<PAGE>
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
[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
General Motors Corporation
.................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:(1)
4) Proposed maximum aggregate value of transaction:
.............................................................
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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:
..............................................................
<PAGE>
GENERAL MOTORS
Notice of Annual Meeting
of Stockholders
and Proxy Statement
[GM LOGO]
Annual Meeting
May 23, 1997
Hotel du Pont
11th & Market Streets
Wilmington, Delaware
<PAGE>
GENERAL MOTORS CORPORATION
NOTICE OF ANNUAL MEETING
April 16, 1997
Dear Stockholder:
We are pleased to invite you to attend the annual meeting of General Motors
stockholders which will be held at 9:00 a.m. local time on Friday, May 23, 1997,
at the Hotel du Pont, 11th & Market Streets, Wilmington, Delaware.
As set forth in the attached Proxy Statement, the meeting will be held for
the following purposes:
ITEM NO. 1--to elect 15 directors;
ITEM NO. 2--to ratify the selection of independent public accountants for
the year 1997;
ITEM NO. 3--to approve the Non-Employee Director Long-Term Stock Incentive
Plan;
ITEM NO. 4--to approve the incentive program consisting of the 1997 Annual
Incentive Plan, the 1997 Stock Incentive Plan and the 1997
Performance Achievement Plan;
ITEMS NO. 5 THROUGH 9--to take action upon 5 stockholder proposals;
and to act upon such other matters as may properly be brought before the
meeting.
Holders of record of Common Stock, $1-2/3 par value ("Common Stock"), and
Class H Common Stock, $0.10 par value ("Class H Common Stock"), at the close of
business on March 24, 1997, are entitled to vote at the meeting. It is requested
that you read carefully the attached Proxy Statement for information on the
matters to be considered and acted upon.
In accordance with Delaware law, a list of General Motors common
stockholders entitled to vote at the 1997 Annual Meeting will be available for
examination at the offices of Richards, Layton & Finger, One Rodney Square, 920
King Street, 2nd Floor, Wilmington, Delaware, for ten days prior to the meeting,
between the hours of 9:00 a.m. and 5:00 p.m., and during the annual meeting.
The format of the 1997 Annual Meeting will be a short meeting focused on
business items, including the election of directors and discussion and voting on
management and stockholder proposals. Time will also be provided for stockholder
questions and comments on the business.
As a supplement to the Annual Meeting, GM continues to strengthen its
communications with stockholders. Our regional Stockholder Forums, which provide
a less formal venue for stockholders throughout the country to interact with
management about the business, will resume in the fall for their sixth
consecutive season. The 1997-98 series will be announced in the June issue of
StockHolder News, a special newsletter for stockholders. We continue to offer
stockholders information about their Corporation as well as their individual
accounts through our toll-free number (1-800-331-9922). Stockholders can also
receive free, round-the-clock information about their GM stock and the
Corporation on GM's home page on the Internet, www.gm.com.
If you plan to attend the annual meeting, please enclose a note with your
proxy indicating the number of tickets required for you and immediate family
members, together with your return address. Admittance tickets will be mailed to
you. Application for admittance may be made at the door for stockholders who do
not receive tickets by mail.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
ON THE ENCLOSED PROXY/VOTING INSTRUCTION CARD. HOWEVER, IT IS NOT NECESSARY TO
MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS; MERELY SIGN, DATE AND RETURN THE PROXY/VOTING INSTRUCTION CARD
IN THE ENCLOSED ENVELOPE.
Cordially,
Nancy E. Polis John F. Smith, Jr.
Secretary Chairman and Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information for Stockholders Page
Proxy Procedure...................................................... ii
Proxy Statement Proposals............................................ ii
Directors............................................................ ii
Basis for Selection of Nominees for Directors........................ iii
Director Compensation................................................ iv
Proxy Statement
ITEM NO. 1--Nomination and Election of Directors..................... 2
Information about Nominees for Directors............................. 3
Report of the Executive Compensation Committee....................... 10
Executive Compensation Tables........................................ 15
</TABLE>
<TABLE>
<S> <C> <C>
ITEM NO. 2-- Ratification of the selection of Deloitte & Touche
LLP as independent
public accountants for the year 1997................. 24
ITEM NO. 3-- Approval of the Non-Employee Director Long-Term Stock
Incentive Plan....................................... 25
ITEM NO. 4-- Approval of incentive program consisting of the 1997
Annual Incentive Plan, the 1997 Stock Incentive Plan,
and the 1997 Performance Achievement Plan............ 27
ITEM NO. 5-- Stockholder proposal to limit director service....... 33
ITEM NO. 6-- Stockholder proposal to provide for cumulative
voting............................................... 34
ITEM NO. 7-- Stockholder proposal regarding separate chief
executive officer and board chairman positions....... 36
ITEM NO. 8-- Stockholder proposal regarding independent
directors............................................ 39
ITEM NO. 9-- Stockholder proposal regarding stock options for
directors............................................ 41
43
Expenses of Solicitation............................................
Other Matters....................................................... 43
Exhibit A--Text of the Non-Employee Director Long-Term Stock
Incentive Plan........................................... A-1
Exhibit B--Text of the 1997 Annual Incentive Plan, the 1997 Stock
Incentive Plan, and the 1997 Performance Achievement
Plan..................................................... B-1
</TABLE>
i
<PAGE>
GENERAL INFORMATION FOR STOCKHOLDERS
PROXY PROCEDURE
Although many of our stockholders are unable to attend the annual meeting
in person, stockholders have the opportunity to vote by means of the proxy
solicited by the Board of Directors. When a proxy is returned properly executed,
the shares represented thereby must be voted by the Proxy Committee as directed
by the stockholder. Stockholders are urged to specify their choices by marking
the appropriate boxes on the enclosed proxy. If no choice is specified, the
shares will be voted as recommended by the Board of Directors. A stockholder may
vote by ballot at the annual meeting, thereby cancelling any proxy previously
given.
The Proxy Committee, composed of three executive officers of the
Corporation, J. F. Smith, Jr., J. M. Losh and H. J. Pearce, each of whom is
authorized to act on behalf of the Committee, will vote all shares of common
stocks represented by proxies signed and returned by stockholders. Proxies also
authorize the Proxy Committee to vote the shares represented thereby on any
matters not known at the time this Proxy Statement went to press that may
properly be presented for action at the meeting.
It is the policy of the Corporation that the stockholders be provided
privacy in voting. The Corporation engages the services of 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 to
stockholders its nominees for election as directors. In addition, the By-laws of
the Corporation require that the selection of independent public accountants by
the Audit Committee of the Board of Directors be submitted for stockholder
ratification at each annual meeting. The Board of Directors also may submit
other matters to the stockholders for action at the annual meeting.
In addition to such matters presented by the Board of Directors, the
stockholders may be asked to take action at the annual meeting upon one or more
stockholder proposals. Occasionally, inquiries have been made as to why the
Board of Directors opposes these proposals in the Proxy Statement.
THE BOARD OF DIRECTORS DOES NOT DISAGREE WITH ALL STOCKHOLDER PROPOSALS
SUBMITTED TO THE CORPORATION. WHEN THE BOARD FINDS THAT A STOCKHOLDER PROPOSAL
IS CONSISTENT WITH THE BEST INTERESTS OF THE CORPORATION AND THE STOCKHOLDERS,
IT NORMALLY CAN BE IMPLEMENTED WITHOUT NEED FOR A STOCKHOLDER VOTE. THE
CORPORATION, OVER THE YEARS, HAS ADOPTED A NUMBER OF STOCKHOLDER PROPOSALS AND
OTHER SUGGESTIONS. THUS, 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.
To meet the deadline for inclusion in the Corporation's Proxy Statement for
the 1998 Annual Meeting, stockholder proposals intended to be presented at that
meeting must be received by General Motors on or before December 17, 1997.
DIRECTORS
The Board of Directors, which held a total of 14 meetings in 1996, is
currently composed of 16 members; one of whom is not standing for reelection.
Mr. Edmund T. Pratt, Jr., will be retiring pursuant to the Director Retirement
Policy of the Board of Directors. If all 15 nominees are elected by the
stockholders at the annual meeting in May, the
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<PAGE>
composition of the Board will be 13 directors whose principal occupation or
employment is and has been outside General Motors and two who are currently
officers of the Corporation.
In addition to membership on the Board, most directors served on one or
more of seven Committees of the Board in 1996, covering a total of 42
memberships. The directors spend a considerable amount of time preparing for
Board and Committee meetings and, in addition, are called upon for their counsel
between meeting dates. In 1996, average attendance at Board and Committee
meetings was 94%.
BASIS FOR SELECTION OF NOMINEES FOR DIRECTORS
The Committee on Director Affairs of the General Motors Board of Directors
has responsibility to conduct continuing studies of the size and composition of
the Board and, from time to time, make recommendations as to candidates for
membership.
The Committee on Director Affairs consists of Mr. Charles T. Fisher, III,
Chairman, Mrs. Anne L. Armstrong and Messrs. Thomas E. Everhart, Edmund T.
Pratt, Jr., J. Willard Marriott, Jr., John G. Smale and Thomas H. Wyman, none of
whom is or has been an employee of the Corporation. Five meetings of the
Committee on Director Affairs were held in 1996.
The Corporation's By-laws provide that each year, prior to the annual
meeting of stockholders, the Committee on Director Affairs recommends to the
Board the persons who will be the nominees of the Board of Directors for the
election of whom the Board will solicit proxies. As part of this process, the
Committee reviews candidates recommended by stockholders of the Corporation. A
stockholder who wishes to recommend an individual for Board membership may do so
by writing to: Secretary, General Motors Corporation, 100 Renaissance Center,
Detroit, Michigan 48243-7301. Notice of intent to make a director nomination, or
to bring before the meeting any matter other than a stockholder proposal
submitted pursuant to Securities and Exchange Commission Rule 14a-8, must be
received by the Secretary of the Corporation not more than 180 days and not less
than 120 days in advance of the annual meeting. For the 1998 Annual Meeting, the
applicable time period is November 23, 1997 through January 22, 1998.
In considering potential new directors, the Committee on Director Affairs
reviews individuals from various disciplines and backgrounds. Among the
qualifications considered in the selection of candidates are broad experience in
business, finance or administration; familiarity with national and international
business matters; and an appreciation of the relationship that a large
industrial corporation must maintain with the changing needs of society. Since
prominence and reputation in a particular profession or field of endeavor are
what bring most persons to the Board's attention, there is the further
consideration of whether the individual has the time available to devote to the
work of the Board of Directors and one or more of its Committees.
A majority of this year's nominees of the Board of Directors are
individuals who, as of the date of their selection as nominees, have been
determined by the Board of Directors to be "Independent Directors" as defined
under Section 2.12 of the Corporation's By-laws, entitled "Independent
Directors." (A copy of that By-law, adopted on January 7, 1991, is available to
stockholders from the Secretary upon written request.) Generally, the By-law
provides that individuals are "Independent Directors" if neither they nor their
immediate relatives are or have been employed by the Corporation or a subsidiary
in an executive capacity within the five years preceding the next annual
meeting, and have no significant direct or indirect business relationships with
the Corporation or its subsidiaries.
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<PAGE>
An extensive review is also made of the activities and associations of each
candidate to ensure that there is no legal impediment, conflict of interest, or
other consideration that might hinder or prevent service on the Board of
Directors. In making its selection, the Board of Directors bears in mind that
the foremost responsibility of a General Motors director is to represent the
interests of the stockholders as a whole.
DIRECTOR COMPENSATION
For service on the Board, each non-employee director receives an annual
retainer of $26,000 and an attendance fee of $1,000 for each Board meeting
attended. Each non-employee director also receives under the Deferred
Compensation Plan (as described below) a grant of deferred restricted stock
units with a market value of $14,000 as part of the annual retainer fee. In
addition, non-employee directors receive annual retainers of $6,000 for each
committee of the Board on which they serve, except for the Executive Committee,
and an attendance fee of $750 for each committee meeting attended. The Chairman
of each Committee, except as noted below, receives an additional annual $5,000
retainer. Each director's membership on one or more of the seven committees of
the Board -- Audit, Capital Stock, Director Affairs, Executive, Investment
Funds, Executive Compensation, and Public Policy -- is set forth below under
"Information About Nominees for Directors." Non-employee directors also receive
a $1,000 per diem fee for special services and assignments requiring their
attendance outside the scope of ordinary Board and Committee activities.
Mr. John G. Smale as Chairman of the Executive Committee of the Board
serves as an ex-officio member of each of the standing Committees of the Board.
Mr. Smale annually receives $200,000 as compensation for his services as
Chairman of the Executive Committee, and is not compensated for Committee
service as an ex-officio member.
Under the General Motors Deferred Compensation Plan adopted by the Board,
non-employee directors have the opportunity to make an irrevocable election,
prior to the commencement of any year, to defer receipt of all or a portion of
their cash compensation. At the option of the director, amounts deferred are
treated as cash and credited with annual interest at the average pre-tax yield
on the Corporation's U.S. cash portfolio, or converted into units of General
Motors common stocks to be credited with dividend equivalents in the form of
additional restricted stock units. Distribution of amounts accumulated is
generally not available until after age 70, following termination of service on
the Board.
Subject to stockholder approval as discussed below, effective as of January
1, 1996, the new General Motors Non-Employee Director Long-Term Stock Incentive
Plan (the "Plan") replaced the General Motors Director Retirement Plan, which
provided a lifetime annual benefit equivalent to the annual Board retainer fee.
The Board will request stockholder approval of the Plan which is summarized
under Item No. 3 on page 25 and the complete text is set forth in Exhibit A.
Non-employee directors of the Corporation are not eligible to participate
in the Incentive Program, Savings-Stock Purchase Program or the Retirement
Programs for certain General Motors employees, and except as described in this
section, there are no separate benefit plans for directors.
iv
<PAGE>
GENERAL MOTORS CORPORATION
100 RENAISSANCE CENTER, DETROIT, MICHIGAN 48243-7301
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 23, 1997
This Proxy Statement is furnished to stockholders of General Motors
Corporation in connection with the solicitation, by order of the Board of
Directors of General Motors Corporation, of proxies to be used at the annual
meeting of stockholders of the Corporation. The accompanying form of proxy
represents your holdings of Common Stock and Class H Common Stock in the
registered account name shown on the proxy. It is expected that this Proxy
Statement and enclosed form of proxy will be mailed commencing Wednesday, April
16, 1997, to each stockholder entitled to vote.
After the enclosed form of proxy is duly executed and returned, a
stockholder may nevertheless revoke it at any time until it is voted, by return
of a duly executed written notice of revocation or by return of a duly executed
subsequent proxy or by voting at the annual meeting. The shares represented by a
proxy will be voted unless the proxy is received late or in a form that cannot
be voted. The proxy is in ballot form so that stockholders may specify their
intent to grant or withhold authority to vote for election of the Board of
Directors, or any individual nominee, and their intent to vote for or against,
or abstain from voting upon, each of the eight proposals.
If a stockholder is a participant in 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 Savings-Stock Purchase
Program, the Hughes Aircraft Company Salaried Employees' Thrift and Savings
Plan, the Hughes Aircraft Company Tucson Bargaining Employees' Thrift and
Savings Plan, the Hughes Aircraft Company California Hourly Employees' Thrift
and Savings Plan, the Hughes Thrift and Savings Plan, the Saturn Individual
Savings Plan for Represented Members, the Saturn Personal Choices Savings Plan
for Non-Represented Members (the "Saturn PCSP") or the GMAC Mortgage Corporation
Savings Incentive Plan, the proxy card will also serve as a voting instruction
for the trustees, plan committees or independent fiduciaries of those plans
where all registrations are identical. With respect to the GM S-SPP, the GM PSP,
the Saturn Individual Savings Plan for Represented Members and the Saturn PCSP,
if voting instructions are not received for shares in such plans, those shares
may be voted by the trustee, plan committee or independent fiduciary at their
discretion. For the remainder of the plans, shares in such plans will not be
voted unless the instruction card is executed and returned.
If a stockholder participates in any of these plans or maintains other
accounts under a different name (e.g., with and without a middle initial), the
stockholder may receive more than one set of proxy materials. To ensure that all
shares are voted, the stockholder must sign and return every proxy card
received.
Brokers, dealers, banks, voting trustees, and their nominees who desire a
supply of the Corporation's proxy soliciting material for transmittal by them to
beneficial owners should write to General Motors Corporation,
c/o Morrow & Co., Inc., 909 Third Avenue, 20th Floor, New York, NY 10022-4799.
1
<PAGE>
The Board of Directors fixed March 24, 1997, as the record date for
determining stockholders entitled to vote at the annual meeting. On that date,
the Corporation had outstanding and entitled to vote 729,999,087 shares of
Common Stock and 100,858,668 shares of Class H Common Stock. Each such share of
Common Stock entitles the holder to one vote and each such share of Class H
Common Stock entitles the holder to one-half vote. With the exception of the
election of directors which requires a plurality of the votes cast, or as
otherwise noted, the affirmative vote of the holders of a majority of the voting
power of the common stocks represented at the meeting is required for approval
of each proposal presented in this Proxy Statement. With respect to votes
indicating an abstention, the shares are considered present at the meeting for a
particular proposal, but since they are not affirmative votes for the proposal,
they will have the same effect as votes against the proposal. With respect to
broker non-votes, the shares are not considered present at the meeting for the
particular proposal for which the broker withheld authority.
ITEM NO. 1
Nomination and Election of Directors
It is intended that the shares represented by the enclosed proxy will be
voted, unless such authority is withheld, for the election of the 15 nominees
for directors named in the following section. The term of office of each
director will be until the next annual election of directors and until a
successor is elected and qualified or until the director's earlier resignation
or removal. In the event that any nominees for directors should become
unavailable, which is not anticipated, the Board of Directors may provide by
resolution for a lesser number of directors or designate substitute nominees,
who would receive the votes of the Proxy Committee.
Pursuant to the Director Retirement Policy of the Board of Directors, Mr.
Edmund T. Pratt, Jr., is not standing for reelection. Mr. Pratt joined the
General Motors Board of Directors in 1977 while serving as Chairman and Chief
Executive Officer of Pfizer, Inc. He is currently Chairman of the Executive
Compensation Committee and a member of the Executive Committee, the Committee on
Director Affairs and the Investment Funds Committee.
Of the nominees in the following section, Messrs. Percy Barnevik and George
M. C. Fisher were elected directors of General Motors since the last annual
meeting of stockholders.
Mr. Barnevik joined ABB Asea Brown Boveri Ltd, Zurich, Switzerland in 1988
as President and Chief Executive Officer and, in 1996, he was elected Chairman
of the Board and Chief Executive Officer. ABB develops, produces, sells and
services systems and products principally in the fields of power generation,
power transmission, power distribution, industrial equipment, drive process
automation, public transportation, environmental control and financial services.
Mr. Fisher before joining Eastman Kodak was Chairman and Chief Executive
Officer of Motorola, Incorporated; he became President and Chief Executive
Officer in 1988 and was elected Chairman and Chief Executive Officer in 1990.
Mr. Fisher was elected Chairman, President and Chief Executive Officer of
Eastman Kodak Company effective December 1, 1993. He retained the titles of
Chairman and Chief Executive Officer in December 1996, when he created a
separate office of President and Chief Operating Officer.
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INFORMATION ABOUT NOMINEES FOR DIRECTORS
The following information with respect to principal occupation or
employment and name of the corporation or other organization in which such
occupation or employment is carried on and in regard to other affiliations and
to shares of Common Stock and Class H Common Stock deemed beneficially owned at
February 28, 1997, under the rules of the Securities and Exchange Commission has
been furnished to the Corporation by the nominees for directors. 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.
PICTURE
ANNE L. ARMSTRONG, 69, Chairman, Board of Trustees, Center for
Strategic and International Studies; former Chairman of the
President's Foreign Intelligence Advisory Board and former
Ambassador to Great Britain; Joined General Motors Corporation
Board in 1977, member of Audit Committee, Committee on Director
Affairs and Public Policy Committee; Director of American
Express Company, Boise Cascade Corporation, Glaxo-Wellcome and
Halliburton Company; Member of the Council on Foreign Relations
and Board of Overseers, Hoover Institution.
PICTURE
PERCY N. BARNEVIK, 56, Chairman, ABB Asea Brown Boveri Ltd.,
Zurich, Switzerland, serving electric power generation,
transmission and distribution customers as well as industrial,
environmental control and mass transit markets; Joined General
Motors Corporation Board in 1996; Director of E. I. du Pont de
Nemours and Company; Chairman of Investor AB; Non-executive
Chairman of Sandvik AB and Skanska AB; Chairman, Competitive
Advisory Group to European Commission; Co-Chairman, the
U.S.-Europe-Poland Commission; Member, Foreign Investment
Council to the Prime Minister of Russia; Charter Member, World
Business Council for Sustainable Development; Member, Board of
World Economic Forum Foundation, European Round Table of
Industrialists, the Advisory Board of the Council on Foreign
Relations, and the Center for Strategic and International
Studies.
PICTURE
JOHN H. BRYAN, 60, Chairman and Chief Executive Officer, Sara
Lee Corporation, Chicago; Joined General Motors Corporation
Board in 1993, member of Audit Committee, Capital Stock
Committee and Executive Compensation Committee; Director of
Amoco Corporation, First Chicago NBD Corporation and its
subsidiary, First National Bank of Chicago; Member of The
Business Roundtable and The Business Council; Member of the
Board and past Chairman of Catalyst; Trustee of the University
of Chicago and the Committee for Economic Development; Vice
Chairman of the Art Institute of Chicago.
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PICTURE
THOMAS E. EVERHART, 65, President and Professor of Electrical
Engineering and Applied Physics, California Institute of
Technology, Pasadena; Former Chancellor of University of
Illinois, Urbana-Champaign; Joined General Motors Corporation
Board in 1989, Chairman, Public Policy Committee, member of
Committee on Director Affairs and Executive Committee; Director
of Hewlett-Packard Corporation, Saint-Gobain Corporation,
Reveo, Inc., Corporation for National Research Initiatives,
Community Television of Southern California (KCET); Member of
National Academy of Engineering Council and Executive
Committee; Member of Council on Competitiveness; Former
Chairman of General Motors Science Advisory Committee.
PICTURE
CHARLES T. FISHER, III, 67, Retired Chairman and President of
NBD Bancorp, Inc. and its subsidiary NBD Bank, N.A.; Joined
General Motors Corporation Board in 1972, Chairman of Committee
on Director Affairs, member of Executive Committee, Investment
Funds Committee and Public Policy Committee; Director of Hughes
Electronics Corporation, AMR Corporation and its subsidiary
American Airlines, Inc., First Chicago NBD Corporation and its
subsidiaries First National Bank of Chicago and NBD Bank
(Michigan).
PICTURE
GEORGE M. C. FISHER, 56, Chairman and Chief Executive Officer,
Eastman Kodak Company, Rochester, NY, since December 1, 1993.
Held additional office of President (December 1993-December
1996); Chairman and Chief Executive Officer, Motorola, Inc.
(1990-1993) and President and Chief Executive Officer
(1988-1990); Joined General Motors Corporation Board in 1996;
Member of The Business Roundtable and Vice Chairman of The
Business Council; Member, Advisory Council for Trade Policy and
Negotiations (ACTPN).
PICTURE
J. WILLARD MARRIOTT, JR., 65, Chairman and Chief Executive
Officer, Marriott International, Inc., Washington, D.C., since
October 1993; President (October 1993-March 1997); Chairman,
President and Chief Executive Officer, Marriott Corporation
(1985-1993); Joined General Motors Corporation Board in 1989,
member of Committee on Director Affairs, Executive Compensation
Committee and Investment Funds Committee; Director of Host
Marriott Corporation, Host Marriott Services Corporation,
Outboard Marine Corporation, and the U.S.-Russia Business
Council; Serves on Board of Trustees of National Geographic
Society, Georgetown University and the Mayo Foundation; Member
of The Business Council and The Business Roundtable.
