPHONE -- SEE ENCLOSED INSTRUCTIONS.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
---------------
SEE REVERSE
SIDE
---------------
PLEASE MARK
/X/ YOUR VOTE
WITH AN X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-2 AND
"AGAINST" ITEMS 3-12
This proxy/voting instruction card will be voted
"FOR" Items 1-2 if no choice is specified.
FOR WITHHELD
1. Election of Directors / / / /
---------------------------------------------------
For, except vote withheld from the above nominee(s):
FOR AGAINST ABSTAIN
2. Ratify selection / / / / / /
of Independent
Accountants
THIS PROXY/VOTING INSTRUCTION CARD REPRESENTS YOUR HOLDINGS OF COMMON STOCK
AND CLASS H COMMON STOCK.
This proxy/voting instruction card will be voted "AGAINST" Items 3-12
if no choice is specified.
FOR AGAINST ABSTAIN
3. Stockholder proposal / / / / / /
related to Internet or
cell phone use
4. Stockholder proposal / / / / / /
on nominating
candidates for the Board
5. Stockholder proposal / / / / / /
on slave or forced
labor in China
FOR AGAINST ABSTAIN
6. Stockholder proposal for / / / / / /
advisory vote on Board
Audit Committee
membership
7. Stockholder proposal that / / / / / /
GM spin-offs retain GM's
corporate governance
standards
8. Stockholder proposal on / / / / / /
"poison pill"
9. Stockholder proposal on / / / / / /
director compensation
10. Stockholder proposal to / / / / / /
require independent
directors on key
Board committees
11. Stockholder proposal on / / / / / /
"golden parachutes"
12. Stockholder proposal to / / / / / /
retain an investment
banker
-------------------------------------------------------------------------------
SIGNATURE(S) DATE
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY/VOTING INSTRUCTION
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
NOTE: Please add your title if you are signing as Attorney, Administrator,
Executor, Guardian, Trustee, or in any other representative capacity.
GM GENERAL MOTORS CORPORATION
---- PROXY/VOTING INSTRUCTION CARD COMMON
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
HOTEL DU PONT, 11TH & MARKET STREETS, WILMINGTON, DELAWARE
TUESDAY, JUNE 5, 2001, 9:00 A.M. LOCAL TIME
The undersigned authorizes John F. Smith, Jr., G. Richard Wagoner, Jr.,
Harry J. Pearce, and John M. Devine, and each of them as the Proxy Committee, to
vote the COMMON STOCK AND CLASS H COMMON STOCK of the undersigned upon the
nominees for Director (P. N. Barnevik, J. H. Bryan, T. E. Everhart,
G. M. C. Fisher, N. Idei, K. Katen, J. W. Marriott, Jr., H. J. Pearce,
E. Pfeiffer, J. F. Smith, Jr., G. R. Wagoner, Jr., and L. D. Ward), upon the
other Items shown on the reverse side, which are described on the pages
identified in the Table of Contents to the Proxy Statement (page i), and upon
all other matters that may come before the 2001 Annual Meeting of Stockholders
of General Motors Corporation, or any adjournment thereof.
IF YOUR REGISTRATIONS ARE NOT IDENTICAL, YOU MAY RECEIVE MORE THAN ONE SET
OF PROXY MATERIALS. PLEASE SIGN AND RETURN ALL CARDS YOU RECEIVE.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
-------------
SEE REVERSE
SIDE
-------------
PLEASE MARK COMMON
/X/ YOUR VOTE
WITH AN X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-2 AND
"AGAINST" ITEMS 3-12
This proxy/voting instruction card will be voted
"FOR" Items 1-2 if no choice is specified.
FOR WITHHELD
1. Election of Directors / / / /
---------------------------------------------------
For, except vote withheld from the above nominee(s):
FOR AGAINST ABSTAIN
2. Ratify selection / / / / / /
of Independent
Accountants
THIS PROXY/VOTING INSTRUCTION CARD REPRESENTS YOUR HOLDINGS OF COMMON STOCK.
This proxy/voting instruction card will be voted "AGAINST" Items 3-12
if no choice is specified.