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PICTURE
ANN D. MCLAUGHLIN, 55, Former U.S. Secretary of Labor
(1987-1989); Chairman, The Aspen Institute; President, Federal
City Council, Washington, D.C. (1990-1995); Joined General
Motors Corporation Board in 1990, member of Audit Committee,
Capital Stock Committee and Public Policy Committee; Director
of AMR Corporation and its subsidiary American Airlines, Inc.,
Fannie Mae, Harman International Industries, Host Marriott
Corporation, Donna Karan International Inc., Kellogg Company,
Nordstrom, Potomac Electric Power Company, Sedgwick Group plc,
Union Camp Corporation, Vulcan Materials Company and The Public
Agenda Foundation, The Conservation Fund and RAND; Board of
Overseers, Wharton School of Business, University of
Pennsylvania.
PICTURE
HARRY J. PEARCE, 54, Vice Chairman, Board of Directors since
January 1, 1996 with responsibility for Hughes Electronics
Corporation, GM Locomotive Group, Allison Transmission Divi-
sion and Corporate Affairs; Executive Vice President
(1994-1995) and General Counsel (1992-1994), Vice President and
General Counsel (1987-1992); Joined General Motors Corporation
in 1985 and its Board in 1996; Director of Hughes Electronics
Corporation, Marriott International, Inc. and MDU Resources
Group, Inc.; Member, The Conference Board, Northwestern
University School of Law Dean's Advisory Council, and Board of
Visitors, United States Air Force Academy; Trustee, Howard
University.
PICTURE
ECKHARD PFEIFFER, 55, President, Chief Executive Officer and
Director (since October 1991), Compaq Computer Corporation,
Houston, Texas; Executive Vice President and Chief Operating
Officer (January-October 1991); President, Europe and
International Division (1989-1990); Joined General Motors Board
in 1996; Director of Bell Atlantic Corporation; Member, Board
of Trustees, Southern Methodist University and Executive Board
of the Cox School of Business-SMU.
PICTURE
JOHN G. SMALE, 69, Chairman of the Executive Committee of
General Motors Corporation since January 1, 1996, former
Chairman, General Motors Corporation (November 2, 1992-
December 31, 1995); Retired Chairman and Chief Executive of The
Procter & Gamble Company; Joined General Motors Corporation
Board in 1982; Ex-officio member of Audit Committee, Capital
Stock Committee, Investment Funds Committee, Executive
Compensation Committee, Committee on Director Affairs and
Public Policy Committee; Board of Governors, The Nature
Conservancy; Emeritus Trustee of Kenyon College.
5
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PICTURE
JOHN F. SMITH, JR., 59, Chairman, General Motors Corporation
since January 1, 1996, and Chief Executive Officer and
President since 1992, Vice Chairman, Board of Directors (1990-
1992); Joined General Motors Corporation in 1961 and its Board
in 1990; member of Investment Funds Committee; Director of
Hughes Electronics Corporation, The Procter & Gamble Company;
Co-Chairman of The Business Roundtable and member of The
Business Council, U.S.-Japan Business Council and the
Chancellor's Executive Committee of the University of
Massachusetts, and Board of Trustees, Boston University; Member
of Board of Overseers of Memorial Sloan-Kettering Cancer Center
and Member of Board of Polish-American Enterprise Fund.
PICTURE
LOUIS W. SULLIVAN, 63, President, Morehouse School of Medicine,
Atlanta, Georgia, since January 21, 1993; U.S. Secretary of
Health and Human Services (1989-1993); Joined General Motors
Corporation Board in 1993, member of Audit Committee and Public
Policy Committee; Director of Georgia Pacific, 3M Corporation,
Household International Inc., CIGNA Corporation, Bristol-Myers
Squibb Company, Equifax Corporation and United Way of America.
PICTURE
DENNIS WEATHERSTONE, 66, Retired Chairman and currently
director of J. P. Morgan & Co. Incorporated and its subsidiary
Morgan Guaranty Trust Company of New York; Joined General
Motors Corporation Board in 1986, Chairman of Audit Committee,
member of Capital Stock Committee, Executive Committee and
Executive Compensation Committee; Director of L'Air Liquide,
Merck & Co., Inc. and the Institute for International
Economics; Member of The Business Council; President and
Trustee of the Royal College of Surgeons Foundation, Inc., New
York; Trustee of the Alfred P. Sloan Foundation; Independent
member of the Board of Banking Supervision of the Bank of
England.
PICTURE
THOMAS H. WYMAN, 67, Senior Adviser, SBC Warburg Inc.,
Chairman, S.G. Warburg & Co. Inc., New York (1992-1996), and
former Chairman, President and Chief Executive Officer, CBS
Inc., New York; Joined General Motors Corporation Board in
1985, Chairman of Capital Stock Committee and Investment Funds
Committee, member of Committee on Director Affairs, Executive
Committee and Executive Compensation Committee; Director of
Hughes Electronics Corporation, AT&T and Zeneca Group PLC
(London); Member of The Business Council; Trustee Emeritus of
The Ford Foundation and of The Aspen Institute; Chairman
Emeritus of Amherst College.
6
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, NAMED EXECUTIVE OFFICERS AND CERTAIN OTHERS
The following table sets forth, as of February 28, 1997, beneficial
ownership of all classes of common stock of the Corporation for each current
nominee for Director, each Named Executive Officer and all current directors and
officers of the Corporation as a group. In June 1996, Electronic Data Systems
(EDS) was split off from GM, and each share of General Motors Class E Common
Stock was converted into one share of EDS common stock.
Each of the individuals/groups listed below is the owner of less than one
percent of the outstanding shares and voting power of any class of common stock
of the Corporation, except that the Capital Group Companies, Inc. is the parent
of six investment management companies which beneficially own 5.3% of the
outstanding shares and voting power of the Class H Common Stock (0.3% of the
combined voting power of the Common Stock and Class H Common Stock). No
management account by itself owns 5% or more of the Class H Common Stock.
Subsidiaries of Putnam Investments, Inc. that are registered investment advisors
beneficially own securities of their clients which aggregate 6.5% of the
outstanding shares and voting power of the Class H Common Stock (0.4% of the
combined voting power of the Common Stock and Class H Common Stock). Fidelity
Management & Research Company, a wholly owned subsidiary of FMR Corp., is the
beneficial owner of 8.1% of the outstanding shares and voting power of the
Common Stock (7.6% of the combined voting power of the Common Stock and Class H
Common Stock) as a result of its acting as investment advisor to several
registered investment companies. Except as otherwise noted in the footnotes,
each individual has sole voting and investment power with respect to the shares
beneficially owned and the totals of shares owned by the individual nominees and
all directors and officers as a group. These shares do not include any shares of
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 such directors and officers serve as directors or
trustees.
<TABLE>
<CAPTION>
Shares
Beneficially Deferred
Owned Stock Units Total Shares Total Stock Options(b)
----------------- ----------------- ----------------- Value ------------------
Class Class Class of Common Class
H H H and H
Common Common Common Common Common Common Class H Common Common
Directors Stock Stock Stock Stock Stock Stock Shares(a) Stock Stock
- ---------------------- ------ ------ ------ ------ ------ ------ --------- ------- ------
# # # # # # $ # #
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A. L. Armstrong (c)... 1,500 112 16,925 4,214 18,425 4,326 1,321,673 0 0
P. Barnevik........... 10,000 0 0 0 10,000 0 578,800 0 0
J. H. Bryan (c)....... 2,000 0 3,789 0 5,789 0 335,067 0 0
T. E. Everhart
(c)(d).............. 400 0 7,721 4,107 8,121 4,107 712,356 0 0
C. T. Fisher, III
(c)(e)(f)........... 14,766 58 8,245 3,659 23,011 3,717 1,551,180 0 0
G. M. C. Fisher....... 5,000 0 0 0 5,000 0 289,400 0 0
J. W. Marriott, Jr.
(c)................. 1,000 0 6,003 1,475 7,003 1,475 492,359 0 0
A. D. McLaughlin
(c)................. 951 0 1,456 887 2,407 887 191,650 0 0
H. J. Pearce (g)...... 16,937 23,878 22,857 7,340 39,794 31,218 4,145,139 115,168 54,083
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Deferred
Shares Stock Units
Beneficially Owned ------------------ Total Shares
------------------------ Class ------------------------ Total Value
Class H H Class H of Common
Common Common Common Common Common Common and Class H
Directors Stock Stock Stock Stock Stock Stock Shares(a)
- ------------------------ ---------- --------- ------- ------ ---------- --------- -------------
# # # # # # $
<S> <C> <C> <C> <C> <C> <C> <C>
E. Pfeiffer (c)......... 1,000 0 599 0 1,599 0 92,550
J. G. Smale (c)......... 16,000 200 5,152 0 21,152 200 1,236,078
J. F. Smith, Jr. (g).... 68,176 19,679 53,273 11,209 121,449 30,888 8,851,860
L. W. Sullivan (c)...... 100 0 2,045 347 2,145 347 144,626
D. Weatherstone (c)..... 6,000 0 14,819 5,339 20,819 5,339 1,520,005
T. H. Wyman (c)(e)...... 1,000 250 5,501 1,751 6,501 2,001 494,337
<CAPTION>
Other Named Executives
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
C. M. Armstrong
(h)(i)................ 6,318 61,620 0 14,012 6,318 75,632 4,827,974
L. R. Hughes (g)........ 25,483 9,364 24,419 5,485 49,902 14,849 3,764,419
G. R. Wagoner, Jr.
(g)................... 20,067 6,231 24,091 5,485 44,158 11,716 3,247,109
All directors and
officers of the
Corporation as a
group................... 720,424 215,726 473,731 84,842 1,194,155 300,568 86,851,203
The Capital Group
Companies, Inc.......... 0 5,383,900 0 0 0 5,383,900 317,650,100
333 South Hope Street
Los Angeles, CA 90071
Putnam Investments,
Inc................... 0 6,527,777 0 0 0 6,527,777 385,138,843
One Post Office Square
Boston, MA 02109
Fidelity Management &
Research Company...... 60,407,423 110,004 0 0 60,407,423 110,004 3,502,871,879
82 Devonshire Street
Boston, MA 02109
<CAPTION>
Stock Options(b)
---------------------
Class H
Common Common
Directors Stock Stock
- ------------------------ --------- -------
<S> <C> <C>
# #
E. Pfeiffer (c)......... 0 0
J. G. Smale (c)......... 0 0
J. F. Smith, Jr. (g).... 603,866 0
L. W. Sullivan (c)...... 0 0
D. Weatherstone (c)..... 0 0
T. H. Wyman (c)(e)...... 0 0
Other Named Executives
- ------------------------
<S> <C> <C>
C. M. Armstrong
(h)(i)................ 25,000 218,318
L. R. Hughes (g)........ 221,692 0
G. R. Wagoner, Jr.
(g)................... 208,557 0
All directors and
officers of the
Corporation as a
group................... 4,705,689 304,211
The Capital Group
Companies, Inc.......... 0 0
333 South Hope Street
Los Angeles, CA 90071
Putnam Investments,
Inc................... 0 0
One Post Office Square
Boston, MA 02109
Fidelity Management &
Research Company...... 0 0
82 Devonshire Street
Boston, MA 02109
</TABLE>
(a) Total value of Common and Class H stocks based on February 28, 1997 closing
market prices of $57.88 and $59.00, respectively.
(b) Common stocks that may be acquired within 60 days through exercise of stock
options; additional information regarding stock options is provided on pages
17 and 18.
8
<PAGE>
(c) Deferred Stock Units -- Includes amounts deferred under General Motors
Deferred Compensation Plan for Non-Employee Directors. Under the plan,
non-employee directors of General Motors are required to retain a portion of
the annual retainer in deferred stock units of GM Common Stock. Directors
may also elect to defer receipt of all or a portion of their remaining
compensation by converting amounts deferred into units of either class of
General Motors common stock. Further, under the Director's Long-Term Stock
Incentive Plan, as more fully described starting on page 25, directors have
been credited with Common Stock units related to their length of service on
the Board. Under both Plans, these stock units are credited with dividend
equivalents in the form of additional stock units of the same class.
Distribution of amounts deferred is generally not available until after age
70, following termination of service on the Board, and will be paid in cash
based on the number of stock units and the market price of the shares at the
time of payment.
(d) Does not include 5,105 shares of Common Stock and 1,945 shares of Class H
Common Stock held in the endowment fund of the California Institute of
Technology or the Beckman Foundation Equity Index Portfolio, the IDS Beckman
Foundation portfolio, and the Sarofim Beckman Foundation portfolio which it
oversees. Dr. Everhart is a member of the Institute's 11-member Investment
Committee which has the power to acquire or dispose of the financial
investments of the Institute.
(e) Deferred Stock Units -- Includes amounts deferred under Hughes Electronics
Deferred Compensation Plan for Non-Employee Directors. Under the plan,
members of the Hughes Board who are not employees of either General Motors
or Hughes Electronics may elect to defer receipt of all or a portion of
their compensation as a director of Hughes Electronics. Provisions of the
Hughes Electronics deferral plan are identical in all significant respects
to provisions of the GM plan described in footnote (c) above, except that
the portion required to be retained is in the form of Class H Common Stock.
(f) Includes 11,378 shares of Common Stock held in a trust of which Mr. Fisher
is a co-trustee and in which he, among other family members, has a residuary
interest; 1,688 shares of Common Stock held in two trusts in which Mr.
Fisher has a one-seventh remainderman interest; and 500 shares of Common
Stock held in one trust of which Mr. Fisher is a co-trustee and the
beneficiary is a relative of Mr. Fisher.
(g) "Shares Beneficially Owned" includes shares credited under the General
Motors Savings-Stock Purchase Program (S-SPP). Under this program,
participants may contribute up to 15% of eligible salary, subject to maximum
limits established by the Internal Revenue Code. "Deferred Stock Units"
include shares under the General Motors Benefit Equalization Plan-Savings
(BEP-S). This Plan is a non-qualified "excess benefit" plan that is exempt
from ERISA and the Internal Revenue Code limitations and provides executives
with the full GM matching contribution without regard to such limitations.
Amounts credited under the Plan are maintained in share units of the
Corporation's Common Stock. Following termination, an employee may, at any
time, elect to receive a complete distribution of amounts in the BEP-S
account, which will be paid in cash. Deferred stock units also include
undelivered incentive awards which will vest upon the occurrence of certain
events and which are subject to forfeiture under certain circumstances.
(h) Includes 280 shares of Common Stock held by Mr. Armstrong's wife. Beneficial
ownership of these shares is expressly disclaimed.
9
<PAGE>
(i) "Shares Beneficially Owned" includes shares credited under the Hughes
Salaried Employees' Thrift and Savings Plan. Under this program,
participants may contribute up to 12% of eligible salary, subject to maximum
limits established by the Internal Revenue Code. "Deferred Stock Units"
include shares under the Hughes Salaried Employees' Excess Benefits Plan.
This plan is a non-qualified "excess benefit" plan that is exempt from ERISA
and the Internal Revenue Code limitations, and provides executives with the
full Hughes matching contribution without regard to such limitations.
Amounts credited under the plan are maintained in share units of General
Motors Class H Common Stock. Upon distribution of an employee's Excess
Savings account, all amounts will be paid in cash.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Federal securities law, the Corporation's directors, certain
officers, and persons holding more than ten percent of any class of the
Corporation's common stocks are required to report, within certain periods,
their ownership of and any transactions in any shares of any class of the
Corporation's equity securities. Based upon reports furnished to the Corporation
and written representations and information provided to the Corporation by the
persons required to make such filings, all such individuals have satisfied such
filing requirements in full, except for A. D. McLaughlin, a Director of the
Corporation who inadvertently omitted reference to shares in the General Motors
Dividend Reinvestment Plan, and M. Kempston Darkes, P. J. Tosch, J. D. Rock, and
H. J. Weiser, officers of the Corporation, who each inadvertently filed one
monthly report relating to one transaction after the due date. All transactions
have now been reported.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation of senior executives -- at GM and all subsidiaries -- is
determined by the Executive Compensation Committee (the "Committee") of the
General Motors Board of Directors. The Committee is a standing committee of the
Board of Directors. It is comprised entirely of independent Directors and met
seven times in 1996. No member of the Committee is eligible to participate in
any of the compensation plans or programs it administers. Further, there are no
interlocks between the members of the Committee and any executive.
In 1996, John F. Smith, Jr. was Chairman of the Board of Directors, Chief
Executive Officer ("CEO"), and President, Harry J. Pearce was Vice Chairman of
the General Motors Board of Directors, Louis R. Hughes and G. Richard Wagoner,
Jr., were Executive Vice Presidents of the Corporation, and C. Michael Armstrong
was Chairman and CEO of Hughes Electronics Corporation ("Hughes"), a General
Motors wholly owned subsidiary. All of these individuals, except Mr. Armstrong,
were members of the Corporation's senior leadership group known as the
President's Council in 1994, 1995 and 1996. Mr. Armstrong became a member of the
GM President's Council effective July 1, 1995. The above named individuals are
the Corporation's Named Executive Officers for 1996.
COMPENSATION PHILOSOPHY
General Motors' executive compensation program is premised on the belief
that the interests of executives should be closely aligned with those of GM's
stockholders. Based on this philosophy, a meaningful portion of each executive's
total
10
<PAGE>
compensation is placed at-risk and linked to the accomplishment of specific
results which will lead to the creation of value for the Corporation's
stockholders in both the short-and long-term. Under this pay-for-performance
orientation: 1) executives are motivated to improve the overall performance and
profitability of the Corporation, as well as the business sector to which each
is assigned, and rewarded only when specific, measurable results have been
achieved; 2) accountability is further encouraged through the adjustment of
salaries and incentive awards on the basis of each executive's individual
performance and contribution; 3) long-term incentive awards are paid in GM
common stocks to further reinforce the linkage of executives' interests with
those of stockholders; and 4) a highly competitive level of compensation can be
earned in years of strong performance to ensure the Corporation attracts and
retains the leadership talent needed to successfully maintain and grow its
businesses; conversely, in years of below average performance, an executive's
compensation is below competitive benchmarks. The philosophies of the
Corporation's major subsidiaries are in most respects similar to the GM
philosophy.
Stock Ownership Guidelines -- To further underscore the importance of
linking executive and stockholder interests, the Committee established formal
stock ownership guidelines for the Named Executive Officers, as well as all
Corporate Officers and other select senior executives. Under the guidelines, the
GM Chairman is required to hold GM common stocks with a minimum aggregate value
equivalent to 3.5 times his base salary. Other members of the President's
Council are required to hold 2.5 times base salary. As of February 28, 1997, all
Named Executive Officers exceeded their respective guideline level.
Compensation Deductibility Policy -- To the extent that it is practicable
and consistent with the Corporation's executive compensation philosophy, the
Committee intends to comply with Section 162(m) of the Internal Revenue Code
(and any regulations promulgated thereunder) in order to preserve the
deductibility of performance-based compensation in excess of $1 million per
taxable year to each of the Named Executive Officers. In this regard, all 1996
base salary amounts in excess of $1 million for Mr. Smith were deferred until
retirement. If compliance with the Section 162(m) rules conflicts with the
compensation philosophy or is deemed not to be in the best interests of
stockholders, the Committee will abide by the compensation philosophy,
regardless of the tax impact of such actions.
COMPENSATION PLAN
As will be discussed in greater detail in Item No. 4 on page 27, the
Corporation's current incentive plans will expire in May 1997. As in the past,
prior to expiration of these plans the Corporation carried out a detailed review
of every aspect of its current executive compensation structure, including a
survey of several global industrial and service corporations, including Ford and
Chrysler. To assist in this review process, the Corporation engaged the services
of an outside consulting firm. Although the formal incentive plans will not be
put into effect unless and until appropriate stockholder approval is received,
certain provisions resulting from the review process which do not require
stockholder approval have already been implemented.
During 1996, the Board of Directors met in executive session to review the
Corporation's performance and the performance of the CEO and other members of
the President's Council, including the Named Executive Officers. The Committee
advised the Board with respect to all compensation determinations for these
executives.
11
<PAGE>
As discussed below, aside from benefits (which will be reviewed in the
tables following this report), an executive's total compensation package is
comprised of four components: (1) base salary; (2) annual incentives; (3) stock
options; and (4) other long-term incentives.
Base Salary -- In connection with the incentive program review, base
salaries for GM executives are targeted to be at the upper end of the third
quartile of the salaries paid to comparable positions at the comparator group.
Salaries for Hughes executives are targeted at the fiftieth percentile. The base
salaries of individual executives can and do vary from this salary benchmark.
Following a detailed review of the scope of each executive's responsibilities
relative to comparable positions at comparator group companies and a review of
each executive's individual performance, the Committee approved salary increases
for the Named Executive Officers. The results of these salary increases are
reflected in the Summary Compensation table on page 15.
Each named executive signed a non-compete agreement barring him from
working for a competitor for a period of three years from the date of the
termination of employment. The Committee believes that it is in GM stockholders'
best interests to ensure continuity in the Corporation's senior leadership
group. On April 4, 1997, the Corporation entered into an agreement with Mr.
Armstrong related to his employment as well as his retirement benefits. This
agreement is more fully discussed commencing on page 21. Aside from these
agreements, the Corporation has no contractual or other arrangements with these
executive officers.
Annual Incentives -- Annual incentives for all executive officers were
granted under the General Motors Amended 1987 Stock Incentive Plan which was
approved by stockholders at the 1992 Annual Meeting. In view of their Corporate-
wide responsibility, the annual incentive award opportunity for Messrs. Smith,
Pearce, Hughes, and Wagoner is based exclusively on GM's overall performance.
The annual incentive award opportunity for Mr. Armstrong is based exclusively on
Hughes' overall performance.
In addition to establishing a targeted performance level, the Committee
also identifies threshold or minimum performance levels which must be achieved
before awards are granted and a maximum beyond which no additional amounts will
be paid. The size of final awards granted is scaled to the actual level of
performance achieved. In establishing this payout range, the Committee assesses
the relative degree of performance necessary to achieve the target objective and
reviews past and projected budgeted performance levels and external marketplace
conditions (e.g., economic outlook, projected size of automotive industry
volumes, expected market share projections). There is no specified weight
assigned to these factors; the Committee uses its judgment in establishing the
targeted performance and related payout range.
Upon the recommendation of Management, the Committee in 1996 continued to
set aggressive financial targets. The payment of a GM award was triggered by the
achievement of a predetermined level of net income derived from the
Corporation's budget and business plan for the year. Based on Management's
input, the Committee used its discretion in setting the specific profitability
targets. The performance target for Hughes was based on sales margin, net asset
turnover, and operating profit. The Committee established individual award
targets for each Named Executive Officer in line with the Corporation's
compensation philosophy. For maximum performance, individual awards for these
executives will pay
12
<PAGE>
at 175% of target. For both GM and Hughes, earnings performance falling within
the ranges for minimum, target, and maximum individual awards are prorated
accordingly.
After reviewing the Corporation's overall operating performance, which in
the opinion of the Committee was not adequately reflected in the financial
results, the Committee determined 1997 annual incentive awards on a basis
reflective of overall operating performance, as well as the specific performance
measures previously established by the Committee. As a result, and after an
individual evaluation of Messrs. Smith, Pearce, Hughes, and Wagoner's
performance, annual incentive award payouts for each such Named Executive
Officer were approved on a basis above target but below maximum payout levels.
Similarly, in reviewing Hughes' overall performance and Mr. Armstrong's
individual performance, the Committee approved the 1996 annual incentive award
payout for Mr. Armstrong on a basis above target but below maximum payout
levels.
Awards for Messrs. Smith, Pearce, Hughes, and Wagoner were denominated in
restricted stock units of GM Common and Class H stocks at the time of award and
were paid in cash in early 1997. The award to Mr. Armstrong was determined and
paid in cash in early 1997.
Stock Options -- Like annual incentives, stock options are also granted
under the provisions of the Amended 1987 Stock Incentive Plan. Stock options are
granted to reinforce the importance of improving stockholder value over the
long-term and to encourage and facilitate executive stock ownership. Stock
options are granted at 100% of the fair market value of the stock on the date of
grant to ensure the executives can only be rewarded for appreciation in the
price of GM common stocks when the Corporation's stockholders are similarly
benefited.
Option grant levels have been patterned after industry-competitive
long-term incentive compensation practices. These grants are positioned at a
level which, in conjunction with their target Performance Achievement Plan
awards (which are detailed on page 18 and discussed in the following section of
this report), places the executives at the upper end of the third quartile of
the long-term incentives granted to comparable positions at survey companies.
The Committee considered the number of option shares each executive had been
previously granted in determining the size of the grants to the Named Executive
Officers. In view of Mr. Pearce's oversight responsibility for Hughes, the
Committee determined that his grant would be denominated in GM Common and Class
H stocks as detailed starting on page 17. The award to Mr. Armstrong was
denominated entirely in Class H stock, reflecting his position as CEO of Hughes.
Other Long-Term Incentives -- In contrast to stock options, which reward
executives for stockholder value creation as measured by improvement in the
prices of GM common stocks, the GM Performance Achievement Plan is intended to
focus executives on the accomplishment of key long-term strategic business
objectives, which require more than one year to complete.
Target awards are typically made annually and payout is contingent on the
achievement of predetermined targets over a three-year plan period as outlined
in the Corporation's and Hughes' strategic business plans for the award period.
Payment of any awards relating to the 1996-1998 grants will be based on the
achievement of predetermined Return on Net Assets ("RONA") levels based on GM's
and Hughes' respective business plans. The percentage of each target award, if
any, that eventually is distributed to participants is determined by the
Committee based on the actual level of performance achieved over the award
period versus the targeted goal. No awards are paid for cumulative performance
below a
13
<PAGE>
predetermined threshold level and final awards are capped at 200% of target for
awards relating to GM performance and 175% of target for awards related to
Hughes performance.
The 1996 target awards (disclosed on page 19) cover the three-year period
1996-1998. The sizes of the target awards for the CEO and the other Named
Executive Officers were developed in line with the methodology discussed in the
previous section on stock options. For Messrs. Smith, Pearce, Hughes, and
Wagoner, these awards were denominated in cash but, if earned, will be paid out
in GM Common and Class H stocks in four installments. The award for Mr.
Armstrong was denominated and will be paid in GM Common and Class H stocks in a
single installment.
The cumulative GM earnings and Hughes RONA targets realized for the
1994-1996 performance period were both above target but below the maximum payout
level. As a result, final awards for Named Executive Officers were paid above
target but below maximum levels.
EXECUTIVE COMPENSATION COMMITTEE
Edmund T. Pratt, Jr., Chairman
John H. Bryan
J. Willard Marriott, Jr.
John G. Smale
Dennis Weatherstone
Thomas H. Wyman
14
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the compensation
of the Chief Executive Officer and each of the other four most highly
compensated executive officers of General Motors Corporation (all of whom were
members of the President's Council in 1996) for services in all capacities while
a Named Executive Officer of the Corporation during 1994, 1995, and 1996. With
respect to 1994 and 1995, the tables below include amounts related to General
Motors Class E Common Stock. Effective June 7, 1996, Electronic Data Systems
(EDS), previously a wholly owned subsidiary of the Corporation, was split off
from General Motors and shares of General Motors Class E stock were converted to
shares of EDS stock on a one-for-one basis.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------------- -------------------------
Other Awards Payouts
Annual Long-Term All Other
Name and Compen- Stock Incentive Compen-
Principal Position Year Salary Bonus(1) sation(2) Options Payouts(3) sation(4)
- ------------------------- --------- ------------- ------------- ----------- ----------- ----------- -----------
$ $ $ Class # Shares $ $
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. F. Smith, Jr.
Chairman, CEO &
President......... 1996 1,750,000 1,600,000 69,875 Com. 200,000 2,310,000 52,000
1995 1,500,000 1,750,000 54,181 Com. 150,000 2,300,000 33,750
1994 1,500,000 1,925,000 N.A. Com. 120,000 2,268,000 22,500
H. J. Pearce
Vice Chairman....... 1996 950,000 840,000 N.A. Com. 101,300 1,155,000 28,500
Cl. H 31,400
1995 850,000 900,000 N.A. Com. 40,000 1,100,000 19,125
Cl. E 22,300
Cl. H 25,000
1994 800,000 963,000 N.A. Com. 25,000 978,000 12,000
Cl. E 25,900
Cl. H 18,700
C. M. Armstrong*
Chairman & CEO...... 1996 906,000 855,000 133,511 Cl. H 105,000 1,111,000 50,309
Hughes Electronics 1995 700,000 775,000 139,038 Cl. H 55,000 1,377,000 43,501
L. R. Hughes
Executive VP........ 1996 925,000 825,000 N.A. Com. 100,000 1,155,000 27,750
1995 850,000 900,000 N.A. Com. 80,000 1,100,000 19,125
1994 800,000 963,000 N.A. Com. 50,000 961,000 12,000
G. R. Wagoner, Jr.
Executive VP........ 1996 925,000 825,000 N.A. Com. 100,000 1,155,000 27,750
1995 850,000 900,000 N.A. Com. 80,000 1,100,000 19,125
1994 800,000 963,000 N.A. Com. 50,000 952,000 12,000
</TABLE>
* Not a Named Executive Officer prior to July 1, 1995.
(1) Awards were granted under the General Motors Amended 1987 Stock Incentive
Plan. The award for Mr. Armstrong was paid in cash in one installment.
Awards for Messrs. Smith, Pearce, Hughes, and Wagoner were denominated in
15
<PAGE>
the form of restricted stock units equivalent to shares of the Corporation's
Common, Class E, and Class H stocks, which vest on an installment basis and
are paid in cash. The first installment vested on date of grant, and
remaining installments vest on December 31 of the same year, except that, in
recognition of the anticipated EDS split-off, all Class E shares in the 1995
grant vested on date of grant and were paid in the first installment. For
1996, awards were denominated in Common and Class H shares and paid in cash
in early 1997 in one installment. Prior to delivery, shares are retained by
the Corporation to satisfy tax withholding obligations. Dividend equivalents
are paid on unvested shares. The following table sets forth the number of
shares which were paid in 1997:
<TABLE>
<CAPTION>
Value of 1995 Second
RSU Vested Installment RSUs
------------------------------------------------ ----------------------
1995 Award
1996 Award Second Installment Common Cl. H
---------------------- ---------------------- --------- ---------
Common Cl. H Common Cl. H $55.75 $56.25
--------- --------- --------- --------- --------- ---------
# # # # $ #
<S> <C> <C> <C> <C> <C> <C>
J. F. Smith, Jr............... 21,077 5,307 14,067 3,617 784,235 203,456
H. J. Pearce.................. 10,373 3,483 6,782 2,325 378,097 130,781
L. R. Hughes.................. 10,868 2,736 7,234 1,860 403,296 104,625
G. R. Wagoner, Jr............. 10,868 2,736 7,234 1,860 403,296 104,625
</TABLE>
(2) For Mr. Smith, includes $24,245 related to use of Corporate aircraft. For
Mr. Armstrong, includes $63,037 related to use of Company aircraft.
(3) For Messrs. Smith, Pearce, Hughes, and Wagoner, includes awards under the
General Motors 1987 and 1992 Performance Achievement Plans. Under the Plans,
awards were made covering the 1991-94, 1992-94, 1993-95, and 1994-96
performance periods. For the 1991-94 PAP cycle, awards were paid in cash in
one installment. For the
1992-94 and 1993-95 cycles, awards vest and are paid in all three classes of
GM common stocks on an installment schedule. Vesting occurs in four equal
installments, the first at the time the final award is determined, the
second and third at the end of the same and following year, and the fourth
installment subsequent to retirement, except that, in recognition of the EDS
split-off, all Class E shares in the 1993-95 grant vested on the date of
grant and were paid simultaneously with the first installment. Further, all
unvested Class E shares from the 1992-94 grant vested on December 31, 1995,
and were paid in January 1996. The 1994-96 grant is comprised of Common and
Class H stock and has a vesting and payment schedule similar to the 1992-94
and 1993-95 grants. The awards to Mr. Armstrong are paid in a single
installment in the form of Common and Class H stocks. Dividend equivalents
may be paid on unvested shares. The following table sets forth the number of
shares which were vested and paid and the number of shares which remain
unvested and unpaid as of February 28, 1997:
16
<PAGE>
<TABLE>
<CAPTION>
Second Installment of 1993-95 grant
and Third Installment of 1992-94
1994-96 Grant grant
------------------------------------------------ -----------------------------------
Value of
Shares
Vested
Shares Vested in 1997 Shares Shares Vested Dec. 31,
Unvested Dec. 31, 1996 1996
---------------------- ---------------------- ---------------------- ---------
Com. Cl. H Com. Cl. H Com. Cl. H Com.
--------- --------- --------- --------- --------- --------- ---------
$55.75
# # # # # # $
<S> <C> <C> <C> <C> <C> <C> <C>
J. F. Smith, Jr............... 7,608 1,916 22,822 5,746 15,965 3,679 890,049
H. J. Pearce.................. 3,566 1,198 10,698 3,591 6,531 2,328 364,103
L. R. Hughes.................. 3,804 958 11,411 2,873 7,637 1,760 425,763
G. R. Wagoner, Jr............. 3,804 958 11,411 2,873 7,637 1,760 425,763
<CAPTION>
Shares Unvested Dec.
31, 1996
----------------------
Cl. H Com. Cl. H
--------- --------- ---------
$56.25
$ # #
<S> <C> <C> <C>
J. F. Smith, Jr............... 206,944 24,052 5,461
H. J. Pearce.................. 130,950 9,293 3,749
L. R. Hughes.................. 99,000 11,503 2,612
G. R. Wagoner, Jr............. 99,000 11,503 2,612
</TABLE>
(4) Except for Mr. Armstrong, Company contributions under the S-SPP and the
BEP-S (more fully disclosed on page 9). For Mr. Armstrong, amounts reflect
Company contributions under the Hughes Salaried Employees' Thrift and
Savings Plan and Hughes Salaried Employees' Excess Benefit Plan (more fully
disclosed on page 10).
OPTIONS AND SAR GRANTS IN 1996
The following table shows the options granted to Messrs. Smith, Pearce,
Hughes, and Wagoner on February 5, 1996. These options were comprised of both
non-qualified and Incentive Stock Options (ISOs) and become exercisable in three
equal annual installments commencing on the first anniversary of the date of
grant. The table also displays the non-qualified options granted to Mr.
Armstrong on May 1, 1996. These options become exercisable in five equal annual
installments commencing on the first anniversary of the date of grant. All ISOs
expire ten years from the date of grant and non-qualified options expire ten
years and two days from the date of grant.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Grant Date
Options Employees Exercise Expiration Present
Name Granted in 1996 Price Date Value(1)
- ------------------ --------- ------------- ----------- ------------- ------------
# Shares % $/Share $
$1-2/3 Par
Common Stock
Options
- ------------------
<S> <C> <C> <C> <C> <C>
J. F. Smith, Jr... 200,000 2.82 52.25 2/6/06 2,800,000
H. J. Pearce...... 101,300 1.43 52.25 2/6/06 1,418,200
L. R. Hughes...... 100,000 1.41 52.25 2/6/06 1,400,000
G. R. Wagoner, Jr. 100,000 1.41 52.25 2/6/06 1,400,000
<CAPTION>
Class H Stock
Options
- ------------------
<S> <C> <C> <C> <C> <C>
H. J. Pearce...... 31,400 1.65 56.32 2/6/06 794,734
C. M. Armstrong... 105,000 5.52 61.31 5/2/06 2,650,200
</TABLE>
17
<PAGE>
(1) These values were determined under the Black-Scholes option pricing model at
the time of exercise based upon the following assumptions: expected price
volatility of 27% (42% for the February 5, 1996 and 33% for the May 1, 1996
Class H grants); exercise in the sixth year (seventh year for Class H);
interest rate based upon the corresponding yield of a government bond
maturing six years (seven years for Class H) from the date of grant; and
dividends at the rate in effect on the date of grant. No adjustments were
made for nontransferability or the risk of forfeiture. The Corporation's use
of this model does not constitute an endorsement or an acknowledgment that
such model can accurately determine the value of options. No assurance can
be given that the actual value, if any, realized by an executive upon the
exercise of these options will approximate the estimated values established
by the Black-Scholes model.
AGGREGATE OPTION/SAR EXERCISES IN 1996 AND
OPTION/SAR VALUES AT DECEMBER 31, 1996
The following table provides information as to options exercised by each of
the Named Executive Officers in 1996 and the value of options held by such
executives at year-end, measured in terms of the closing prices of General
Motors common stocks on December 31, 1996 (Common -- $55.75; Class H -- $56.25).
No SARs may be granted under the General Motors Amended 1987 Stock Incentive
Plan.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Dec. 31, 1996 Dec. 31, 1996
Shares
Class of Acquired Value Exercisable/ Exercisable/
Name Stock on Exercise Realized Unexercisable Unexercisable
- ------------------------ -------------- -------------- ----------- ------------------------- -----------------------
# Shares $ # Shares $
<S> <C> <C> <C> <C> <C> <C> <C>
J. F. Smith, Jr......... Common 24,904 382,351 487,200 / 300,000 6,354,300 / 1,950,000
H. J. Pearce............ Common 55,070 1,066,782 68,068 / 127,967 548,375 / 687,888
Class E 35,250 740,369 -0- / -0- -0- / -0-
Class H -0- -0- 35,284 / 48,066 850,542 / 360,319
C. M. Armstrong......... Common -0- -0- 25,000 / -0- 450,000 / -0-
Class H -0- -0- 242,500 / 132,500 6,594,125 / 448,525
L. R. Hughes............ Common 13,354 201,049 161,692 / 153,333 2,002,004 / 1,016,663
G. R. Wagoner, Jr....... Common 11,900 191,235 148,557 / 153,333 1,776,421 / 1,016,663
</TABLE>
LONG-TERM INCENTIVE AWARDS
The following table displays target long-term incentive awards granted to
Named Executive Officers in 1996 under the General Motors 1992 Performance
Achievement Plan. Assuming that the threshold performance level is met, the
percentage of the target award eventually paid to participants depends upon the
extent to which the established RONA target for the three-year performance
period is achieved. If the threshold performance level established by the
Committee is not met, no awards will be paid.
18
<PAGE>
<TABLE>
<CAPTION>
Number of Estimated Future Payouts
Shares, Units Under Non-Stock Price-Based Plans
or Performance ------------------------------------------
Name Other Rights Period Threshold Target Maximum
- ---------------------- -------------- -------------- ------------ ------------ ------------
# Shs. $ $ $
<S> <C> <C> <C> <C> <C>
J. F. Smith, Jr....... N.A. 1996-98 728,000 1,820,000 3,640,000
H. J. Pearce.......... N.A. 1996-98 390,000 975,000 1,950,000
L. R. Hughes.......... N.A. 1996-98 364,000 910,000 1,820,000
G. R. Wagoner, Jr..... N.A. 1996-98 364,000 910,000 1,820,000
C. M. Armstrong # Shs. # Shs. # Shs. # Shs.
--Common......... 5,287 1996-98 2,115 5,287 9,252
--Class H........ 14,701 1996-98 5,880 14,701 25,727
</TABLE>
RETIREMENT PROGRAM
The retirement program for General Motors executives in the United States
consists of the General Motors Retirement Program for Salaried Employees, which
is a tax-qualified plan and subject to ERISA, as well as two non-qualified plans
(collectively the "GM Salaried Program"). The contributory portion of the
tax-qualified plan provides defined benefits under a formula based on credited
years of service and upon the average pensionable remuneration received in the
highest five years out of the final ten years of service, subject to certain
Internal Revenue Code limitations which change from time to time. In addition,
employees receive an annual retirement benefit which is equal to the sum of 100%
of their contributions made after October 1, 1979, and of smaller percentages of
contributions made before that date. If employees do not elect to contribute to
the tax-qualified plan, they are entitled to receive only basic retirement
benefits equal to a flat dollar amount per year of credited service, essentially
equivalent to the General Motors Pension Plan For Hourly Employees. 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.
If executives made the required contributions to the tax-qualified plan,
they may also be eligible to receive the regular form of a supplemental
executive retirement benefit. The sum of the qualified plan benefits and the
regular form of the supplemental executive retirement benefit will provide the
executive with total annual retirement benefits under the GM Salaried Program
that are equal to 2% times eligible years of credited service, times the average
of the highest five years of base salary during the final ten years of service,
less 2% times the years of credited service times the maximum annual Social
Security benefit payable to a person retiring at age 65. Table I, on page 20,
shows the regular form of the estimated total annual retirement benefit related
to final average base salary as of December 31, 1996 that would be payable in 12
equal monthly installments per annum as a single life annuity to executives
retiring in 1997 at age 65 (the benefits shown are based upon maximum Social
Security benefits of $15,912 payable to persons retiring in 1997). If the
executive elects to receive benefits in the form of a 60% joint and survivor
annuity, the amounts shown would generally be reduced by from 5% to 7.5%,
depending upon the age differential between spouses.
19
<PAGE>
TABLE I
PROJECTED TOTAL ANNUAL RETIREMENT BENEFITS FROM ALL PARTS OF THE GM SALARIED
PROGRAM ASSUMING EXECUTIVE QUALIFIES FOR REGULAR SUPPLEMENTAL EXECUTIVE
RETIREMENT PROGRAM BENEFITS(A)
<TABLE>
<CAPTION>
Years of Eligible Contributory Pensionable
Service
Highest Five-Year -------------------------------------------------
Average Annual Salary 15 25 35 45
- ---------------------- ------- --------- --------- ---------
$ $ $ $ $
<S> <C> <C> <C> <C>
700,000 205,226 342,044 478,862 615,679
1,000,000 295,226 492,044 688,862 885,679
1,300,000 385,226 642,044 898,862 1,155,679
1,600,000 475,226 792,044 1,108,862 1,425,679
1,900,000 565,226 942,044 1,318,862 1,695,679
2,200,000 655,226 1,092,044 1,528,862 1,965,679
<FN>
(a) The average annual base salary for the highest five years over the last
10-year period and the eligible years of credited service as of
December 31, 1996 for each of the Named Executive Officers were as
follows; John F. Smith, Jr., $1,374,583, 36 years; Harry J. Pearce,
$723,167, 18 years; Louis R. Hughes, $713,333, 29 years; and G. Richard
Wagoner, Jr., $697,833, 19 years. The annual base salaries for the most
recent year(s) considered in the calculation of the averages reported
here are in the Summary Compensation Table on page 15 in the column
labeled "Salary."
</TABLE>
An executive may be eligible to receive the alternative form of the
supplemental executive retirement benefit in lieu of the regular form of the
supplemental executive retirement benefit contingent upon satisfaction of
certain criteria including, but not limited to, refraining from working for any
competitor or otherwise acting in any manner inimical or contrary to the best
interests of the Corporation. The executive will receive the greater of the
regular form or the alternative form of the supplemental executive retirement
benefit. The sum of the qualified plan benefits and the alternative form of the
supplemental executive retirement benefit will provide the executive with the
total annual retirement benefits that are equal to 1.5% times the eligible years
of credited service (up to a maximum of 35 years) times the average of the
executive's highest five years of total direct compensation (i.e., the average
of the five highest years of base salary plus the average of the five highest
years of bonus and/or restricted stock units awarded) out of the last ten years,
less 100% of the maximum annual Social Security benefit payable to a person age
65 ($15,912 for 1997). Table II, on page 21, shows the alternative form of the
estimated total annual retirement benefit related to final average total direct
compensation as of December 31, 1996 that would be payable in 12 equal monthly
installments per annum as a single life annuity to executives retiring in 1997
at age 65. Again, the amounts shown would be reduced in the same way as under
the regular form if the executive were to elect joint and survivor benefits.
20
<PAGE>
TABLE II
PROJECTED TOTAL ANNUAL RETIREMENT BENEFITS FROM ALL PARTS OF THE GM SALARIED
PROGRAM ASSUMING EXECUTIVE QUALIFIES FOR ALTERNATIVE SUPPLEMENTAL EXECUTIVE
RETIREMENT PROGRAM BENEFITS(A)
<TABLE>
<CAPTION>
Highest Five-Year Years of Eligible Contributory Pensionable Service
Average Annual Total -------------------------------------------------------------------
Direct Compensation 15 20 25 30 35
- ---------------------- ----------- ----------- ----------- ----------- -----------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C>
1,100,000 231,588 314,088 396,588 479,088 561,588
1,775,000 383,463 516,588 649,713 782,838 915,963
2,450,000 535,338 719,088 902,838 1,086,588 1,270,338
3,125,000 687,213 921,588 1,155,963 1,390,338 1,624,713
3,800,000 839,088 1,124,088 1,409,088 1,694,088 1,979,088
4,475,000 990,963 1,326,588 1,662,213 1,997,838 2,333,463
<FN>
(a) The average annual total direct compensation, determined as described in the
preceding paragraph, and the eligible years of credited service as of
December 31, 1996 for each of the Named Executive Officers was as follows:
John F. Smith, Jr., $2,709,583, 35 years; Harry J. Pearce, $1,411,767, 18
years; Louis R. Hughes, $1,365,933, 29 years; and G. Richard Wagoner, Jr.,
$1,312,433, 19 years. The annual total direct compensation for the most
recent year(s) considered in the calculation of the sum of the averages of
salary and of bonus income, which is reported here as average annual total
direct compensation, will be found in the Summary Compensation Table on page
15 in the column labeled "Salary" and in the column labeled "Bonus."
</TABLE>
In addition, 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
supplemental executive retirement benefits for such executives. The regular or
alternative form of the supplemental executive retirement benefit is provided
under a program which is non-qualified for tax purposes and not pre-funded.
Supplemental executive retirement benefits under the regular and alternative
formula can be reduced or eliminated for both retirees and active employees by
the Committee and the Board of Directors.
On January 16, 1997, the Corporation announced a series of proposed
transactions (the "Proposed Transactions") including: (i) the tax-free spin-off
of 100 percent of Hughes Aircraft Company to holders of the Corporation's Common
Stock and Class H Common Stock in a distribution ratio still to be determined;
(ii) the tax-free merger of Hughes Aircraft with Raytheon Company immediately
after the spin-off; (iii) the transfer of Delco Electronics from Hughes
Electronics to the Corporation's Delphi Automotive Systems; and (iv) the
recapitalization of the Corporation's Class H Common Stock into a new tracking
stock linked solely to the telecommunications and space businesses of Hughes
Electronics.
On April 4, 1997, the Corporation entered into an agreement with C. Michael
Armstrong, Chairman & CEO of Hughes Electronics, pursuant to which he would
receive a grant of restricted stock units (the "Grant") under the 1997
21
<PAGE>
Stock Incentive Plan, if it is approved by GM stockholders (see Item 4 below,
"1997 Stock Incentive Plan"). The agreement provides that, if the Proposed
Transactions are completed, the Grant would consist of RSUs denominated in the
new tracking stock, with a value of $10 million based on the average price of
such stock for the three months after the initial issuance of the tracking
stock. The shares in the Grant will vest on October 1, 2003 provided that Mr.