FOR AGAINST ABSTAIN
3. Stockholder proposal / / / / / /
related to Internet or
cell phone use
4. Stockholder proposal / / / / / /
on nominating
candidates for the Board
5. Stockholder proposal / / / / / /
on slave or forced
labor in China
FOR AGAINST ABSTAIN
6. Stockholder proposal for / / / / / /
advisory vote on Board
Audit Committee
membership
7. Stockholder proposal that / / / / / /
GM spin-offs retain GM's
corporate governance
standards
8. Stockholder proposal on / / / / / /
"poison pill"
9. Stockholder proposal on / / / / / /
director compensation
10. Stockholder proposal to / / / / / /
require independent
directors on key
Board committees
11. Stockholder proposal on / / / / / /
"golden parachutes"
12. Stockholder proposal to / / / / / /
retain an investment
banker
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY/VOTING INSTRUCTION CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
NOTE: Please add your title if you are signing as Attorney, Administrator,
Executor, Guardian, Trustee or in any other representative capacity.
Signature: ____________________________________________ Date ______________
Signature: ____________________________________________ Date ______________
GM GENERAL MOTORS CORPORATION
---- PROXY/VOTING INSTRUCTION CARD CLASS H
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
HOTEL DU PONT, 11TH & MARKET STREETS, WILMINGTON, DELAWARE
TUESDAY, JUNE 5, 2001, 9:00 A.M. LOCAL TIME
The undersigned authorizes John F. Smith, Jr., G. Richard Wagoner, Jr.,
Harry J. Pearce, and John M. Devine, and each of them as the Proxy Committee, to
vote the COMMON STOCK AND CLASS H COMMON STOCK of the undersigned upon the
nominees for Director (P. N. Barnevik, J. H. Bryan, T. E. Everhart,
G. M. C. Fisher, N. Idei, K. Katen, J. W. Marriott, Jr., H. J. Pearce,
E. Pfeiffer, J. F. Smith, Jr., G. R. Wagoner, Jr., and L. D. Ward), upon the
other Items shown on the reverse side, which are described on the pages
identified in the Table of Contents to the Proxy Statement (page i), and upon
all other matters that may come before the 2001 Annual Meeting of Stockholders
of General Motors Corporation, or any adjournment thereof.
IF YOUR REGISTRATIONS ARE NOT IDENTICAL, YOU MAY RECEIVE MORE THAN ONE SET
OF PROXY MATERIALS. PLEASE SIGN AND RETURN ALL CARDS YOU RECEIVE.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
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SEE REVERSE
SIDE
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PLEASE MARK CLASS H
/X/ YOUR VOTE
WITH AN X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-2 AND
"AGAINST" ITEMS 3-12
This proxy/voting instruction card will be voted
"FOR" Items 1-2 if no choice is specified.
FOR WITHHELD
1. Election of Directors / / / /
---------------------------------------------------
For, except vote withheld from the above nominee(s):
FOR AGAINST ABSTAIN
2. Ratify selection / / / / / /
of Independent
Accountants
THIS PROXY/VOTING INSTRUCTION CARD REPRESENTS YOUR HOLDINGS OF
CLASS H COMMON STOCK.
This proxy/voting instruction card will be voted "AGAINST" Items 3-12
if no choice is specified.
FOR AGAINST ABSTAIN
3. Stockholder proposal / / / / / /
related to Internet or
cell phone use
4. Stockholder proposal / / / / / /
on nominating
candidates for the Board
5. Stockholder proposal / / / / / /
on slave or forced
labor in China
FOR AGAINST ABSTAIN
6. Stockholder proposal for / / / / / /
advisory vote on Board
Audit Committee
membership
7. Stockholder proposal that / / / / / /
GM spin-offs retain GM's
corporate governance
standards
8. Stockholder proposal on / / / / / /
"poison pill"
9. Stockholder proposal on / / / / / /
director compensation
10. Stockholder proposal to / / / / / /
require independent
directors on key
Board committees
11. Stockholder proposal on / / / / / /
"golden parachutes"
12. Stockholder proposal to / / / / / /
retain an investment
banker
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY/VOTING INSTRUCTION CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
NOTE: Please add your title if you are signing as Attorney, Administrator,
Executor, Guardian, Trustee or in any other representative capacity.
Signature: ____________________________________________ Date ______________
Signature: ____________________________________________ Date ______________