Armstrong is still employed by Hughes. If the shares in the Grant are worth less
than $10 million at the time of vesting, Mr. Armstrong will receive in cash the
difference in value. If Mr. Armstrong dies before that date, his estate will be
paid all or a portion of the value of the Grant, depending upon a vesting
schedule. Further, in the event of a change of control (as defined in the
agreement) of Hughes within five years of the date of the Grant, followed within
three years by a trigger event (as defined in the agreement, which includes
involuntary termination or a fundamental change in duties), Mr. Armstrong would
receive (x) a severance payment of four times his then current salary and most
recent bonus, and (y) in lieu of any payment under the Grant, an additional
amount determined as follows: if the trigger event occurs after April 1, 1998
and on or before April 1, 1999, the greater of $2.5 million or the then current
value of 25% of the Grant; before April 1, 2000, the greater of $5.0 million or
the then current value of 50% of the Grant; before April 1, 2001, the greater of
$7.5 million or the then current value of 75% of the Grant; and before the later
of April 1, 2002 or the third anniversary of the change of control, $10.0
million, or the then current value of the Grant.
When Mr. Armstrong joined Hughes, he and General Motors entered into an
agreement which provided that if he retired at age 60, he would receive total
annual retirement benefits of $364,211 from Hughes. This benefit will consist of
the standard benefit and a supplement from Hughes. This benefit, when added to
the benefit he is receiving from his previous employer, equals what he would
have received had he retired at age 60 from his previous employer. Mr. Armstrong
and General Motors have also agreed that if Mr. Armstrong continues to work
after age 60, he will be entitled to receive annually, upon his retirement from
Hughes, an additional amount equal to the increase in Hughes' standard annual
benefit from age 60. (For example, if Mr. Armstrong retires at age 62, he would
receive approximately an additional $69,756; at age 65, an additional $203,532.)
22
<PAGE>
PERFORMANCE PRESENTATION
Set forth below are graphs which compare the cumulative total returns,
including reinvestment of dividends, for each of the two classes of General
Motors common stocks against the cumulative total return of the Standard &
Poor's (S&P) 500 Composite Stock Index and respective peer group indices for the
last five years, assuming investment of $100 in each of the Corporation's common
stocks and each of the respective peer indices noted on January 1, 1992. For
General Motors Common Stock, a peer group index comprised of Ford Motor Company
and Chrysler Corporation has been used. Reflecting the diversity of Hughes
Electronics Corporation's business, a comparator group index has been developed
using Value Line industry group data for the following: Auto Parts -- OEM;
Telecommunications Service; Telecommunications Equipment: Aerospace/Defense; and
Electronics. In constructing the index, a two-stage weighting process was
applied. The data were first weighted by market value within each industry group
and then by the percentage each line represented of Hughes Electronics
Corporation's segment revenue.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
GENERAL MOTORS COMMON STOCK,
S&P 500 INDEX, FORD AND CHRYSLER
DATE GM COMMON STOCK S&P 500 FORD AND CHRYSLER
- ---- --------------- ------- -----------------
1/1/92 100 100 100
1/1/93 116 108 196
1/1/94 201 118 330
1/1/95 157 120 305
1/1/96 202 165 353
12/31/96 219 203 422
23
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
GENERAL MOTORS CLASS H COMMON STOCK,
S&P 500 INDEX, AND VALUE LINE COMPOSITE INDEX
DATE GM CLASS H STOCK S&P 500 VALUE LINE COMPOSITE INDEX
- ---- ---------------- ------- --------------------------
1/1/92 100 100 100
1/1/93 181 108 100
1/1/94 280 118 134
1/1/95 256 120 132
1/1/96 369 165 178
12/31/96 429 203 200
ITEM NO. 2
The By-laws of the Corporation provide that the Audit Committee shall be
composed of directors who are not officers of the Corporation and that the
selection by the Committee of independent public accountants shall be subject to
ratification by the stockholders at the annual meeting. This standing Committee
of the Board reviews the scope and results of the audits, the accounting
principles being applied, and the effectiveness of internal controls and, in its
oversight role, assures that management fulfills its responsibilities in the
preparation of the financial statements. During 1996, the Audit Committee was
composed of Mr. Dennis Weatherstone, Chairman, Mrs. Anne L. Armstrong, Mr. John
H. Bryan, Ms. Ann D. McLaughlin, John G. Smale and Dr. Louis W. Sullivan. The
Committee held eight meetings in 1996.
24
<PAGE>
In accordance with the By-laws, the Committee has selected and engaged the
firm of Deloitte & Touche LLP as independent public accountants for the year
1997 and this selection is being presented to the stockholders for ratification.
Representatives of Deloitte & Touche LLP will attend the annual meeting, will
have the opportunity to make a statement if they desire to do so, and will be
available to answer questions that may be asked by stockholders.
Deloitte & Touche LLP has audited the Corporation's books annually since
1918, 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 the General Motors engagement at
least once every five years, with assignments beyond three years of supervising
partners responsible for the General Motors engagement reviewed and approved in
advance by the Audit Committee. In the event the selection of Deloitte & Touche
LLP as independent public accountants is not ratified by the stockholders, the
Audit Committee will seek other accountants. However, because of the difficulty
and expense of making any change in public accountants so long after the
beginning of the current year, it is likely that the appointment would stand for
1997 unless the Committee found other good reason for making a change.
During the 1996 calendar year, Deloitte & Touche LLP provided GM with
extensive audit and other services. Fees for all services totaled approximately
$55 million.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION, BY THE AUDIT COMMITTEE OF THE CORPORATION, OF DELOITTE & TOUCHE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE BOOKS, RECORDS AND ACCOUNTS OF
THE CORPORATION AND ITS SUBSIDIARIES FOR THE YEAR 1997. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT
CHOICE.
ITEM NO. 3
The Board of Directors has adopted, subject to approval by GM Common and GM
Class H stockholders at the annual meeting, the General Motors Corporation
Non-Employee Director Long-Term Stock Incentive Plan (the "Plan"). The vote
required for approval of the Plan is the affirmative vote of the holders of a
majority of the shares of common stock present, in person or by proxy, and
entitled to vote at the Annual Meeting. If the Plan is not so approved, stock
options will not be granted.
The purpose of the Plan is to provide non-employee Directors of General
Motors Corporation (the "Corporation") with a plan of stock ownership that will
further ensure that the compensation of its Directors is closely aligned with
stockholder interests and the performance of the Corporation.
The following is a summary of the principal provisions of the Plan, a copy
of which is attached to this proxy statement as Exhibit A. This summary is
qualified in its entirety by express reference to the complete text of the Plan.
Participation in the Plan shall be limited to non-employee Directors of the
Corporation who are not former employees of the Corporation or any subsidiary.
Eligibility is currently limited to each such non-employee Director who has
attained age 56 as of the date of the annual meeting in such year (each a
"Participant").
25
<PAGE>
As reported in last year's proxy statement, each non-employee Director who
would be required pursuant to the General Motors Director Retirement Policy to
retire in 15 years or less, was credited on January 2, 1996 with an initial
grant of restricted stock units of General Motors Common Stock ("RSUs"). The
dollar value of each Participant's initial grant of RSUs was determined based on
the Director's estimated life expectancy. The dollar value of each initial grant
of RSUs was established in such a way that the projected value of the initial
grant of RSUs to each Director together with the projected value of all of the
subsequent annual grants of RSUs plus an estimated return (including dividend
reinvestment and appreciation of the stock price) will be equivalent in value to
the present value, measured as of January 2, 1996, of the retirement benefit
such Director would have received under the terminated General Motors Director
Retirement Plan.
On or before December 31 of each Plan year, each Participant will have the
opportunity to make an irrevocable election to receive his or her annual Plan
award to be granted in the subsequent year, either:
(1) in the form of a grant of RSUs with a market value of $10,000 on the
first business day of June, or
(2) in the form of a non-qualified stock option to purchase 1,000 shares of
General Motors Common Stock upon the terms provided in Section 11 of
the Plan.
The stock options shall have a term of up to 10 years and 2 days from the
date of award, subject to earlier termination as provided herein. A stock option
shall not become exercisable until one year from the date of grant. If a
Participant leaves the Board before the stock option becomes exercisable, the
stock option will terminate on the date that such Participant is no longer a
Director.
Subject to adjustment as set forth in the Plan, the aggregate maximum
number of shares upon exercise of stock options granted pursuant to the Plan
will be 250,000 shares.
This Plan may at any time be amended, modified or terminated by the Board,
to comport with changes in the Internal Revenue Code of 1986, as amended, and
the Employee Retirement Income Security Act of 1974, as amended, or the rules or
regulations promulgated thereunder. In addition, the Board may, in its sole
discretion, modify the terms and conditions of the Plan in response to and
consistent with any changes in other applicable laws, rules or regulations. The
Board also reserves the right to modify the Plan from time to time, or to
suspend or terminate the Plan entirely, provided, however, that no modification
of the Plan, except for such modifications as may be required by law, rule or
regulation, shall operate to annul an election already in effect for the current
calendar year or any preceding calendar year.
This Plan shall be effective as of January 1, 1996. The Plan will expire
when no shares of stock are available for issuance.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THE PROPOSAL TO ADOPT THE
NON-EMPLOYEE DIRECTOR LONG-TERM STOCK INCENTIVE PLAN. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT
CHOICE.
26
<PAGE>
ITEM NO. 4
The General Motors incentive program currently consists of the General
Motors Amended 1987 Stock Incentive Plan and the General Motors 1992 Performance
Achievement Plan. The incentive program has been administered since 1937 by the
General Motors Executive Compensation Committee (the "Committee"), a standing
committee of the Board of Directors comprised entirely of independent Directors.
No member of the Committee is eligible to receive an award under the Stock
Incentive or Performance Achievement Plans.
As noted in the report of the Committee commencing on page 10, General
Motors' executive compensation philosophy provides for a meaningful portion of
each executive's total compensation to be placed at-risk. In this regard, the
at-risk portion of compensation is determined under the Corporation's incentive
plans. The current plans are scheduled to terminate on May 31, 1997. As in the
past, prior to expiration of these plans, the Corporation carried out a detailed
review of the executive compensation structure. To assist in this review
process, the Corporation engaged the services of KPMG Peat Marwick's executive
compensation practice group.
To ensure that the Corporation's plans and practices provide a highly
competitive compensation opportunity in the context of the Corporation's
performance and compensation philosophy, the first step in the review process
was to establish a benchmark against which the Corporation would measure its
performance and incentive compensation. In recognition of the limited number of
automotive industry competitors as well as the fact that the competitive labor
market for the Corporation's executives is broader than the automotive industry
alone, a group of large, high-performing global companies (the "comparator
group") was chosen as the basis against which the Corporation would measure its
performance. Further, a group of companies, many of which were in the comparator
group, were identified as providing the best practices in executive
compensation.
After a complete review and analysis of the Corporation's philosophy and
executive compensation practices, including individual interviews with each
member of the President's Council, together with an examination of the policies
and practices of the aforementioned comparator and best practices groups, the
Committee has, by the unanimous vote of its members, adopted the 1997 incentive
program. Although the current incentive program provides for annual incentive
awards (Restricted Stock Unit ("RSU") grants) and stock options under one plan
(the Amended 1987 Stock Incentive Plan), the proposed 1997 incentive program
provides for annual incentive cash awards, and stock option and RSU grants under
independent plans (the General Motors 1997 Annual Incentive Plan and the General
Motors 1997 Stock Incentive Plan). The 1997 Performance Achievement Plan is, in
most respects, similar to the 1992 Performance Achievement Plan. Following the
Committee's approval, the Plans were reviewed with the entire Board of Directors
which unanimously expressed its agreement with the Plans.
Each of the Plans constituting a part of the 1997 incentive program
provides that the Committee shall not take certain actions with respect to such
Plans without seeking the prior approval of stockholders of the Corporation. The
Corporation reserves the right, however, to adjust or initiate cash compensation
arrangements as it deems appropriate, including incentive plans providing for
cash awards, without seeking stockholder approval. With respect to the adoption
of any plan which is intended to be a successor to any Plan (or portion thereof)
which constitutes a part of the 1997 incentive program,
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the Committee shall determine whether it is appropriate to seek stockholder
approval of any such adoption based upon the regulatory requirements in effect
at such time.
If approved by a majority of the shares of common stock voted on the
proposal at the 1997 Annual Meeting, the Corporation's incentive program,
effective June 1, 1997, will include the General Motors 1997 Annual Incentive
Plan, the General Motors 1997 Stock Incentive Plan, and the General Motors 1997
Performance Achievement Plan. The text of each of these Plans is attached as
Exhibit B. The general discussion of each of the Plans as set forth below is
qualified in its entirety by express reference to the complete text of the Plan.
If not approved, the Plans will not be adopted; however, in such event the
Corporation reserves the right to adjust cash compensation arrangements as it
deems appropriate.
1997 ANNUAL INCENTIVE PLAN
Under the 1997 Annual Incentive Plan, the Committee may grant awards at any
time from June 1, 1997, through May 31, 2002.
AMOUNT OF GRANTS. The Plan permits the Committee to make cash grants in
such amounts and at such times as it may determine. The Committee may delegate
to the President's Council determination of individual awards to employees who
are not officers of the Corporation. The determinations by the President's
Council shall be subject to a maximum funding amount which shall be approved by
the Committee.
TARGET AWARDS. Under the Plan, early each year, the Committee will
establish targeted performance levels at which target performance awards may be
earned. The Committee will also identify threshold or minimum performance levels
for payment of awards below which no award will be paid, and a maximum
performance level beyond which no additional amounts will be paid, and will
establish the corresponding minimum and maximum awards. The Committee may
delegate to the President's Council determination of individual final awards for
employees who are not officers of the Corporation. Any such determinations by
the President's Council shall be subject to a maximum amount which shall be
approved by the Committee.
In determining the performance criteria applicable to any grant of awards,
the Committee may use one or more of the following business criteria: return on
assets, return on net assets, asset turnover, return on equity, return on
capital, market price appreciation of one or more of the Corporation's common
stocks, economic value added, total stockholder return, net income, pre-tax
income, earnings per share, operating profit margin, net income margin, sales
margin, cash flow, market share, inventory turnover, hours per vehicle, vehicles
per employee, net income per vehicle, capacity utilization, increase in customer
base, environmental health and safety, diversity, and/or quality. The business
criteria may be expressed in absolute terms or relative to the performance of
other companies or to an index.
FINAL AWARDS. The percentage of each target award which will become a final
award will be determined by the Committee on the basis of the performance goals
established and the related performance achieved, as well as the employee's
individual performance during the period. Final awards may be less than or
greater than 100% of the target award. The Committee may, in its discretion,
elect not to pay out the full amount and may increase or decrease final awards
to reflect performance if, in its judgment, events have occurred which require
changes to preserve the incentive features of this Plan. No individual shall be
granted a final award in excess of $7.5 million for any calendar year.
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ELIGIBILITY. To be eligible to receive an award under the Plan, a
participant must be an employee of the Corporation or a subsidiary as defined in
the Plan or an individual who has been requested by the Corporation to accept
employment with an entity in which the Corporation has a substantial ownership
interest. Between 1992 and 1997, the number of participants in the annual
incentive portion of the Stock Incentive Plan ranged from 706 to 3,560
employees. Going forward, it is anticipated that approximately 4,000 employees
annually will participate in the Plan, including approximately 70 officers of
the Corporation.
1997 STOCK INCENTIVE PLAN
Under the 1997 Stock Incentive Plan, the Committee may grant stock options
or Restricted Stock Units ("RSUs") at any time from June 1, 1997, through May
31, 2002.
AMOUNT OF GRANTS. Subject to adjustment as set forth in the Plan, the Plan
provides for a pool of 60,000,000 shares of General Motors Common Stock and
2,500,000 shares of Class H Common Stock from which options and RSUs may be
granted prior to June 1, 2002, provided, however, that the maximum number of
shares which may be granted as RSUs shall not exceed 7,500,000 Common and
1,000,000 Class H shares. The Plan provides for the use of authorized but
previously unissued and/or reacquired shares; however, the Corporation has
committed that a maximum of 40,000,000 shares of Common Stock and 1,700,000
shares of Class H Common Stock would be previously unissued shares. Since July
1995, all Common Stock option exercises have been sourced exclusively through
reacquired shares, and the Corporation anticipates that this practice will
continue for the foreseeable future.
STOCK OPTIONS. Within the limits previously described, the Plan permits the
Committee to make stock option grants in such amounts and at such times as it
may determine. The Committee currently anticipates that, as in the past, the
granting of stock options will normally be made on an annual basis. The
Committee may delegate to the President's Council determination of individual
grants for employees who are not officers of the Corporation. Any such
determinations by the President's Council shall be subject to a maximum number
of shares which shall be approved by the Committee. Subject to adjustment as set
forth in the Plan, the maximum number of shares of Common Stock, Class H Common
Stock or any combination thereof that may be granted to any individual in the
form of stock options in any calendar year will not exceed 1,000,000 shares.
Eligibility for stock option grants is similar to that under the Annual
Incentive Plan. Between 1992 to 1997, the number of participants in the stock
option portion of the Stock Incentive Plan ranged from 3,232 to 3,781 employees.
Going forward, it is anticipated that approximately 4,000 employees annually
will participate in the Plan, including approximately 70 officers of the
Corporation.
OPTION EXERCISE AND TERMINATION PROVISIONS. The Plan provides, in
accordance with past practice, that Incentive Stock Options will be exercisable
for a term ten years from the date of grant as stipulated by the Internal
Revenue Code, and non-qualified options will be exercisable for a term of ten
years and two days from the date of grant (to distinguish them from Incentive
Stock Options). The Plan provides that, except as otherwise determined by the
Committee, following termination of an employee's employment and contingent upon
satisfaction of the conditions precedent described below, options held by each
employee will expire not later than five years from date of termination of
employment, subject to earlier termination by the terms of the option. However,
if termination is due to death, the options
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will expire three years from the date of death, subject to earlier termination
by the terms of the option. These provisions are the same as under the existing
Plan (except that in case of death the current Plan provides for termination of
the options one year after the date of death).
If required by the Committee, by accepting an option grant, an employee
will agree to remain employed by the Corporation for a period of six months
following the exercise of any option granted under this Plan. If the employee
retires or terminates employment without the consent of the Committee for any
reason (other than death) within six months of the date of exercise of a stock
option, the employee will be required to pay to the Corporation the amount of
any gain realized as of the time of the exercise.
OPTION PRICE. Except in connection with certain acquisitions and/or
reorganizations as described in the Plan, the option price will be not less than
100% of the fair market value of the stock at the time the option is granted.
Under both the current and proposed Plans, shares purchased upon exercise of an
option must be paid for in full at the time of exercise. Payment upon exercise
may be made in cash or, unless determined otherwise by the Committee, by
delivery of previously acquired shares of the same class of the Corporation's
common stock.
RESTRICTED STOCK UNIT GRANTS. The Committee may grant RSU awards to such
individuals, at such times, and in such amounts as it may determine. It is not
intended that these awards will be made on a regular basis. Subject to
adjustment as set forth in the Plan, the maximum number of shares of Common
Stock, Class H Common Stock, or a combination thereof, that may be granted to
any individual in the form of RSUs in any calendar year shall not exceed 250,000
shares.
FEDERAL INCOME TAX CONSEQUENCES
Certain of the Federal income tax consequences applicable to stock options
under the 1997 Stock Incentive Plan are set forth below:
1. With respect to non-qualified options granted under the Plan: When an
optionee exercises an option, the amount by which the fair market value of the
stock on the date of exercise exceeds the exercise price of the option is taxed
as ordinary income to the optionee in the year of exercise and generally will be
allowed as a deduction for Federal income tax purposes to the Corporation in the
same year. When an optionee disposes of shares acquired by the exercise of the
option, any amount received in excess of the fair market value of the shares on
the date of exercise will be treated as long-or short-term capital gain to the
optionee, depending upon the holding period of the shares. If the amount
received is less than the market value of the shares on the date of exercise,
the loss will be treated as long-or short-term capital loss, depending upon the
holding period of the shares.
2. With respect to incentive stock options granted under the Plan: When an
optionee exercises an incentive stock option while employed by the Corporation
or a subsidiary or within the three-month (one year for disability) period after
termination of employment, no ordinary income will be recognized by the optionee
at that time. If the shares acquired upon exercise are not disposed of until
more than one year after the date of exercise and more than two years after the
date of the option grant, the excess of the sale proceeds over the aggregate
option price of such shares will be long-term capital gain to the optionee, and
the Corporation will not be entitled to a tax deduction under such
circumstances. Except as
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provided in (3) below, if the shares are disposed of (including the surrender of
such shares to exercise another incentive stock option) prior to such date (a
"disqualifying disposition"), the excess of the fair market value of such shares
at the time of exercise over the aggregate option price (but generally not more
than the amount of gain realized on the disposition) will be ordinary income to
the optionee at the time of such disqualifying disposition. The Corporation
generally will be entitled to a Federal tax deduction equal to the amount of
ordinary income so recognized by the optionee. If an incentive stock option is
exercised more than three months (one year for disability) after termination of
employment, the tax consequences are the same as described above in (1) for
non-qualified stock options.
3. Special rule if option price is paid for in shares: To the extent that
an optionee pays all or part of the option price of a non-qualified option by
tendering shares of common stock of the Corporation owned by the optionee, the
rules described in (1) above apply except that the number of shares received
upon such exercise, which is equal to the number of shares surrendered as
payment of the option price, shall have the same tax basis and tax holding
period as the shares surrendered. If the shares surrendered by the optionee in
the exercise of a non-qualified option had previously been acquired by reason of
the exercise of an incentive stock option granted to such optionee, the
surrender of such shares is not a disqualifying disposition of such shares, but
the shares received upon the exercise of the non-qualified option which are
equal in number to the surrendered incentive stock option shares will still
constitute incentive stock option shares. The additional shares received upon
such exercise have a tax basis equal to the sum of the amount of ordinary income
recognized and the amount of any cash paid on such exercise and a holding period
which commences on the date of exercise.
1997 PERFORMANCE ACHIEVEMENT PLAN
Under the Performance Achievement Plan, the Committee may grant target
awards at any time from June 1, 1997 through May 31, 2002.
ELIGIBILITY. Eligibility under the Plan is the same as under the proposed
1997 Annual Incentive and 1997 Stock Incentive Plans (see above). Employees may
participate in the Plan only upon recommendation of the Chief Executive Officer
and with the approval of the Committee, except that the Committee alone has
discretion with respect to participation by officers. Annual participation under
the 1992 Performance Achievement Plan ranged from 437 to 462 employees and
averaged 454 employees.
PERFORMANCE PERIOD. The performance period for an award must be at least
two and not more than five years. It is anticipated that new grants will be made
annually and will be for a three-year period.
TARGET AWARDS. Employees selected to participate in the Plan will be
granted target awards payable in stock and/ or cash which, in general, will be
determined based on each participant's level of responsibility. At higher levels
of responsibility, the target award will represent a greater portion of total
compensation. At the beginning of each performance period, the Committee will
establish a targeted performance level at which a target performance award may
be earned, with a threshold or minimum performance level below which no award
will be paid, and a maximum beyond which no additional amounts will be paid. In
determining the performance criteria applicable to any grant of awards, the
Committee may use one or more of the same business criteria provided for in the
1997 Annual Incentive Plan.
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FINAL AWARDS. The percentage of each target award which will become a final
award will be determined by the Committee on the basis of the performance goals
established and the related performance achieved, as well as the employee's
individual performance during the period. Final awards may be less than or
greater than 100% of the target award. The Committee may, in its discretion,
elect not to pay out the full amount and may increase or decrease final awards
to reflect performance if, in its judgment, events have occurred which require
changes to preserve the incentive features of this Plan. The Committee may
delegate to the President's Council determination of individual final awards for
employees who are not officers of the Corporation. Any such determinations by
the President's Council shall be subject to a maximum amount which shall be
approved by the Committee. No individual shall be granted a final award in
excess of $7.5 million for any Plan period.
FORM OF FINAL AWARD. The 1997 Performance Achievement Plan provides, in
accordance with past practice, that final awards may relate to, and upon vesting
be paid in the form of, one or more classes of General Motors common stock, in
cash, or partly in stock and partly in cash, as the Committee may determine.
Unlike past practice, however, the 1997 Plan provides that any stock delivered
upon payment of final awards shall only be made with reacquired shares and will
not be paid in the form of newly-issued shares.
PAYMENT OF FINAL AWARDS. Each final award will be subject to a vesting
schedule, as determined by the Committee. Vesting periods may vary depending on
an executive's level of responsibility. At the Committee's discretion, dividend
and/or interest equivalents may be paid on final awards during or at the end of
the vesting period. Payment of final awards will be further contingent upon
satisfaction of conditions precedent described below.
ALL PLANS
CONDITIONS PRECEDENT. Each of the Plans in the revised incentive program
sets forth conditions which must be satisfied for a participant to receive
delivery of award installments or exercise stock options following termination
of employment. These conditions are that the participant must (1) continue to
render services to the Corporation (unless this condition is waived by the
Committee); (2) refrain from competitive activity and conduct that is inimical
or in any way contrary to the best interests of the Corporation; and (3) furnish
reasonable information with respect to the satisfaction of (1) and (2). The
Committee has flexibility in interpreting and applying these provisions to
ensure that the objectives of the Plans are realized in accordance with
Corporate goals. These provisions are virtually identical to those under the
Amended 1987 Stock Incentive Plan and the 1992 Performance Achievement Plan.
FUNDING AND EXPENSES. The expenses of administering the Plans will be borne
by the Corporation.
AWARDS CONTINGENT UPON STOCKHOLDER APPROVAL. The Committee has granted
target awards under the 1997 Annual Incentive and Performance Achievement Plans
to members of the President's Council and other officers and employees of the
Corporation, which are subject to approval of the Plans by stockholders at the
1997 Annual Meeting. The amounts which ultimately may be payable pursuant to
such awards, however, cannot be determined at this time.
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APPROVAL BY STOCKHOLDERS. All Plans will become effective June 1, 1997, if
approved by stockholders at the 1997 Annual Meeting.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THE PROPOSAL TO APPROVE THE 1997
INCENTIVE PROGRAM, CONSISTING OF THE GENERAL MOTORS 1997 ANNUAL INCENTIVE PLAN,
THE GENERAL MOTORS 1997 STOCK INCENTIVE PLAN, AND THE GENERAL MOTORS 1997
PERFORMANCE ACHIEVEMENT PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 5
Mrs. Evelyn Y. Davis, Watergate Office Building, Suite 215, 2600 Virginia
Avenue, N.W., Washington, DC 20037, owner of 102 shares of Common Stock and 4
shares of Class H Common Stock, has given notice that she intends to present for
action at the annual meeting the following resolution:
"RESOLVED: 'That the stockholders of General Motors recommend that the
Board take the necessary steps so that future outside directors shall not
serve for more than six years.' "
The following statement was submitted in support of such resolution:
"REASONS: 'The President of the U.S.A. has a term limit, so do Governors of
many states.'
"Newer directors may bring in fresh outlooks and different approaches with
benefits to all shareholders.
"No director should be able to feel that his or her directorship is until
retirement.
"If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL FOR
THE FOLLOWING REASONS:
The Board of Directors has carefully reviewed the issue of term limits and
has expressed its position in the Board's Corporate Governance Guidelines. As
explained in Guideline 11, the Board believes that although term limits may
provide some potential benefits, those benefits are outweighed by the
disadvantages of "losing the contribution[s] of Directors who have . . .
developed, over a period of time, increasing insight into the company and its
operations and, therefore, provide an increasing contribution to the board as a
whole." Continuity of service permits directors to acquire a depth of knowledge
concerning the Corporation that enhances their capability. Term limits could
force the untimely exit of good directors and make it more difficult to recruit
effective candidates.
At the same time, the Board believes that a directorship should not be
viewed as a lifetime position. To ensure that fresh ideas and viewpoints are
available to the Board as necessary, the following practices are followed:
* Directors are elected each year to hold office only until the next annual
meeting or until their successors have been elected and qualified. They are not
entitled to automatic renomination for another term. Reviewing candidates for
the Board and the overall composition of the Board is a continuing
responsibility of the Committee on Director Affairs. In recommending the
nominees for election by the stockholders at the annual meeting, the Committee
considers many
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factors including the expertise, experience, reputation and other personal
attributes and qualifications of the incumbents as compared to other potential
candidates, as well as the overall needs of the Corporation.
* Every five years the Committee on Director Affairs conducts a formal
review that specifically concerns each Director's continuation on the Board.
(Guideline 11)
* Directors who change the responsibility they held when elected to the
Board are asked to submit a letter of resignation, to give the Board, via the
Committee on Director Affairs, an opportunity to review the continued
appropriateness of Board service. (Guideline 10)
* The Director Retirement Policy provides that employee directors resign
from the Board when they retire as employees at age 65 or earlier. Any other
director is ineligible for reelection for a term commencing subsequent to his or
her 70th birthday. (Guideline 12)
The Board believes that cumulatively these practices provide a beneficial
means of ensuring both continuity of service and the opportunity for obtaining
fresh viewpoints.
A copy of the Guidelines is available from the Secretary upon request.
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.
ITEM NO. 6
Mr. John J. Gilbert and the estate of Lewis D. Gilbert, 29 East 64th
Street, New York, NY 10021-7043, each the owner of record of 100 shares of
Common Stock and 10 shares of Class H Common Stock, and additional family
ownership of 200 shares of Common Stock; Margaret R. Gilbert and John J.
Gilbert, co-trustees under the will of Samuel Rosenthal, owners of 200 shares of
Common Stock; Mr. John C. Henry, 5 East 93rd Street, New York, NY 10128, who is
the owner of 1,148 shares of Common Stock and 200 shares of Class H Common
Stock, have given notice that they intend to present for action at the annual
meeting the following resolution:
"RESOLVED: That the stockholders of General Motors Corporation, assembled
in annual meeting in person and by proxy, hereby request the Board of
Directors to take the steps necessary to provide for cumulative voting in
the election of directors, which means each stockholder shall be entitled
to as many votes as shall equal the number of shares he or she owns
multiplied by the number of directors to be elected, and he or she may cast
all of such votes for a single candidate, or any two or more of them as he
or she may see fit."
The following statement was submitted in support of such resolution:
"REASONS
"Continued strong support along the lines we suggest were shown at the last
annual meeting, when 21.8%, 72,108 owners of 124,661,412 shares, were cast
in favor of this proposal. The vote against included 53,634 unmarked
proxies.
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"A California law provides that all state pension holdings and state
college funds, invested in shares must be voted in favor of cumulative
voting proposals, showing increasing recognition of the importance of this
democratic means of electing directors.
"The National Bank Act provides for cumulative voting. In many cases
companies get around it by forming holding companies without cumulative
voting. Banking authorities have the right to question the capability of
directors to be on banking boards. In many cases authorities come in after
and say the director or directors were not qualified. We were delighted to
see that the SEC has finally taken action to prevent bad directors from
being on the boards of public companies. The SEC should have hearings to
prevent such persons becoming directors before they harm investors.
"We think cumulative voting is the answer to find new directors for various
committees. Some recommendations have been made to carry out the CERES 10
points. The 11th should be, in our opinion, having cumulative voting and
ending staggered Boards.
"When Alaska became a state it took away cumulative voting over our
objections. The Valdez oil spill might have been prevented if environmental
directors were elected through cumulative voting. The huge derivative
losses might have also been prevented with cumulative voting.
"Many successful corporations have cumulative voting. Example, Pennzoil
defeated Texaco in that famous case. Ingersoll-Rand also having cumulative
voting won two awards. FORTUNE magazine ranked it second in its industry as
'America's Most Admired Corporations' and the WALL STREET TRANSCRIPT noted
'on almost any criteria used to evaluate management, Ingersoll-Rand
excels.' In 1994 and 1995 they raised their dividend.
"Lockheed-Martin, as well as VWR Corporation now have a provision that if
anyone has 40% of the shares cumulative voting applies, it applies at the
latter company.
"In 1995 American Premier adopted cumulative voting. Alleghany Power System
tried to take away cumulative voting, as well as put in a stagger system,
and stockholders defeated it, showing stockholders are interested in their
rights.
"If you agree, please mark your proxy for this resolution; otherwise, it is
automatically cast against it, unless you have marked to abstain."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Board of Directors believes that cumulative voting would threaten to
undermine effective Board functioning in at least two respects. First,
cumulative voting introduces the possibility of partisanship among Board members
that could impair their ability to work together, a requirement essential to the
effective functioning of any board of directors. Second, it is the Board's duty
to represent all of the stockholders. To do so, each Director must feel a
responsibility toward all the stockholders, without any special loyalty to any
one group. From this perspective, cumulative voting is undesirable since
directors so elected might be principally concerned about representing and
acting in the interest of special groups of stockholders rather than in the
interests of all stockholders. At General Motors, all of our stockholders are
minority
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owners, although some stockholders have more extensive holdings than others. The
Board does not believe that some minority of stockholders should be
advantaged--or disadvantaged--compared with all other stockholders.
A similar proposal for cumulative voting was disapproved by General Motors
stockholders at the 1996 meeting and on twelve other occasions. The possibility
of factionalism that cumulative voting presents has lead to a trend against its
adoption. Many companies have eliminated cumulative voting over the years.
Overall, its presence has declined. The State of California, considered among
the most protective of stockholder interests, amended its state laws to permit
the repeal of cumulative voting in 1989. In supporting the change, the Committee
on Corporations of the Business Law Section of the State Bar of California
argued:
"While a healthy diversity of opinion and experience, as
represented by independent directors, is desirable, factionalism
is not appropriate in the board's essential executive function.
The principal objective of a business enterprise should be profit
and gain for its shareholders, not political accommodation of
competing interests . . . Practical experience has shown that
effective management of a corporation requires candor and
consensus in the Boardroom, (not) rancor and contention."
No reason is given, and the Board of Directors knows of none, why the
present method of voting should not continue to work as successfully in the
future as it has in the past. Thirteen of General Motors' 15 Board members are
independent non-employee directors and are all nominated for the Board by
General Motors' Committee on Director Affairs which consists entirely of
independent directors. This guarantees the continued independence of the Board
in representing all of the stockholders.
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.
ITEM NO. 7
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, owner
of more than $1,000 of Class H Common Stock, has given notice that he intends to
present for action at the annual meeting the following resolution:
"RE-START A SEPARATE GM CHIEF EXECUTIVE AND SEPARATE INDEPENDENT BOARD
CHAIRMAN
"PURPOSE: RE-ESTABLISH OBJECTIVE GM MANAGEMENT OVERSIGHT
"RESOLVED:
"General Motors Shareholders recommend the Board take all enabling
action on the day of the 1997 Shareholder meeting:
"TO RE-START A SEPARATE GM CHIEF EXECUTIVE AND SEPARATE INDEPENDENT GM
BOARD CHAIRMAN TO RE-ESTABLISH OBJECTIVE GM MANAGEMENT OVERSIGHT AND
APPOINT A HIGHLY QUALIFIED PERSON TO TAKE THIS RESPONSIBILITY.
"Management should adopt an Independent Lead Director and Vice
Chairman at the January 1997 Board meeting as an initial step."
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The following statement was submitted in support of such resolution:
"REASON:
"In December 1995 General Motors decided that Independent Director
John Smale would no longer be Board Chairman. This reversed General Motors
practice since 1992, of an Independent Board Chairman.
"The GM Chairman's key duty is to oversee management. When the Chief
Executive Officer is also the Chairman, he oversees his own strategic plan
and its implementation--in effect he 'grades his own papers.'
"The 2 top jobs held by one GM person limits the degree of objective
oversight and scrutiny available to General Motors, the largest corporation
in the world.
"PUBLISHED RATIONALE:
"1. When GM sacked its highly successful Independent Board Chairman, who
rescued GM from disaster in 1992. USA Today said:
"GM dismantled its groundbreaking and much-copied decision to give the top
2 jobs--Chairman and CEO--to different people.
"GM CEO John Smith's low profile leads to criticism that GM has no one to
publicly explain GM's vision and direction.
USA Today December 5, 1995
Soon after Jack Smith took the top 2 GM jobs:
"Will Jack Smith punch out early?
Business Week April 8, 1996
"2. GM Management was distracted by the Lopez scandal and needs objective
oversight to prevent potential scandals:
"Former GM Vendor Czar. Jose Lopez, knew all the tricks at GM--how to use
threats, ruthlessness, lying, emotion, flattery, jokes. Despite the
squeals, GM brass was pleased with the results.
Los Angeles Times November 30, 1996
"GM's highly touted Marketing Czar, Ronald L. Zarrella, is fresh from 9
years at Bausch & Lomb where, as President, he was close to B&L's CEO Dan
Gill. Gill created profit-pressures that led to unethical behavior through
the company.
" 'Blind Ambition' cover story, later nominated for a Magazine 'Oscar.'
Business Week October 23, 1995
"3. GM management needs objective oversight in correcting GM's 50-year
problem of slow and costly new model introductions:
"GM's slow-motion minivan start-up takes 20 months, while GM's fleetest
competitors switch models in a month or less. Financially it's a disaster.
Business Week December 16, 1996
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"4. GM management needs objective oversight in managing a productive
workforce and keeping its pledges to employees:
"General Motors finished dead last in 5 of 6 working conditions in a survey
that included physical risk, stress risk and excessive workload.
Automotive News June 10, 1996
"The fear of GM employees losing their jobs is widespread. Ironically, many
of those left with jobs are pushed hard, working tough overtime schedules.
Automotive News March 25, 1996
"Court tells GM to pay retiree benefits to keep its promise to 50,000
retirees.
Automotive News August 26, 1996
"5. GM management needs objective oversight in acquisitions:
"GM-Hughes pays $3 Billion for about 70% of PanAmSat.
Los Angeles Times September 21, 1996
"PanAmSat revenue was about $100 Million in 1995. PanAmSat has $600 Million
debt.
Investors Business Daily September 9, 1996
"For objective GM management oversight:
"VOTE YES TO RE-ESTABLISH AN INDEPENDENT GM DIRECTOR AS BOARD CHAIRMAN AND
TO APPOINT A HIGHLY QUALIFIED PERSON TO TAKE THIS RESPONSIBILITY."
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
independent leadership at the board level. The Board fully recognizes that
independence from Management is a prerequisite to fulfilling its duty, set forth
in its Corporate Governance Guidelines Mission Statement, which states "to
regularly monitor the effectiveness of Management policies and decisions
including the execution of its strategies." The Board's Corporate Governance
Guidelines outline a number of practices that ensure independent board
leadership whether or not the Chairman and CEO roles are separated.
The Board of Directors believes that the appropriate balancing of
independent board structure with flexibility in determining board leadership is
expressed in its current Guidelines. Guideline 4, addressing the "Selection (and
Separation) of Chairman and CEO," ensures flexibility by providing that: "the
Board should be free to make this choice any way that seems best for the Company
at a given point in time." Guideline 5, addressing "the Lead Director Concept,"
ensures appropriate board independence from management by providing that: "the
Board . . . have a Director selected by the outside Directors who will assume
the responsibility of chairing the regularly scheduled meetings of outside
Directors or other responsibilities which the outside Directors as a whole might
designate from time to time." This Guideline further provides that this role be
filled either by the non-executive Chairman or, should the Chairman be a Company
employee, by another Director. Presently, the Chairman of the Executive
Committee, Mr. John G. Smale, serves in this capacity. This active oversight is
not dependent on mandating that the Chairman be an outside Director.
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In light of these and other mechanisms in the Guidelines that ensure the
Board's independence from Management and accountability to stockholders (for
example, the committees charged with the executive compensation, board
nomination, audit and other key functions are wholly independent), the Board
believes that no purpose is served by imposing an absolute rule against a member
of Management serving as Board Chairman. Indeed, that is why the Board provided
itself the flexibility to select either an employee or non-employee as Chairman.
Therefore, the Board opposes the resolution because it would reduce the Board's
flexibility to select a style of leadership depending on the unique
circumstances at any given time.
A copy of the Guidelines is available from the Secretary upon request.
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
Mr. Nick Rossi, P.O. Box 249, Boonville CA 95415, owner of 600 shares of GM
Common Stock, has given notice that he intends to present for action at the
annual meeting the following resolution:
"INDEPENDENT DIRECTORS
"Resolved:
"General Motors Shareholders direct the Board to immediately take all
enabling action to require 90% of GM Directors be independent."
The following statement was submitted in support of such resolution:
"Reason:
"Independent Directors will give the Board effective oversight to direct
and challenge management to greater accomplishments in profitability and
growth. Independent Directors are particularly important for GM to respond
to the new era of global automotive competition. Also for GM preparation
for inevitable industry downturns.
"Independent Directors are important to good corporate performance,
according to many corporate governance experts.
"Additionally, GM Management needs oversight because of Management
diversions. GM Management was diverted by the complex 3 year lawsuit
against for GM vendor-czar, Jose Lopez. Lopez defected to Volkswagen after
his reported border line business practices at General Motors.
"Based on criteria from CalPERS and the Florida Retirement System Trust
Fund (Two major public pension funds that seek to maximize stock values),
independent directors are.
* Not employed by GM or an affiliate, as an executive within the last 5
years.
* Are not and were not employed by GM as paid suppliers. For instance, as
lawyers, accountants or vendors, like auto parts makers.
* Are not employed by GM customers.
* Have no personal services contracts with GM.
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* Are not employed by a foundation or university that receives grants or
endowments from GM.
* Are not a relative of GM management.
* Are not an Officer or Director of another company, where the General
Motors Chairman or CEO is also a Director.
"It is additionally important for GM to have independent Directors because
none of the outside GM Directors have automotive experience.
"The lack of automobile experience for outside GM Directors is verified by
biographies in the 1996 GM Proxy. Automotive expertise is increasingly
important as GM concentrates more on automobiles after the GM Hughes
Electronics sale.
"Without automotive experience, GM Directors are less capable to question
and challenge management. Without automotive experience, GM Directors are
more inclined to approve management without question. Or they must do extra
work to be proficient on automobile issues.
"Yet it is difficult to demonstrate that some GM Directors have time for
the extra work required.
"For instance, according to the 1996 GM Proxy, these Directors have
full-time jobs and serve on 8 or 9 outside positions as Directors or
Trustees:
GM Director Full-time Job Number of Additional Outside Positions
John Bryan CEO Sara Lee 8
J. M. Marriott CEO Marriott 9
"Mark your proxy 'Yes' for independent Directors to ensure effective
oversight for long-term profitability and growth."
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. The Board, as nominated, will be comprised of 15 directors,
13 of whom are independent under Section 2.12 of the General Motors By-laws.
That Section of the By-laws provides that a majority of the Board's nominees for
director for each year must be "independent." The definition of "independent" is
substantially the same as the definition 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)."
Since the adoption of this By-law in 1991, no more than two directors at
any time have qualified as non-independent. The percentage of independent
directors has consistently exceeded eighty percent, and is currently 87%. In the
experience
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of the Board of Directors, a majority of independent directors is sufficient to
ensure that independent judgment is exercised by the Board.
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
The Teamsters Affiliates Pension Plan, 25 Louisiana Avenue, N.W.,
Washington D.C. 20001, owners of more than $1,000 of GM Common Stock have given
notice that they intend to present for action at the annual meeting the
following resolution:
"RESOLVED: That directors of the Company will receive, at each annual
meeting, an option grant valued at approximately $40,000 (the amount of the
current retainer), with the option exercise price being equal to 110% of
the underlying common shares on the date of grant."
The following statement was submitted in support of such resolution:
"SUPPORTING STATEMENT
"The purpose of this resolution is to align director interests with
shareholder interests by causing directors to be compensated only when they
oversee an appreciation in General Motors share value.
"We believe that to maximize board accountability, GM should pay directors'
retainers entirely in stock. Eight companies have already adopted this
practice, among them Chrysler, ITT, and Sears Roebuck.
"GM directors currently receive only $14,000 of their annual retainer in
stock, and $26,000 in cash. Meanwhile, the Company's own Corporate
Governance Guidelines emphasize the importance of keeping director
compensation in line with company performance: "As part of a Director's
total compensation and to create a direct linkage with corporate
performance, the Board believes that a meaningful portion of director's
compensation should be provided in common stock units."
"Several governance experts prefer stock compensation. Charles Elson,
Professor of Law at Stetson University, argues that all forms of director
compensation that are not equity-based should be discontinued. And Business
Week's report card ("The Best & Worst Boards, November, 1996) notes:
'several studies have shown that companies in which directors own
significant amounts of stock outperform those that don't.' Finally, Joe
Grundfest, professor of law at Stanford University and a former SEC
commissioner writes:
"The days of a board that serves for a fixed fee, a set of meeting fees,
and a pension are coming quickly to an end. Boards will have to become
exposed to the risks and rewards of economic performance -- just like the
corporation's shareholders, employees, suppliers, and customers.
"By paying GM directors their entire retainer in options that vest only
upon increased shareholder returns, GM would further align director
compensation with company performance.
"Between 1991 and 1995 GM Common Stock returns did not keep pace with
competitors Ford and Chrysler. In such a climate, a board with long-term
interest is critical. For example, Wall Street rewards downsizing in the
short run, but not the long. GM's massive layoffs, to the tune of 99,400 or
29% of the workforce may be a shortsighted strategy.
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Note the results of a report by the U.S. Department of Labor, "Guide to
Responsible Downsizing," on the relationship between financial performance
and downsizing.
"The report notes, '[F]or each $1.00 invested in a portfolio of downsizing
companies at the beginning of the year of downsizing, the value of the
portfolio would have grown to $1.047 three years later. The same amount
invested in a portfolio of companies in the same industry would have grown,
on average, to $1.343 by Year +3.' GM needs a board whose compensation is
most closely tied to performance, one with long-term interest.
"We believe many of the Company's board directors may be
overcommitted--five directors serve on greater than three boards other than
GM, and one serves on 10 other boards. Aligning director compensation with
director performance will help ensure the directors' attention and
diligence to GM now and into the future."
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
forms of director compensation that directly link director interests with
corporate performance and stockholder interests. As set forth in the Corporate
Governance Guidelines, "the Board believes that a meaningful portion of a
Director's compensation should be provided in common stock units. (Guideline 13)
Currently, outside directors are required to defer $14,000 of their $40,000
annual Board retainer into restricted stock units of GM common stocks. The
balance of the retainer together with other Board and Committee fees may also be
deferred into common stock units. For 1997, GM's outside Directors have elected
to defer more than 55% of their compensation into stock units.
The Board continues to seek methods to link director compensation to GM's
performance and stockholder interests. In January 1996, the GM Board adopted the
Non-Employee Director Long-Term Stock Incentive Plan (Director Stock Plan),
which is described starting on page 24. The Plan provides for a $10,000 annual
stock grant and, if approved by stockholders, the election to receive a 1,000
share stock option in lieu of the stock grant. To further link director
compensation to GM's performance, stock grants and deferred compensation in the
form of restricted stock units will not be payable until a director's retirement
from the GM Board. This long-term deferral creates a much more direct link
between compensation and performance.
As detailed on pages 7 and 8 of this proxy statement, the GM non-employee
director's average holdings of GM common stocks amounted to over $689,000, a
substantial equity ownership. The 100% use of stock options or stock units under
the Director Stock Plan will further increase ownership and enhance the
alignment of interests of the GM Board with that of the GM stockholder.
In 1997 the Board took a number of steps to strengthen stockholder value.
The quarterly dividend on GM $1-2/3 common stock is being increased by $0.10,
to $0.50 per share. The dividend has been increased three times, for a total of
$0.30 per share, since May 1995. The GM Board also approved a $2.5 billion
repurchase program for GM $1-2/3 common stock, which the Corporation plans to
execute through open-market purchases during 1997. This would represent a
repurchase of slightly more than five percent of the outstanding shares of GM
$1-2/3 common stock. In addition, GM has undertaken a number of initiatives
designed to enhance stockholder value, including a proposal to: distribute to
stockholders a valuable equity interest in the defense business of Hughes
Electronics Corporation; provide a more
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focused, appropriately capitalized investment in Hughes Electronics'
telecommunications and space business; and transfer Delco Electronics from
Hughes Electronics to GM's Delphi Automotive Systems. GM is also considering
some form of future partial public ownership of certain parts of the resulting
Delco/Delphi entity. Finally, GM has made significant progress in rebuilding the
Corporation's balance sheet. GM's cash balance at year-end 1996 was $17 billion,
compared with $10.2 billion at the end of 1995.
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.
EXPENSES OF SOLICITATION
The cost of this solicitation of proxies will be borne by the Corporation.
General Motors will solicit proxies by mail and the directors, officers, and
employees of GM may also solicit proxies by telephone, telegram or personal
contact. These persons will receive no additional compensation for such
services. In addition, General Motors 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 confers upon the person or persons entitled to vote the
shares represented thereby discretionary authority to vote such shares in
accordance with their best judgment with respect to all matters which may come
before the meeting in addition to the scheduled items of business, including any
stockholder proposal 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 did not know of any other matter which may properly be
presented for action at the meeting, but the enclosed proxy confers the same
discretionary authority with respect to any such other matter.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
ON THE ENCLOSED PROXY. HOWEVER, IT IS NOT NECESSARY TO MARK ANY BOXES IF YOU
WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS; MERELY
SIGN, DATE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE. YOUR PROMPT RESPONSE
IS HELPFUL, AND YOUR COOPERATION IS APPRECIATED.
By order of the Board of Directors,
NANCY E. POLIS, Secretary
April 16, 1997
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EXHIBIT A
GENERAL MOTORS CORPORATION
NON-EMPLOYEE DIRECTOR LONG-TERM STOCK INCENTIVE PLAN
1. NAME AND PURPOSE
The name of this plan is the General Motors Corporation Non-Employee
Director Long-Term Stock Incentive Plan (the "Plan"). Its purpose is to provide
non-employee Directors of General Motors Corporation (the "Corporation") with a
plan of stock ownership that will further ensure that the compensation of its
Directors is closely aligned with stockholder interests and the performance of
the Corporation.
2. ADMINISTRATION
The Plan shall be administered by the General Motors Board of Directors (the
"Board"). The decisions of the Board with respect to any questions arising as to
the interpretation of the Plan, including the severability of any and all of the
provisions thereof, shall be final, conclusive and binding on all parties.
The Board is authorized, subject to the provisions of the Plan, from time to
time to establish such rules and regulations as it deems appropriate for the
proper administration of the Plan.
3. PARTICIPANTS
Participation in the Plan shall be limited to non-employee Directors of the
Corporation who are not former employees of the Corporation or any subsidiary.
Eligibility shall be limited in each year to each such non-employee Director (a
"Participant") who has attained age 56 as of the date of the Annual Meeting in
such year. The age eligibility requirement may be changed by the Board at any
time provided such change does not affect any right of any Participant with
respect to awards made pursuant to the Plan prior to such change.
4. AWARDS -- ELECTION OF STOCK OPTION OR RESTRICTED STOCK UNIT GRANT AND
DEFERRED DISTRIBUTION SCHEDULE
(a) On January 2, 1996, each non-employee Director who shall be required
pursuant to the Director Retirement Policy to retire prior to June 1, 2010,
shall be credited with an initial grant of restricted stock units of General
Motors Common Stock, $1-2/3 par value ("RSUs"). The dollar value of each
Participant's initial grant of RSUs shall be determined based on the Director's
estimated life expectancy. The dollar value of each initial grant of RSUs shall
be established in such a way that the projected value of the initial grant of
RSUs to each Director together with the projected value of all of the subsequent
annual grants of RSUs (including dividend equivalents thereon) shall be
equivalent in value to the present value, measured as of January 2, 1996, of the
retirement benefit such Director would have received under the now terminated
General Motors Director Retirement Plan.
(b) On or before December 31 preceding each Plan year, each Participant
shall have the opportunity to make an irrevocable election to receive his or her
annual Plan award to be granted in the subsequent year, either:
(1) in the form of a grant of RSUs with a market value of $10,000 on the
first business day of June, or
(2) in the form of a non-qualified stock option to purchase 1,000 shares of
General Motors Common Stock, $1-2/3 par value ("GM Common Stock") upon
the terms provided in Section 11 of the Plan.
If a Participant shall elect to receive his or her award under the Plan in
the form of a $10,000 grant of RSUs, the Participant's Plan account will be
credited with such RSUs as of the first business day in June. The cash value
equivalent of each such grant of RSUs, as well as all other RSUs credited to
such Participant's Plan account in the form of dividend equivalents, shall be
distributed in accordance with Section 8 hereof to the Participant following his
or her retirement from the Board.
(c) No awards of stock options or grants of RSUs shall be made to a
Participant's account under the terms of the Plan after the date of a
Participant's death.
(d) Subject to the provisions of Section 12(b) on the maximum number of
stock options which may be granted under the Plan, the Board may adjust the
maximum amount of the awards provided by Section 4(b).
5. VESTING AND NON-ASSIGNABILITY OF GM $1-2/3 RESTRICTED STOCK UNITS
After a Director has served on the Board for six years, all grants of RSUs
and dividend equivalents thereon shall vest. All subsequent annual $10,000
grants of RSUs as the Participant shall elect to receive shall vest immediately
on the date of grant. Except as provided in Section 9, awards under the Plan
shall not be assigned, transferred, pledged, encumbered or be subject in any
manner to alienation or anticipation.
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6. RSUS: DIVIDEND EQUIVALENTS AND THEIR CASH EQUIVALENT
On each dividend payment date for GM Common Stock, dividend equivalents in
the form of additional RSUs representing such Common Stock will be credited to
the Participant's Plan account in an amount equal to the sum of the per share
cash dividend multiplied by the number of RSUs in the Participant's Plan account
divided by the average market price of such stock on such dividend payment date.
Amounts credited to the Participant's Plan account will continue to accrue
dividend equivalents until such amounts are distributed in accordance with the
Plan. RSUs will be calculated to the nearest thousandth.
7. RETIREMENT PRIOR TO AGE 70
A Participant who serves on the Board until normal retirement, which occurs
after the Annual Meeting at which such Participant will serve as a 70 year old
member, in accordance with the Corporation's Director Retirement Policy (such
Participant's "normal Retirement Date"), will receive such Participant's last
annual $10,000 grant of RSUs on the first business day of June (a "Determination
Date") following such normal Retirement Date. A Participant who leaves the Board
before such Participant's normal Retirement Date shall not be entitled to
receive any additional awards under the Plan after leaving the Board, except
that a Participant (i) who commenced service on the Board prior to having
attained age 56 and (ii) who leaves the Board prior to such Participant's normal
Retirement Date and after having rendered at least six years of Board service
and (iii) who has at least one full year of service on the Board prior to the
Annual Meeting at which such Participant shall serve as a 56 year old member
("Years of Prior Service") shall be entitled to receive an additional grant of
RSUs with a market value of $10,000 on each Determination Date which is (x)
after the Annual Meeting at which such Participant shall serve as a 56 year old
member and (y) prior to the Determination Date following such Participant's
normal Retirement Date; provided that the number of such additional grants shall
not exceed the number of Years of Prior Service and, with respect to each
additional grant, that the Participant is alive on the date thereof.
8. METHOD OF DISTRIBUTION AND VALUATION
No distributions shall be permitted from a Participant's RSU Plan account
except as provided in this Section 8 and Section 9.
The value of the Participant's RSU Plan account shall be payable in cash, in
either a lump sum or in up to ten annual installments, as elected by the
Participant. If annual installments are elected, the amount of the first payment
shall be a fraction of the value of the Participant's Plan account as of
December 31st of the year preceding payment, the numerator of which is one and
the denominator of which is the total number of installments elected. The amount
of each subsequent payment shall be a fraction of the value as of December 31st
of the year preceding each subsequent payment, the numerator of which is one and
the denominator of which is the total number of installments elected minus the
number of installments previously paid.
Amounts deferred under this Plan, including dividend equivalents, shall be
distributed as previously elected by the Participant either in a lump sum or
annual installments as soon as possible, but no earlier than the January of the
year following termination from the Board and after attainment of age 70.
The value of a Plan account for purposes of distribution to the Participant
and for determining the $10,000 market value of a grant pursuant to Section 4(b)
shall be determined by multiplying or dividing, whichever is applicable, the
number of RSUs by the average daily closing market price of GM Common Stock as
reported in The Wall Street Journal for the three months immediately preceding
the date of delivery or grant, whichever is applicable.
9. DISTRIBUTION UPON DEATH
A Participant shall designate a beneficiary or beneficiaries to receive
amounts credited under the Plan in the event of the Participant's death. A
designation of beneficiary or beneficiaries shall be on a form prescribed by and
filed with the secretary of the Committee on Director Affairs of the Board. If
any Participant dies while an eligible Director, or thereafter, before receiving
all scheduled installments for his or her Plan account, the unpaid amount in
such Participant's Plan account shall be paid to his or her beneficiary; but if
none has been designated, to his or her estate. Such payment shall be made in
one lump sum. The value of the Plan account on the date of payment shall be
determined in accordance with the provisions of Section 8 hereof.
10. PARTICIPANT'S RIGHTS UNSECURED
The right of any Participant to receive future installments under the
provisions of the Plan shall be an unsecured claim against the general assets of
the Corporation.
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11. STOCK OPTIONS
Each Participant who elects pursuant to Section 4 hereof to receive a stock
option shall be granted a non-qualified stock option to purchase 1,000 shares of
GM Common Stock. Such stock option shall be granted on the same date and the
same exercise price as stock options are awarded under the General Motors 1997
Stock Incentive Plan or its successor.
The stock options shall have a term of up to 10 years and 2 days from the
date of grant, subject to earlier termination as provided herein. A stock option
shall not become exercisable until one year from the date of grant. If a
Participant leaves the Board before the stock option becomes exercisable, the
stock option will terminate on the date that such Participant is no longer a
Director.
Stock options available under the Plan are not transferable other than by
will or by the laws of descent and distribution. A Participant's beneficiary, or
if no such designation has been made, the Participant's legal representative or
such other person entitled thereto by a court of competent jurisdiction, may
exercise, in accordance with the Plan's provisions, all unexercised options for
a period of three years from the date of the Participant's death, subject to
earlier expiration by the terms of the original grant.
Payment in full of the stock option exercise price shall be made by the
Participant at the time of exercise. The stock option exercise price may be paid
by the Participant either in cash or shares of GM Common Stock, to be valued at
their fair market value on the date of exercise, or a combination thereof. A
cashless exercise of such stock option shall be permitted in accordance with the
administrative procedures for exercising stock options established pursuant to
the General Motors 1997 Stock Incentive Plan or its successor.
12. LIMITATION ON AGGREGATE SHARES; ADJUSTMENTS TO STOCK OPTIONS AND/OR RSUS;
SOURCE OF PLAN SHARES
(a) The aggregate maximum number of shares issued upon exercise of stock
options granted pursuant to the Plan shall be 250,000 shares, subject to
adjustment pursuant to Section 12(b) below.
(b) Stock options as well as any RSUs contained in a Participant's Plan
account shall be subject to appropriate adjustment in the event of future stock
splits, stock dividends, or other changes in capitalization of the Corporation
to prevent the dilution or enlargement of Participant's rights under the Plan.
Such adjustments to stock options shall be made in the same manner as
adjustments to stock options issued pursuant to the General Motors 1997 Stock
Incentive Plan or its successor. Such adjustments to RSUs shall be made in the
same manner as adjustments to shares of GM Common Stock contained in the
Corporation's Dividend Reinvestment Plan or its successor.
(c) The shares for use under this Plan will be made available from
reacquired shares or from newly-issued stock or a combination of the two as
determined by the Board or a committee appointed by the Board.
13. PARTICIPANTS CEASING TO BE DIRECTORS
If a Participant leaves the Board (a) while holding unexercised stock
options previously granted to him or her under the Plan or (b) while having
unvested RSUs in his or her Plan account, such stock options or RSUs shall
immediately be forfeited, except in the case of the Participant's (i) death,
(ii) disability, (iii) retirement after attaining the age of 70, or (iv) such
other conditions as may be approved by the Board. Stock options granted to a
Participant who ceases to be a Director under the circumstances set forth in
clauses (ii), (iii) or (iv) of the preceding sentence shall remain exercisable
for a period of the lesser of the term of the grant or five years from the date
the Participant leaves the Board.
14. AMENDMENT AND TERMINATION
It is the Corporation's intent that the Plan comply in all respects with
Rule 16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act"), or its
successor, and any regulations promulgated thereunder. If any provision of the
Plan is found not to be in compliance with such Rule and such regulations, the
provision shall be deemed null and void, and the remaining provisions of the
Plan shall continue in full force and effect. All transactions under this Plan
shall be executed in accordance with the requirements of Section 16 of the
Exchange Act and regulations promulgated thereunder.
This Plan may at any time be amended, modified or terminated by the Board,
to comport with changes in the Internal Revenue Code of 1986, as amended, and
the Employee Retirement Income Security Act of 1974, as amended, or the rules or
regulations promulgated thereunder. In addition, the Board may, in its sole
discretion, modify the terms and conditions of the Plan in response to and
consistent with any changes in other applicable law, rule or regulation. The
Board also reserves the right to modify the Plan from time to time, or to
suspend or terminate the Plan entirely, provided, however, that no modification
of the Plan, except for such modifications as may be required by law, rule or
regulation, shall operate to annul an election already in effect for the current
calendar year or any preceding calendar year.
15. EFFECTIVE DATE AND EXPIRATION
This Plan shall be effective as of January 1, 1996. The Plan shall expire
when no shares of stock are available for issuance.
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EXHIBIT B
GENERAL MOTORS CORPORATION
GENERAL MOTORS 1997 ANNUAL INCENTIVE PLAN
1. The purposes of the General Motors 1997 Annual Incentive Plan (this
"Plan") are to reward performance and provide incentive for future endeavor to
employees who contribute to the success of the business by making them
participants in that success.
2(a). The Executive Compensation Committee of the General Motors Board of
Directors (the "Committee"), as from time to time constituted pursuant to the
By-Laws of General Motors Corporation (the "Corporation"), may, prior to June 1,
2002, authorize the granting to employees of the Corporation of annual target
awards. The Committee, in its sole discretion, shall determine the performance
levels at which different percentages of such awards shall be earned, the
collective amount for all awards to be granted at any one time, and the
individual annual grants with respect to employees who are officers of the
Corporation. The Committee may delegate to the President's Council
responsibility for determining, within the limits established by the Committee,
individual award grants for employees who are not officers of the Corporation.
All such awards shall be denominated and paid in cash (U.S. dollars or local
currency equivalent).
2(b). Prior to the grant of any target award, the Committee shall establish
for each such award performance levels related to the enterprise (as defined
below) at which 100% of the award shall be earned and a range (which need not be
the same for all awards) within which greater and lesser percentages shall be
earned. The term "enterprise" shall mean the Corporation and/or any unit or
portion thereof, and any entities in which the Corporation has, directly or
indirectly, a substantial ownership interest.
2(c). With respect to the performance levels to be established pursuant to
paragraph 2(b), the specific measures for each grant shall be established by the
Committee at the time of such grant. In creating these measures, the Committee
may establish the specific goals based upon or relating to one or more of the
following business criteria: return on assets, return on net assets, asset
turnover, return on equity, return on capital, market price appreciation of one
or more of the Corporation's common stocks, economic value added, total
stockholder return, net income, pre-tax income, earnings per share, operating
profit margin, net income margin, sales margin, cash flow, market share,
inventory turnover, hours per vehicle, vehicles per employee, net income per
vehicle, capacity utilization, increase in customer base, environmental health
and safety, diversity, and/or quality. The business criteria may be expressed in
absolute terms or relative to the performance of other companies or to an index.
2(d). If any event occurs during a performance period which requires changes
to preserve the incentive features of this Plan, the Committee may make
appropriate adjustments (either upward or downward), in the specified
performance levels.
2(e). Except as otherwise provided in paragraph 6, the percentage of each
target award to be distributed to an employee shall be determined by the
Committee on the basis of the performance levels established for such award and
the performance of the applicable enterprise or specified portion thereof, as
the case may be, during the performance period. Following determination of the
final payout percentage, the Committee may, upon the recommendation of the Chief
Executive Officer, make adjustments to awards for officers of the Corporation to
reflect individual performance during such period. Adjustments to awards to
reflect individual performance for employees who are not officers of the
Corporation may be made by the President's Council. Any target award, as
determined and adjusted pursuant to this paragraph 2(e) and paragraph 6, is
herein referred to as a "final award." The total aggregate final award paid to
any employee for any one year shall not exceed $7.5 million.
3. Subject to such additional limitations or restrictions as the Committee
may impose, the term "employees" shall mean persons (a) who are employed by the
Corporation, or any subsidiary (as such term is defined below), including
employees who are also directors of the Corporation or any such subsidiary, or
(b) who accept (or previously have accepted) employment, at the request of the
Corporation, with any entity not described in 3(a) above but in which the
Corporation has, directly or indirectly, a substantial ownership interest. For
purposes of this Plan, the term "subsidiary" shall mean (i) a corporation of
which capital stock having ordinary voting power to elect a majority of the
board of directors of such corporation is owned, directly or indirectly, by the
Corporation, or (ii) any unincorporated entity in respect of which the
Corporation can exercise, directly or indirectly, comparable control. The
Committee shall, among other things, determine when and to what extent
individuals otherwise eligible for consideration shall become or cease to be, as
the case may be, employees for purposes of this Plan and shall determine when,
and under what circumstances, any individual shall be considered to have
terminated employment for purposes of this Plan. To the extent determined by the
Committee, the term employees shall be deemed to include former employees and
any beneficiaries thereof.
4(a). Target awards which have become final awards shall be subject to a
vesting schedule established by the Committee. Except as otherwise provided in
this Plan, no final award (or portion thereof) subject to a vesting schedule
shall be paid prior to vesting, and the unpaid portion of any final award shall
be subject to the provisions of paragraph 6. The Committee shall have the
authority to modify a vesting schedule as may be
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necessary or appropriate in order to implement the purposes of this Plan. As a
condition to the vesting of all or any portion of a final award, the Committee
may, among other things, require an employee to enter into such agreements as
the Committee considers appropriate and in the best interests of the
Corporation.
4(b). If employment of an employee is terminated by death, all final awards
not currently vested shall immediately vest. In all other cases, if employment
of an employee is terminated for any reason prior to the vesting of any final
award, the Committee may, but in any case shall not be required to, change the
vesting period with respect to such final awards to accelerate the vesting
period related to all or any portion of such final award.
4(c). With respect to target awards which have become final awards as
provided in paragraph 2(e), the Committee may, in its discretion, pay to the
participant interest on all portions thereof which are unvested. No holder of a
target award shall have any rights to interest prior to such target award
becoming a final award. Any interest payable with respect to such unvested final
awards shall be paid at such times, in such amounts, and in accordance with such
procedures as the Committee shall determine.
5(a). An employee shall be eligible for consideration for a target award
based on such criteria as the Committee shall from time to time determine.
5(b). No target award shall be granted to any director of the Corporation
who is not an employee at the date of grant.
6(a). Payment of any final award (or portion thereof) to an individual
employee shall be subject to the satisfaction of the conditions precedent that
such employee: (i) continue to render services as an employee (unless this
condition is waived by the Committee), (ii) refrain from engaging in any
activity which, in the opinion of the Committee, is competitive with any
activity of the Corporation or any subsidiary (except that employment at the
request of the Corporation with an entity in which the Corporation has, directly
or indirectly, a substantial ownership interest, or other employment
specifically approved by the Committee, shall not be considered to be an
activity which is competitive with any activity of the Corporation or any
subsidiary) and from otherwise acting, either prior to or after termination of
employment, in any manner inimical or in any way contrary to the best interests
of the Corporation, and (iii) furnish to the Corporation such information with
respect to the satisfaction of the foregoing conditions precedent as the
Committee shall reasonably request. Except as otherwise provided under paragraph
6(c) below, the failure by any employee to satisfy such conditions precedent
shall result in the immediate cancellation of the unvested portion of any final
award previously made to such employee and such employee shall not be entitled
to receive any consideration in respect of such cancellation.
6(b). If any employee is dismissed for cause or quits employment without the
prior consent of the Corporation, the unvested portion of any final award
previously made to such employee shall be canceled as of the date of such
termination of employment, and such employee shall not be entitled to receive
any consideration in respect of such cancellation.
6(c). Upon termination of an employee's employment for any reason other than
as described in (b) above, the Committee may, but shall not in any case be
required to, waive the condition precedent relating to the continued rendering
of services in respect of all or any specified percentage of the unvested
portion of any final award, as the Committee shall determine. To the extent such
condition precedent is waived, the Committee may accelerate the vesting of all
or any specified percentage of the unvested portion of any final award.
6(d). For purposes of this Plan, a qualifying leave of absence, determined
in accordance with procedures established by the Committee, shall not constitute
a termination of employment, except that a final award shall not vest during a
leave of absence granted an employee for government service.
7. Subject to paragraph 6, all final awards which have vested in accordance
with the provisions of this Plan shall be paid as soon as practicable following
the end of the related vesting period. If the Corporation shall have any unpaid
claim against an employee arising out of or in connection with the employee's
employment with the Corporation, such claim may be offset against awards under
this Plan. Such claim may include, but is not limited to, unpaid taxes, the
obligation to repay gains pursuant to paragraph 5(d) of the General Motors 1997
Stock Incentive Plan, or Corporate business credit card charges.
8. To the extent that any employee, former employee, or any other person
acquires a right to receive payments or distributions under this Plan, such
right shall be no greater than the right of a general unsecured creditor of the
Corporation. All payments and distributions to be made hereunder shall be paid
from the general assets of the Corporation. Nothing contained in this Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind or a fiduciary relationship between the Corporation
and any employee, former employee, or any other person.
9. The expenses of administering this Plan shall be borne by the
Corporation.
10. Except as otherwise determined by the Committee, with the exception of
transfer by will or the laws of descent and distribution, no target or final
award shall be assignable or transferable and, during the lifetime of the
employee, any payment in respect of any final award shall be made only to the
employee. An employee shall designate a beneficiary or beneficiaries to receive
all or part of the amounts to be distributed to the employee
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under this Plan in case of death. A designation of beneficiary may be replaced
by a new designation or may be revoked by the employee at any time. A
designation or revocation shall be on forms prescribed by and filed with the
Secretary of the Committee. In case of the employee's death, the amounts
distributable to the employee under this Plan with respect to which a
designation of beneficiary has been made (to the extent it is valid and
enforceable under applicable law) shall be distributed in accordance with this
Plan to the designated beneficiary or beneficiaries. The amount distributable to
an employee upon death and not subject to such a designation shall be
distributed to the employee's estate or legal representative. If there shall be
any question as to the legal right of any beneficiary to receive a distribution
under this Plan, the amount in question may be paid to the estate of the
employee, in which event the Corporation shall have no further liability to any
party with respect to such amount.
11. Full power and authority to construe and interpret this Plan shall be
vested in the Committee. To the extent determined by the Committee,
administration of this Plan, including, but not limited to (a) the selection of
employees for participation in this Plan, (b) the determination of the number of
installments, and (c) the determination of the vesting schedule for final
awards, may be delegated to the President's Council; provided, however, the
Committee shall not delegate to the President's Council any powers,
determinations, or responsibilities with respect to officers of the Corporation.
Any person who accepts any award hereunder agrees to accept as final,
conclusive, and binding all determinations of the Committee and the President's
Council. The Committee shall have the right, in the case of participants not
employed in the United States, to vary from the provisions of this Plan in order
to preserve the incentive features of this Plan.
12. The Committee, in its sole discretion, may, at any time, amend, modify,
suspend, or terminate this Plan provided that no such action shall (a) adversely
affect the rights of an employee with respect to previous target awards or final
awards under this Plan (except as otherwise permitted under paragraphs 2(d), 4,
or 6), and this Plan, as constituted prior to such action, shall continue to
apply with respect to target awards previously granted and final awards which
have not been paid, or (b) without the approval of the stockholders, (i)
increase the limit on the maximum amount of final awards provided in paragraph
2(e), or (ii) render any director of the Corporation who is not an employee at
the date of grant or any member of the Executive Compensation Committee or the
Audit Committee, eligible to be granted a target award, or (iii) permit any
target award to be granted under this Plan after May 31, 2002.
13. Every right of action by, or on behalf of, the Corporation or by any
stockholder against any past, present, or future member of the Board of
Directors, officer, or employee of the Corporation or its subsidiaries arising
out of or in connection with this Plan shall, irrespective of the place where
action may be brought and irrespective of the place of residence of any such
director, officer, or employee, cease and be barred by the expiration of three
years from the date of the act or omission in respect of which such right of
action arises. Any and all right of action by any employee (past, present, or
future) against the Corporation arising out of or in connection with this Plan
shall, irrespective of the place where an action may be brought, cease and be
barred by the expiration of three years from the date of the act or omission in
respect of which such right of action arises. This Plan and all determinations
made and actions taken pursuant hereto shall be governed by the laws of the
State of Delaware and construed accordingly.
14. This Plan shall be effective on June 1, 1997 if approved by the
stockholders of the Corporation at the 1997 Annual Meeting.
GENERAL MOTORS 1997 STOCK INCENTIVE PLAN
1. The purposes of the General Motors 1997 Stock Incentive Plan (this
"Plan") are to provide incentive for the creation of stockholder value and
provide employees with the opportunity for long-term capital accumulation
through the grant of options and restricted stock units to acquire shares of
$1-2/3 par value common stock ("Common Stock") or Class H Common Stock of
General Motors Corporation (the "Corporation"). Subject to such additional
limitations or restrictions as may be imposed as provided below, the term
"employees" shall mean persons (a) who are employed by the Corporation or any
"subsidiary" (as such term is defined below), including employees who are also
directors of the Corporation or any such subsidiary, or (b) who accept (or
previously have accepted) employment, at the request of the Corporation, with
any entity not described in (a) above but in which the Corporation has, directly
or indirectly, a substantial ownership interest. For purposes of this Plan, the
term "subsidiary" means (i) a corporation of which capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
is owned, directly or indirectly, by the Corporation or (ii) any unincorporated
entity in respect of which the Corporation can exercise, directly or indirectly,
comparable control. The rights reserved herein shall, among other things, permit
the Executive Compensation Committee of the General Motors Board of Directors
(the "Committee"), as from time to time constituted pursuant to the By-Laws of
the Corporation, to determine when, and to what extent, individuals otherwise
eligible for consideration shall become or cease to be, as the case may be,
employees for purposes of this Plan and to determine when, and under what
circumstances, any individual shall be considered to have terminated employment
for purposes of this Plan. To the extent determined by the Committee, the term
employees shall be deemed to include former employees and any beneficiaries
thereof.
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2. Subject to the provisions of paragraph 10, the aggregate number of shares
of stock with respect to which options and restricted stock units may be granted
under this Plan shall not exceed 60,000,000 shares of Common Stock and 2,500,000
shares of Class H Common Stock; provided, however, subject to the provisions of
paragraph 10, the maximum number of shares of stock which may be granted in the
form of restricted stock units under this Plan shall not exceed 7,500,000 shares
of Common Stock and 1,000,000 shares of Class H Common Stock. Subject to the
provisions of paragraph 10, no individual may be granted options in any calendar
year covering more than 1,000,000 shares of Common Stock, Class H Common Stock,
or any combination thereof and no individual may be granted restricted stock
units in any calendar year covering more than 250,000 shares of Common Stock,
Class H Common Stock, or any combination thereof. If, prior to June 1, 2002, all
or any portion of an option granted under this Plan shall have expired or
terminated for any reason without having been exercised in full or all or any
portion of a restricted stock unit shall have failed to vest, the corresponding
unpurchased or undelivered shares shall (unless this Plan shall have been
terminated) again become available for grant under the terms of this Plan.
3. The Committee may, at such time or times as it may determine prior to
June 1, 2002, establish for any calendar year a maximum number of shares,
consistent with the provisions of paragraph 2, to be awarded as stock options
and restricted stock units for such year. To the extent authorized by the
Committee, the President's Council may grant options and restricted stock units,
within the maximum number of shares established by the Committee, to employees
selected by it, except that no such grant may be made by the President's Council
to employees who are officers of the Corporation or members of the Board of
Directors. The Committee shall make all grants of stock options and restricted
stock units to employees who are officers of the Corporation. Determinations as
to whether the options granted shall be "incentive stock options" within the
meaning of Section 422, or any successor provision, of the Internal Revenue Code
of 1986, as amended (the "Code"), or non-qualified options, and as to any
restrictions which shall be placed on options and restricted stock units, shall
be made by the Committee under such procedures as it may, from time to time,
determine.
4. Except as provided in paragraph 9, the purchase price of the shares of
stock under each option shall be not less than 100% of the fair market value
(but in no event less than the par value) of such stock at the time the option
is granted, such fair market value to be determined based on the mean of the
highest and lowest sales prices as reported for such class of stock in The Wall
Street Journal for the date of grant. In accordance with such rules and
procedures as the Committee may establish, the aggregate fair market value
(determined as of the time of option grant) of the stock with respect to which
incentive stock options granted and held by an employee which are exercisable
for the first time by such employee during any calendar year under this Plan and
all other plans of the Corporation (and any subsidiary or any parent corporation
within the meaning of Section 424 of the Code, or any successor provision),
shall not exceed $100,000 (except that such amount may be adjusted by the
Committee as appropriate to reflect any amendment of Section 422 of the Code).
The terms of any incentive stock option granted hereunder shall comply in all
respects with the provisions of Section 422 of the Code, or any successor
provision, and any regulations promulgated thereunder.
5. Options granted under this Plan shall be subject to the following
provisions:
5(a). Except as otherwise determined by the Committee, no option shall
become exercisable prior to the first anniversary date of the date of option
grant (or such later date as may be established by the Committee) and after such
date shall be exercisable only in accordance with the terms and conditions
established at the time of grant. As a condition to the exercise of any option,
an employee may, among other things, be required to enter into such agreements
as are considered by the Committee to be appropriate and in the best interests
of the Corporation.
5(b). The expiration date of the option shall be determined at the time of
grant, provided that each such option shall expire not more than ten years and
two days after the date the option was granted or, in the case of an "incentive
stock option," ten years after the date such option was granted.
5(c). (i) If an employee is dismissed for cause or quits employment without
the prior written consent of the Corporation or, except as otherwise determined
by the Committee, the employee's employment terminates for any reason prior to
the first anniversary of the date an option is granted, the option shall
terminate on the date of termination of employment. (ii) If an employee's
employment is terminated by reason of death at any time after the first
anniversary of the date of grant of an option, the option shall, except as
otherwise determined by the Committee, terminate on the third anniversary of the
date of death or, if earlier, the expiration date of such option. (iii) If an
employee's employment terminates at any time on or after the first anniversary
of the date of grant of an option for any reason other than as set forth above
in this paragraph 5(c), the option shall, except as otherwise determined by the
Committee, terminate not later than the fifth anniversary of the date of
termination of employment or, if earlier, the expiration date of the option;
provided that (A) if the employee dies within such period, the option shall
terminate on the third anniversary of the date of death or, if earlier, the
expiration date of the option; (B) the Committee may, at any time prior to any
termination of employment under the circumstances covered by this clause (iii),
determine that the option shall terminate on the date of notice of termination
of employment, or such later date as may be determined by the Committee; and (C)
the exercise of any option after termination of employment shall be subject to
satisfaction of the conditions precedent that the employee refrain from engaging
in any activity which, in the opinion of the Committee, is competitive with any
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activity of the Corporation or any subsidiary (except that employment at the
request of the Corporation with an entity in which the Corporation has, directly
or indirectly, a substantial ownership interest, or other employment
specifically approved by the Corporation, shall not be considered to be an
activity which is competitive with any activity of the Corporation or any
subsidiary), and from otherwise acting, either prior to or after termination of
employment, in any manner inimical or in any way contrary to the best interests
of the Corporation, and that the employee furnish to the Corporation such
information with respect to the satisfaction of the foregoing condition
precedent as the Committee shall reasonably request.
5(d). In consideration for any option granted under this Plan and as a
condition to the exercise thereof, the employee being granted the option, by
accepting such option, will thereby agree to remain in the employment of the
Corporation for a period of six months after the date of exercise of any such
option, unless such employment is terminated by death or retirement (unless the
Committee has determined at the time of issuance or exercise of the option not
to require such agreement). If, contrary to any such agreement, the employee
terminates employment for any reason (unless the employee retires with the prior
consent of the Corporation or dies) within six months after the date of exercise
of any stock option, the employee shall pay to the Corporation an amount equal
to any gain from such exercise, determined by multiplying the difference between
the mean of the highest and lowest market price as reported in The Wall Street
Journal for the date of the option exercise and the exercise price of the option
(without regard to any subsequent market price decrease or increase) by the
number of option shares exercised. Any such option gain realized by the employee
from exercising an option shall be paid by the employee to the Corporation
within thirty days of the date of termination. By accepting an option grant
under this Plan, the employee consents to a deduction of an amount equal to such
option gain from any amounts the Corporation owes the employee, including, but
not limited to, amounts owed as wages or other compensation, fringe benefits, or
vacation pay.
5(e). For purposes of this Plan, a qualifying leave of absence shall not
constitute a termination of employment, except that an option shall not be
exercisable during a leave of absence granted an employee for government
service.
5(f). All shares purchased upon exercise of any option shall be paid for in
full at the time of purchase. Such payment shall be made in cash, through
delivery of shares of the same class of stock as the option shares, or a
combination of cash and stock. Any shares so delivered shall be valued at their
fair market value based on the mean of the highest and lowest sales prices as
reported in The Wall Street Journal for the date of exercise of the option. If
payment of federal, state, and/or local withholding taxes is required in
connection with the exercise of an option, the optionee will, at the time of
exercise, pay such taxes in cash or stock (including shares obtained from the
exercise and delivery of option shares). To the extent authorized by the
Committee, any exercise of an option granted under this Plan may be made in
accordance with any cashless exercise program approved by the Committee.
5(g). No holder of any option shall have any rights to dividends or other
rights of a stockholder with respect to shares subject to the option prior to
purchase of such shares upon exercise of the option.
5(h). Unless otherwise determined by the Committee, with the exception of
transfer by will or the laws of descent and distribution, or as otherwise
provided in paragraph 7, no option shall be assignable or transferable, and an
option shall be exercisable during the life of an employee only by such
employee.
6. Restricted stock units (sometimes referred to herein as "Units") granted
under this Plan shall be subject to the following provisions:
6(a). Subject to adjustments contemplated under Section 10 of this Plan, (i)
a Unit granted hereunder shall relate to one share of Common Stock or Class H
Common Stock (a "Corresponding Share"), as the Committee shall determine, and
(ii) the value of a Unit at any time shall be the fair market value of the
Corresponding Share, determined in accordance with procedures established by the
Committee.
6(b). Subject to the terms of this Plan, the Committee shall determine the
number of Units to be granted to an employee, the class or classes of
Corresponding Shares which relate to such Units and the terms and conditions
applicable to the grant (a "Unit Grant") of such Units. If the Committee shall
determine to grant Units relating to more than one class of Corresponding Shares
to a particular employee, a separate Unit Grant shall be considered to have been
made in respect to each such class of Corresponding Shares. Subject to the terms
of this Plan, the Committee may impose different terms and conditions on any
particular Unit Grant made to any particular employee.
6(c). Subject to the satisfaction of the conditions precedent set forth
under paragraph 6(d) below and such additional conditions as may be imposed by
the Committee, each Unit Grant shall vest at the time or times determined by the
Committee, provided that the Committee, in making such determination, shall
establish the vesting increments (including their number, amounts, and timing)
so as to carry out the purposes of this Plan. Within the limitations specified
in the preceding sentence, the Committee may, in its sole discretion, modify
vesting provisions with respect to the unvested portion of any Unit Grant if, in
the judgment of the Committee, circumstances outside the control of the
Corporation have so changed as to make such modifications necessary or advisable
in order to preserve the reward and incentive purposes of this Plan. As a
condition to the vesting of all or any portion of a Unit Grant, the Committee
may, among other things, require an employee to enter into such agreements as
the Committee considers appropriate and in the best interests of the
Corporation. In addition, the Committee may establish performance vesting
criteria with respect
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to all or any portion of a Unit Grant which relate to and are contingent upon
the satisfaction of specific goals established by the Committee at the time of
the Unit Grant. Such goals may be based upon or relate to one or more of the
following business criteria: return on assets, return on net assets, asset
turnover, return on equity, return on capital, market price appreciation of one
or more of the Corporation's common stocks, economic value added, total
stockholder return, net income, pre-tax income, earnings per share, operating
profit margin, net income margin, sales margin, cash flow, market share,
inventory turnover, hours per vehicle, vehicles per employee, net income per
vehicle, capacity utilization, increase in customer base, environmental health
and safety, diversity, and/or quality. The business criteria may be expressed in
absolute terms or relative to the performance of other companies or to an index.
With respect to any Unit Grant which is subject to performance vesting, the
Committee shall establish for each such award performance levels related to the
enterprise (as defined below) at which 100% of the award shall be earned and a
range (which need not be the same for all awards) within which greater and
lesser percentages shall be earned. The term "enterprise" shall mean the
Corporation and/or any unit or portion thereof, and any entities in which the
Corporation has, directly or indirectly, a substantial ownership interest.
6(d). (i) The vesting of each Unit Grant shall be subject to the
satisfaction of the conditions precedent that: (A) the employee continue to
render services as an employee (unless waived by the Committee), (B) the
employee refrain from engaging in any activity which, in the opinion of the
Committee, is competitive with any activity of the Corporation or any subsidiary
(except that employment at the request of the Corporation with an entity in
which the Corporation has, directly or indirectly, a substantial ownership
interest, or other employment specifically approved by the Committee, shall not
be considered to be an activity which is competitive with any activity of the
Corporation or any subsidiary) and from otherwise acting, either prior to or
after termination of employment, in any manner inimical or in any way contrary
to the best interests of the Corporation, and (C) the employee furnish to the
Corporation such information with respect to the satisfaction of the foregoing
conditions precedent as the Committee shall reasonably request. Except as
otherwise provided under (iii) below, the failure by any employee to satisfy
such conditions precedent shall result in the immediate cancellation of the
unvested portion of any Unit Grant previously made to such employee and all
Units still covered by such Unit Grant, and such employee shall not be entitled
to receive any consideration in respect of such cancellation. (ii) If any
employee is dismissed for cause or quits employment without the prior written
consent of the Corporation, the unvested portion of any Unit Grant previously
made to such employee, and all Units still covered thereby shall be canceled as
of the date of such termination of employment, and such employee shall not be
entitled to receive any consideration in respect of such cancellation. (iii)
Upon termination of an employee's employment for any reason other than as
described in (ii) above, the Committee may, but shall not in any case be
required to, waive the condition precedent relating to the continued rendering
of services in respect of all or any specified percentage of the unvested
portion of any Unit Grant, as the Committee in its discretion shall determine.
To the extent such condition precedent is waived, the Committee may, in its
discretion, accelerate the vesting of all or any specified percentage of the
unvested portion of any Unit Grant. (iv) For purposes of this Plan, a qualifying
leave of absence, determined in accordance with procedure established by the
Committee, shall not constitute a termination of employment, except that a Unit
Grant shall not vest during a leave of absence granted an employee for
government service.
6(e). With respect to any dividend or other distribution on any
Corresponding Shares, the Committee may, in its discretion, authorize current or
deferred payments (payable in cash or stock or a combination thereof, as
determined by the Committee) or appropriate adjustments to outstanding Unit
Grants to reflect such dividend or distribution.
6(f). (i) Upon vesting of all or any portion of a Unit Grant, the percentage
of the Unit Grant then vesting will be applied to the total number of Units then
covered by such Unit Grant, and the proportionate number of Units so computed,
disregarding fractional Units, will be paid to such Participant in the form of
the respective Corresponding Shares of General Motors Common Stock, or in cash
based on the fair market value of the Corresponding Shares on the vesting date,
or partly in cash and partly in the applicable Corresponding Shares of General
Motors stock as the Committee in its sole discretion shall determine.
Certificates for such stock, or the related cash payment, will be delivered, in
accordance with procedures to be established by the Committee, and upon
satisfaction of the applicable withholding requirements, as soon as practicable
after such vesting date. (ii) In the discretion of, and in accordance with
procedures to be established by the Committee, Corresponding Shares, or cash of
equivalent value, may be designated for, and delivered to, the Corporation in
satisfaction of any federal, state and/or local withholding taxes applicable to
the payment of Units.
6(g). Unless otherwise determined by the Committee, no holder of a Unit
Grant shall have any rights to dividends (other than as provided in paragraph
6(e) above) or other rights of a stockholder with respect to Units and
Corresponding Shares relating to such Unit Grant prior to the delivery of such
Corresponding Shares pursuant to the vesting of such Unit Grant.
6(h). Unless otherwise determined by the Committee, with the exception of
transfer by will or the laws of descent and distribution or as otherwise
provided in paragraph 7, no Unit Grant shall be assignable or transferable and,
during the lifetime of the grantee thereof, any payment in respect of such Unit
Grant shall be made only to such grantee.
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<PAGE>
7. An employee holding an option or Unit Grant under this Plan may make a
written designation of beneficiary or beneficiaries on a form prescribed by and
filed with the Secretary of the Committee. Such beneficiary or beneficiaries or,
if no such designation of any beneficiary or beneficiaries has been made, the
employee's legal representative(s) or such other person(s) entitled thereto as
determined by a court of competent jurisdiction, (i) may exercise, in accordance
with and subject to the provisions of paragraph 5, any unterminated and
unexpired option granted to such employee and (ii) receive payment, in
accordance with and subject to the provisions of paragraph 6, pursuant to the
vesting of all or any portion of a Units Grant. A designation of beneficiary may
be replaced by a new designation or may be revoked by the employee at any time.
8. The shares to be delivered upon exercise of an option or vesting of a
Unit Grant shall be made available, at the discretion of the Board of Directors
or a Committee of the Board of Directors as designated by the Board, either from
authorized but previously unissued shares or from shares reacquired by the
Corporation, including shares purchased in the open market. If shares are
purchased in the open market for delivery upon the exercise of an option or
vesting of a Unit Grant, they shall be held in a treasury account specifically
designated for such awards. In any event, a maximum of 40,000,000 Common shares
and 1,700,000 Class H shares will be authorized but previously unissued shares.
9. If the Corporation acquires an entity which has issued and outstanding
stock options or other rights, the Corporation may substitute an appropriate
number of stock options or Units under this Plan for options or rights of such
entity, including options to acquire stock at less than 100% of the fair market
price of the stock at the time of grant, as determined by the Committee in its
sole discretion.
10. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in Corporate structure
affecting any class of General Motors common stock the Committee may, but shall
not be required to, make such adjustments in the class and aggregate number of
shares which may be delivered under this Plan, the class, number and option
price of shares subject to outstanding options and the class and number of
shares subject to Units granted under this Plan (provided the number of shares
of any class subject to any award shall always be a whole number), as may be
determined to be appropriate by the Committee, and any such adjustment may, in
the sole discretion of the Committee, take the form of options covering more
than one class of General Motors capital stock.
11. To the extent determined by the Committee, any subsidiary may, without
regard to the limitations under this Plan, have a separate incentive plan or
program. The Committee shall have exclusive jurisdiction and sole discretion to
approve or disapprove any such plan or program and, from time to time, to amend,
modify, or suspend any such plan or program. Individuals eligible for grants
under any such plan or program shall not be considered employees eligible for
grants under this Plan, unless otherwise determined by the Committee. No
provision of any such plan or program shall be included in or considered a part
of this Plan, and any awards made under any such plan or program shall not be
charged against the aggregate number of shares of stock available for grant
under this Plan, unless otherwise determined by the Committee.
12. The expenses of administering this Plan shall be borne by the
Corporation.
13. Full power and authority to construe and interpret this Plan shall be
vested in the Committee. To the extent determined by the Committee,
administration of this Plan, including, but not limited to (a) the selection of
employees for participation in this Plan and (b) the grant amounts and the
vesting schedules for options and RSUs, may be delegated to the President's
Council; provided, however, the Committee shall not delegate to the President's
Council any powers, determinations or responsibilities with respect to officers
of the Corporation. The instruments evidencing options and RSUs and
documentation with respect to the exercise of options and payment of RSUs, if
any, shall be in such form, consistent with this Plan, as may be determined by
the Committee. Any person who accepts any award hereunder agrees to accept as
final, conclusive, and binding all determinations of the Committee and the
President's Council. The Committee shall have the right, in the case of
participants not employed in the United States, to vary from the provisions of
this Plan in order to preserve the incentive features of this Plan.
14. The Committee, in its sole discretion, may, at any time, amend, modify,
suspend, or terminate this Plan provided that no such action without the
approval of the stockholders shall increase the maximum number of shares for
which, or with respect to which, options or restricted stock units may be
granted to employees under this Plan (except as permitted by paragraph 10), or
permit the granting of options under this Plan with an option price of less than
100% of the fair market value of the applicable class of stock at the time the
options are granted (except as permitted in paragraphs 9 and 10 of this Plan),
or permit exercise of the options unless full payment is made at the time of
exercise, or extend the period during which options may be exercised, or render
any member of the Executive Compensation Committee or the Audit Committee, or
any director who is not an employee, eligible to be granted an option or Unit,
or (iii) grant any option or Unit under this Plan after May 31, 2002.
15. Every right of action by, or on behalf of, the Corporation or by any
stockholder against any past, present, or future member of the Board of
Directors, officer, or employee of the Corporation or its subsidiaries arising
out of or in connection with this Plan shall, irrespective of the place where
action may be brought and irrespective of the place of residence of any such
director, officer, or employee, cease and be barred by the expiration of three
years from the date of the act or omission in respect of which such right of
action arises. Any and all right of action by any employee (past, present, or
future) against the Corporation arising out of or in connection with this Plan
shall, irrespective of the place where an action may be
B-7
<PAGE>
brought, cease and be barred by the expiration of three years from the date of
the act or omission in respect of which such right of action arises. This Plan
and all determinations made and actions taken pursuant hereto shall be governed
by the laws of the State of Delaware and construed accordingly.
16. This Plan shall be effective on June 1, 1997 if approved by the
stockholders of the Corporation at the 1997 Annual Meeting.
GENERAL MOTORS 1997 PERFORMANCE ACHIEVEMENT PLAN
1. The purpose of the General Motors 1997 Performance Achievement Plan (this
"Plan") is to provide employees in positions of senior leadership with incentive
compensation related to accomplishment of key Corporate long-term strategic
objectives which enhance stockholder value.
2(a). The Executive Compensation Committee of the General Motors Board of
Directors (the "Committee"), as from time to time constituted pursuant to the
By-Laws of the General Motors Corporation (the "Corporation"), may prior to June
1, 2002 authorize the granting to employees of the Corporation of target awards.
The Committee, in its sole discretion, shall determine the performance levels at
which different percentages of such awards shall be earned, the collective
amount for all awards to be granted at any one time, and the individual amounts
with respect to employees who are officers of the Corporation. The Committee may
delegate to the President's Council responsibility for determining, within the
limits established by the Committee, individual award grants for employees who
are not officers of the Corporation.
2(b). Prior to the grant of any target award, the Committee shall establish
for each such award (i) performance levels related to the enterprise (as defined
below) at which 100% of the award shall be earned and a range (which need not be
the same for all awards) within which greater and lesser percentages shall be
earned and (ii) a performance period which shall not be less than two nor more
than five years. The term "enterprise" shall mean the Corporation and/or any
unit or portion thereof, and any entities in which the Corporation has, directly
or indirectly, a substantial ownership interest.
2(c). With respect to the performance levels to be established pursuant to
paragraph 2(b), the specific measures for each grant shall be established by the
Committee at the time of such grant. In creating these measures, the Committee
may establish the specific goals based upon or relating to one or more of the
following business criteria: return on assets, return on net assets, asset
turnover, return on equity, return on capital, market price appreciation of one
or more of the Corporation's common stocks, economic value added, total
stockholder return, net income, pre-tax income, earnings per share, operating
profit margin, net income margin, sales margin, cash flow, market share,
inventory turnover, hours per vehicle, vehicles per employee, net income per
vehicle, capacity utilization, increase in customer base, environmental health
and safety, diversity, and/or quality. The business criteria may be expressed in
absolute terms or relative to the performance of other companies or to an index.
2(d). If any event occurs during a performance period which requires changes
to preserve the incentive features of this Plan, the Committee may make
adjustments (either upwards or downwards), in the specified performance levels
of this Plan.
2(e). Except as otherwise provided in paragraph 3, the percentage of each
target award to be distributed to an employee shall be determined by the
Committee (i) on the basis of the performance levels established for such award
and the performance of the applicable enterprise during the performance period
and (ii) in the discretion of the Committee, on the basis of individual
performance during such period. Following determination of the final payout
percentage, the Committee may, upon the recommendation of the Chief Executive
Officer, make adjustments to awards for officers of the Corporation to reflect
individual performance during such period. Adjustments to awards to reflect
individual performance for employees who are not officers of the Corporation
shall be made by the President's Council. Any target award, as determined and
adjusted pursuant to this paragraph and paragraph 3, is herein referred to as a
"final award." The amount related to any final award for each performance period
grant paid to any employee shall not exceed $7.5 million. No distribution of any
final award (or portion thereof) shall be made if the minimum performance level
applicable to the related target award is not achieved during the applicable
performance period, except as otherwise provided in paragraph 3(d), or, unless
otherwise determined by the Committee, if the employment of the employee to whom
the related target award was granted shall terminate for any reason whatsoever
(including death) within 12 months after the date the target award was granted.
2(f). All final awards which have vested in accordance with the provisions
of paragraphs 3 and 4 shall be paid as soon as practicable following the end of
the related vesting period. Final awards shall be paid in cash, in General
Motors stock (as defined below), or partly in cash and partly in General Motors
stock, as the Committee shall determine. General Motors stock (hereinafter
referred to as "stock") shall include all present and future classes of capital
stock of General Motors Corporation. With respect to final awards which become
payable partly or wholly in stock, the number of shares to be delivered upon
determination of the final award and satisfaction of the related vesting
provisions shall be determined by dividing the final award, less any cash
received, by the fair market value of a share of the applicable class of stock,
such fair market value to be determined in accordance with procedures
established by the Committee. Shares deliverable in payment of such final awards
shall be made available from shares reacquired by the Corporation, including
shares purchased in the open market. If shares are purchased in the open market
for delivery in payment of
B-8
<PAGE>
such final awards, they shall be held in a treasury account specifically for
awards under this Plan. If the Corporation shall have any unpaid claim against
the employee arising out of or in connection with such employee's employment
with the Corporation, such claim may be offset against awards under this Plan.
Such claim may include, but is not limited to, unpaid taxes, the obligation to
pay gains pursuant to paragraph 5(d) of the General Motors 1997 Stock Incentive
Plan, or Corporate business credit card charges.
2(g). Subject to such additional limitations or restrictions as the
Committee may impose, the term "employees" shall mean persons who, at any time
during the period to which an award relates, (i) are employed by the Corporation
or any subsidiary (as such term is defined below), including employees who are
also directors of the Corporation or any such subsidiary, or (ii) accept (or
previously have accepted) employment, at the request of the Corporation, with
any entity not described in (i) above but in which the Corporation has, directly
or indirectly, a substantial ownership interest. For purposes of this Plan, the
term "subsidiary" means (A) a corporation of which capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
is owned, directly or indirectly, by the Corporation or (B) any unincorporated
entity in respect of which the Corporation can exercise, directly or indirectly,
comparable control. The Committee shall, among other things, determine when and
to what extent individuals otherwise eligible for consideration shall become or
cease to be, as the case may be, employees for purposes of this Plan and to
determine when and under what circumstances any individual shall be considered
to have terminated employment for purposes of this Plan. To the extent
determined by the Committee, the term employees shall be deemed to include
former employees and any beneficiaries thereof.
3(a). Payment of any final award (or portion thereof) to an individual
employee shall be subject to the satisfaction of the following conditions
precedent that such employee: (i) continue to render services as an employee
(unless this condition is waived by the Committee), (ii) refrain from engaging
in any activity which, in the opinion of the Committee, is competitive with any
activity of the Corporation or any subsidiary (except that employment at the
request of the Corporation with an entity in which the Corporation has, directly
or indirectly, a substantial ownership interest, or other employment
specifically approved by the Committee, shall not be considered to be an
activity which is competitive with any activity of the Corporation or any
subsidiary) and from otherwise acting, either prior to or after termination of
employment, in any manner inimical or in any way contrary to the best interests
of the Corporation, and (iii) furnish to the Corporation such information with
respect to the satisfaction of the foregoing conditions precedent as the
Committee shall reasonably request. If the Committee shall determine that such
employee has failed to satisfy any of the foregoing conditions precedent, all
target awards granted to such employee which have not become final awards, and
all final awards which have not been paid pursuant to paragraph 4(a) shall be
immediately canceled. Upon termination of an employee's employment other than by
death (whether such termination is before or after a target award shall have
become a final award), the Committee may, but shall not in any case be required
to, waive the condition precedent of continuing to render services but in the
event of such waiver, the payment of any target award which shall thereafter
become a final award and payment of any final award which shall remain unpaid
shall nevertheless remain subject to the conditions precedent that (A) the
employee refrains from engaging in any activity which, in the opinion of the
Committee, is competitive with any activity of the Corporation or any subsidiary
(except that employment at the request of the Corporation with an entity in
which the Corporation has, directly or indirectly, a substantial ownership
interest or other employment specifically approved by the Committee shall not be
considered to be an activity which is competitive with any activity of the
Corporation or any subsidiary) and from otherwise acting, either prior to or
after termination of employment, in any manner inimical or in any way contrary
to the best interests of the Corporation and (B) the employee furnish to the
Corporation such information with respect to the satisfaction of the foregoing
condition precedent as the Committee shall reasonably request. As used in the
immediately preceding clause (B), the term employees shall include the
beneficiary or beneficiaries designated by such employee as provided in
paragraph 7, or if no such designation of any beneficiary or beneficiaries has
been made, the employee's legal representative or other persons entitled to any
payment or benefit with respect to the employee pursuant to this Plan. As a
condition to the vesting and payment of all or any portion of a final award, the
Committee may, among other things, require an employee to enter into such
agreements as the Committee considers appropriate and in the best interests of
the Corporation.
3(b). If, upon termination of an employee's employment prior to the end of
any performance period for a reason other than death, the Committee shall
determine to waive the condition precedent of continuing to render services as
provided in paragraph 3(a), the target award granted to such employee with
respect to such performance period shall be reduced pro rata based on the number
of months remaining in the performance period after the month of such
termination. The final award for such employee shall be determined by the
Committee (i) on the basis of the performance levels established for such award
(including the minimum performance level) and the performance level achieved
through the end of the performance period and (ii) in the discretion of the
Committee, on the basis of individual performance during the period prior to
such termination. A qualifying leave of absence, determined in accordance with
procedures established by the Committee, shall not be deemed to be a termination
of employment but, except as otherwise determined by the Committee, the
employee's target award will be reduced pro rata based on the number of months
during
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<PAGE>
which such person was on such leave of absence during the performance period. A
target award shall not vest during a leave of absence granted an employee for
government service.
3(c). Upon termination of an employee's employment by reason of death prior
to the end of any performance period, the target award granted to such employee
with respect to such performance period, except as otherwise provided in
paragraph 2(e), shall be reduced pro rata based on the number of months
remaining in the performance period after the month of such employee's death.
The percentage of the reduced target award to be distributed to such employee
shall be determined by the Committee (i) on the basis of the performance levels
established for such award (including the minimum performance level) and the
performance level achieved through the end of the fiscal year during which such
employee died and (ii) in the discretion of the Committee, on the basis of
individual performance during the applicable period. Such final awards will
immediately vest and be paid as promptly as practicable.
3(d). If the performance levels established for any target award are based
on the performance of a specified portion of the enterprise and that portion is
sold or otherwise disposed of or reorganized or the employee is transferred to
another portion of the enterprise prior to the end of the performance period,
the target award granted to such employee with respect to such performance
period shall be reduced pro rata based on the number of months remaining in the
performance period after the month of such event. The final award for such
employee shall be determined by the Committee (i) on the basis of the
performance levels established for such award (including the minimum performance
level) and the performance level achieved, in the case of a sale, disposition or
reorganization of the applicable portion of the enterprise, through the end of
the fiscal year during which such event occurs and, in the case of a transfer of
the employee, through the end of the performance period and (ii) in the
discretion of the Committee, on the basis of individual performance during the
applicable period. In addition, in any such case, the Committee may, in its
discretion, further adjust such award upward as it may deem appropriate and
reasonable.
3(e). If an employee is promoted during the performance period with respect
to any target award, such target award may, in the discretion of the Committee,
be increased to reflect such employee's new responsibilities.
3(f). If the Corporation acquires an entity which has issued and outstanding
long-term target awards, the Corporation may substitute awards under this Plan
in place of such awards, under such provisions consistent with the terms of this
Plan, as the Committee, in its sole discretion, may determine.
4(a). Target awards which have become final awards shall be subject to a
vesting schedule established by the Committee. Except as otherwise provided in
this Plan, no final award (or portion thereof) subject to a vesting schedule
shall be paid prior to vesting and the unpaid portion of any final award shall
be subject to the provisions of paragraph 3(a). The Committee shall have the
authority to modify a vesting schedule as may be necessary or appropriate in
order to implement the purposes of this Plan. As a condition to the vesting of
all or any portion of a final award, the Committee may, among other things,
require an employee to enter into such agreements as the Committee considers
appropriate and in the best interests of the Corporation.
4(b). If the employment of an employee is terminated for any reason prior to
the vesting of any final award, the Committee may, but in any case shall not be
required to, change the vesting period with respect to such final awards to
accelerate the vesting period related to all or any portion of such final award.
If the employment of an employee is terminated by death, all final awards not
currently vested shall immediately vest.
4(c). No holder of a target award shall have any rights to dividends or
interest (other than as provided in paragraph 4(d) below) or other rights of a
stockholder with respect to a target award prior to such target award's becoming
a final award.
4(d). With respect to target awards which have become final awards payable
in cash pursuant to paragraph 2(f) but which have not vested, the Committee may,
in its discretion, pay to the employees interest on all such unvested cash
amounts. With respect to target awards which have become final awards payable in
stock pursuant to paragraph 2(f) but which have not vested, the Committee may,
in its discretion, pay to the employees an amount equal to the dividends which
would have been paid if such shares had been vested and registered in the
employee's name. Any interest or dividend equivalents payable with respect to
such final awards shall be paid at such times, in such amounts, and in
accordance with such procedures as the Committee shall determine.
4(e). With respect to any dividend or other distribution on any of the
Corporation's common stocks, the Committee may, in its discretion, authorize
current or deferred payments (payable in cash or stock or a combination thereof,
as determined by the Committee) or appropriate adjustments to outstanding target
awards and unvested final awards denominated in shares of stock to reflect such
dividend or distribution.
5(a). An employee shall be eligible for consideration for a target award
based on such criteria as the Committee shall, from time to time, determine.
5(b). No target award shall be granted to any director of the Corporation
who is not an employee at the date of grant nor to any member of the Executive
Compensation Committee or the Audit Committee.
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<PAGE>
5(c). The Committee shall have discretion with respect to the determination
of each target award. Recommendations shall be made to the Committee by the
Chief Executive Officer under such procedures as may, from time to time, be
approved by the Committee as to the employees to be granted target awards, the
amounts of such awards, the performance levels at which different percentages of
such awards would be earned and adjustments, if any, to such levels, the
adjustments to such awards on the basis of individual performance, and the
amounts of final awards, except that no such recommendations shall be made with
respect to employees who are members of the Board of Directors, but such
selections and determinations shall be dealt with exclusively by the Committee
under such procedures as it may determine.
6. Except as otherwise determined by the Committee, with the exception of
transfer by will or the laws of descent and distribution, no target or final
award shall be assignable or transferable and, during the lifetime of the
employee, any payment in respect of any final award shall be made only to the
employee. An employee shall designate a beneficiary or beneficiaries to receive
all or part of the amounts to be distributed to the employee under this Plan in
case of death. A designation of beneficiary or beneficiaries may be replaced by
a new designation or may be revoked by the employee at any time. A designation
or revocation shall be on forms prescribed by and filed with the Secretary of
the Committee. In case of the employee's death, the amounts distributable to the
employee under this Plan with respect to which a designation of beneficiary or
beneficiaries has been made (to the extent it is valid and enforceable under
applicable law) shall be distributed in accordance with this Plan to the
designated beneficiary or beneficiaries. The amount distributable to an employee
upon death and not subject to such a designation shall be distributed to the
employee's estate or legal representative. If there shall be any question as to
the legal right of any beneficiary to receive a distribution under this Plan,
the amount in question may be paid to the estate of the employee, in which event
the Corporation shall have no further liability to any party with respect to
such amount.
7. To the extent that any employee, former employee, or any other person
acquires a right to receive payments or distributions under this Plan, such
right shall be no greater than the right of a general unsecured creditor of the
Corporation. All payments and distributions to be made hereunder shall be paid
from the general assets of the Corporation. Nothing contained in this Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Corporation
and any employee, former employee, or any other person.
8. The expenses of administering this Plan shall be borne by the
Corporation.
9. Full power and authority to construe and interpret this Plan shall be
vested in the Committee. To the extent determined by the Committee,
administration of this Plan, including, but not limited to (a) the selection of
employees for participation in this Plan, (b) the determination of the number of
installments, and (c) the determination of the vesting schedule for final
awards, may be delegated to the President's Council; provided, however, the
Committee shall not delegate to the President's Council any powers,
determinations, or responsibilities with respect to officers of the Corporation.
Any person who accepts any award hereunder agrees to accept as final,
conclusive, and binding all determinations of the Committee and the President's
Council. The Committee shall have the right, in the case of participants not
employed in the United States, to vary from the provisions of this Plan in order
to preserve the incentive features of this Plan.
10. The Committee, in its sole discretion, may, at any time, amend, modify,
suspend, or terminate this Plan provided that no such action shall (a) adversely
affect the rights of an employee with respect to previous target awards or final
awards under this Plan (except as otherwise permitted under paragraphs 2(d) and
3), and this Plan, as constituted prior to such action, shall continue to apply
with respect to target awards previously granted and final awards which have not
been paid, or (b) without the approval of the stockholders, (i) increase the
limit on the maximum amount of final awards provided in paragraph 2(e), or (ii)
render any director of the Corporation who is not an employee at the date of
grant or any member of the Executive Compensation Committee or the Audit
Committee, eligible to be granted a target award, or (iii) permit any target
award to be granted under this Plan after May 31, 2002.
11. Every right of action by, or on behalf of, the Corporation or by any
stockholder against any past, present, or future member of the Board of
Directors, officer, or employee of the Corporation or its subsidiaries arising
out of or in connection with this Plan shall, irrespective of the place where
action may be brought and irrespective of the place of residence of any such
director, officer, or employee, cease and be barred by the expiration of three
years from the date of the act or omission in respect of which such right of
action arises. Any and all right of action by any employee (past, present, or
future) against the Corporation arising out of or in connection with this Plan
shall, irrespective of the place where an action may be brought, cease and be
barred by the expiration of three years from the date of the act or omission in
respect of which such right of action arises. This Plan and all determinations
made and actions taken pursuant hereto shall be governed by the laws of the
State of Delaware and construed accordingly.
12. This Plan shall be effective on June 1, 1997 if approved by the
stockholders of the Corporation at the 1997 Annual Meeting.
B-11
<PAGE>
GM
----
RESULTS OF THE ANNUAL MEETING
The results of the voting at the annual
meeting will be made available to all
stockholders. Any stockholder desiring a
transcript of the meeting may obtain it by
writing to General Motors Corporation, Mail
Code 482-111-200, General Motors Building,
Detroit, Michigan 48202.
ENVIRONMENTAL, HEALTH & SAFETY REPORT
Any stockholder desiring a copy of the new
General Motors Environmental, Health & Safety
Report may obtain it by writing to General
Motors Corporation, Corporate Affairs, Mail
Code 482-112-157, General Motors Building,
Detroit, Michigan 48202. This report provides
information on the environmental aspects of
GM's products and operations.
IMPORTANT!
Stockholders are encouraged to specify their
choices by marking the appropriate boxes on
the enclosed proxy. However, it is not
necessary to mark any boxes if you wish to
vote in accordance with the Board of
Directors' recommendations; merely sign, date
and return the proxy in the enclosed
envelope.
[RECYCLE LOGO] Printed on recycled paper
<PAGE>
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
FRIDAY, MAY 23, 1997, 9:00 A.M. LOCAL TIME
The undersigned authorizes John F. Smith, Jr., J. Michael Losh and
Harry J. Pearce 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 (A. L. Armstrong, P. N. Barnevik, J. H. Bryan, T. E. Everhart,
C. T. Fisher, III, G. M. C. Fisher, J. W. Marriott, Jr., A. D. McLaughlin,
H. J. Pearce, E. Pfeiffer, J. G. Smale, J. F. Smith, Jr., L. W. Sullivan,
D. Weatherstone, T. H. Wyman), upon the other Items shown on the reverse side,
which are described and page referenced in the Table of Contents (page i) to
the Proxy Statement, and upon all other matters which may come before the 1997
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 of General Motors and its subsidiaries as described in
the Proxy Statement. IF 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 SEE REVERSE
NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE SIDE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. ---------------
<PAGE>
PLEASE MARK
/ X / YOUR VOTE
WITH AN X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-4 AND "AGAINST"
ITEMS 5-9
- -----------------------------------------------------------------------------
This proxy/voting instruction card will be voted "FOR" Items 1-4
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
3. Approval of / / / / / /
Director Stock Plan
4. Approval of / / / / / /
Incentive Program
- -----------------------------------------------------------------------------
This proxy/voting instruction card will be voted
"AGAINST" Items 5-9 if no choice is specified.
- -----------------------------------------------------------------------------
FOR AGAINST ABSTAIN
5. Stockholder / / / / / /
proposal to limit
director service
6. Stockholder / / / / / /
proposal on
cumulative voting
7. Stockholder / / / / / /
proposal
regarding separate
CEO/Chairman
8. Stockholder / / / / / /
proposal
regarding
independent
directors
9. Stockholder / / / / / /
proposal
regarding stock
options for
directors
THIS PROXY/VOTING INSTRUCTION CARD REPRESENTS YOUR HOLDINGS OF COMMON STOCK AND
CLASS H COMMON STOCK.
- --------------------------------------------------------------------------------
SIGNATURE(S) PLEASE MARK, SIGN, DATE AND RETURN THIS DATE
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.
<PAGE>
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
FRIDAY, MAY 23, 1997, 9:00 A.M. LOCAL TIME
The undersigned authorizes John F. Smith, Jr., J. Michael Losh and Harry J.
Pearce and each of them as the Proxy Committee, to vote the COMMON STOCK of the
undersigned upon the nominees for Director (A. L. Armstrong,
P. N. Barnevik, J. H. Bryan, T. E. Everhart, C. T. Fisher, III, G. M. C. Fisher,
J. W. Marriott, Jr., A. D. McLaughlin, H. J. Pearce, E. Pfeiffer, J. G. Smale,
J. F. Smith, Jr., L. W. Sullivan, D. Weatherstone, T. H. Wyman), upon the other
Items shown on the reverse side, which are described and page referenced in the
Table of Contents (page i) to the Proxy Statement, and upon all other matters
which may come before the 1997 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 of General Motors and its subsidiaries as described in
the Proxy Statement. IF 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 SEE REVERSE
NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE SIDE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. ---------------
<PAGE>
PLEASE MARK COMMON
/ X / YOUR VOTE
WITH AN X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-4 AND "AGAINST"
ITEMS 5-9
- -----------------------------------------------------------------------------
This proxy/voting instruction card will be voted "FOR" Items 1-4
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
3. Approval of / / / / / /
Director Stock Plan
4. Approval of / / / / / /
Incentive Program
- -----------------------------------------------------------------------------
This proxy/voting instruction card will be voted
"AGAINST" Items 5-9 if no choice is specified.
- -----------------------------------------------------------------------------
FOR AGAINST ABSTAIN
5. Stockholder / / / / / /
proposal to limit
director service
6. Stockholder / / / / / /
proposal on
cumulative voting
7. Stockholder / / / / / /
proposal
regarding separate
CEO/Chairman
8. Stockholder / / / / / /
proposal
regarding
independent
directors
9. Stockholder / / / / / /
proposal
regarding stock
options for
directors
THIS PROXY/VOTING INSTRUCTION CARD REPRESENTS YOUR HOLDINGS OF
COMMON STOCK.
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 _____________
<PAGE>
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
FRIDAY, MAY 23, 1997, 9:00 A.M. LOCAL TIME
The undersigned authorizes John F. Smith, Jr., J. Michael Losh and Harry J.
Pearce and each of them as the Proxy Committee, to vote the CLASS H COMMON STOCK
of the undersigned upon the nominees for Director (A. L. Armstrong,
P. N. Barnevik, J. H. Bryan, T. E. Everhart, C. T. Fisher, III, G. M. C. Fisher,
J. W. Marriott, Jr., A. D. McLaughlin, H. J. Pearce, E. Pfeiffer, J. G. Smale,
J. F. Smith, Jr., L. W. Sullivan, D. Weatherstone, T. H. Wyman), upon the other
Items shown on the reverse side, which are described and page referenced in the
Table of Contents (page i) to the Proxy Statement, and upon all other matters
which may come before the 1997 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 of General Motors and its subsidiaries as described in
the Proxy Statement. IF 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 SEE REVERSE
NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE SIDE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. ---------------
<PAGE>
PLEASE MARK CLASS H
/ X / YOUR VOTE
WITH AN X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-4 AND "AGAINST"
ITEMS 5-9
- -----------------------------------------------------------------------------
This proxy/voting instruction card will be voted "FOR" Items 1-4
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
3. Approval of / / / / / /
Director Stock Plan
4. Approval of / / / / / /
Incentive Program
- -----------------------------------------------------------------------------
This proxy/voting instruction card will be voted
"AGAINST" Items 5-9 if no choice is specified.
- -----------------------------------------------------------------------------
FOR AGAINST ABSTAIN
5. Stockholder / / / / / /
proposal to limit
director service
6. Stockholder / / / / / /
proposal on
cumulative voting
7. Stockholder / / / / / /
proposal
regarding separate
CEO/Chairman
8. Stockholder / / / / / /
proposal
regarding
independent
directors
9. Stockholder / / / / / /
proposal
regarding stock
options for
directors
THIS PROXY/VOTING INSTRUCTION CARD REPRESENTS YOUR HOLDINGS OF
CLASS H COMMON STOCK.
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 _____________
