Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
GENERAL MOTORS CORPORATION
......................................................................
(Name of Registrant as Specified In Its Charter)
......................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
[LOGO] GENERAL MOTORS CORPORATION
NOTICE OF ANNUAL MEETING
April 18, 2002
Dear Stockholder:
You are invited to attend the annual meeting of stockholders of General
Motors Corporation, which will be held at 9 a.m. local time on Tuesday, June 4,
2002, at the Hotel du Pont, 11th & Market Streets, Wilmington, Delaware. At the
meeting, stockholders will vote upon the following matters:
* The election of directors for the next year;
* The ratification of the Board of Directors' proposal for the selection of
independent public accountants for the next year;
* The incentive compensation program consisting of the 2002 Annual
Incentive Plan, the 2002 Stock Incentive Plan, and the 2002 Long-Term
Incentive Plan;
* Five stockholder proposals (if they are properly presented at the
meeting).
If you were a record holder of Common Stock, $1 2/3 par value ("Common
Stock"), or Class H Common Stock, $0.10 par value ("Class H Common Stock"), at
the close of business on April 5, 2002, you will be entitled to vote at the
meeting. You have a variety of options as to how to vote by proxy. You can vote
by Internet or telephone by following the instructions on your proxy card, or by
mail by using the enclosed proxy card. Please see your proxy card or the
information provided by your broker, bank, or other record holder for more
information on these options. Please read the attached Proxy Statement carefully
and submit your proxy with voting instructions as soon as possible. A list of
stockholders entitled to vote at the meeting will be available for examination
at the General Motors Corporation, Renaissance Center, Detroit, Michigan, for
ten days before the meeting between 9 a.m. and 5 p.m., and at the Hotel du Pont
during the annual meeting.
The annual meeting will include a report on the state of the business, and
thereafter focus on electing directors, voting on the selection of independent
public accountants, the 2002 incentive compensation program, stockholder
proposals, and related discussion. After that, we will provide time for
questions and comments.
If you plan to attend the meeting, please detach and retain the admission
ticket that is attached to your proxy card. You may bring one guest to the
meeting. If you hold your stock through a broker, bank, or other record holder,
please bring evidence of ownership to the meeting and we will provide you with
admission tickets. If you receive your annual meeting materials electronically
and wish to attend the meeting, please follow the instructions provided for
attendance. A form of government-issued photograph identification will be
required to enter the meeting. To permit as many stockholders as possible to
participate, only stockholders or their valid proxy holders may speak at the
meeting.
In addition to the annual meeting, we hold regional stockholder forums.
These meetings provide a less formal way for you to discuss General Motors
business and related issues with top management. The time and location of these
meetings will be announced in Stockholder News as well as on the Internet under
"Calendar for Investors" at http: / / investor.gm.com.
IF YOU VOTE BY MAIL, PLEASE SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES ON THE ENCLOSED PROXY/VOTING INSTRUCTION CARD. IF YOUR VOTE IS THE SAME AS
THE BOARD OF DIRECTORS' RECOMMENDATIONS, YOU DO NOT HAVE TO MARK ANY BOXES. JUST
SIGN AND DATE THE PROXY/VOTING INSTRUCTION CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE.
Sincerely,
/s/ Nancy E. Polis /s/ John F. Smith, Jr.
Secretary Chairman
TABLE OF CONTENTS
General Information for Stockholders Page
Proxy Procedure...................................................... ii
Proxy Statement Proposals............................................ ii
Directors............................................................ ii
Selecting Candidates to Serve on the Board of Directors.............. ii
Director Compensation................................................ iii
Committees of the Board of Directors................................. iii
Householding of Annual Meeting Materials............................. iv
Proxy Statement
ITEM NO. 1--Nomination and Election of Directors..................... 2
Information about Nominees for Director.............................. 2
Report of the Executive Compensation Committee....................... 8
Executive Compensation Tables........................................ 12
Audit Committee Report............................................... 19
ITEM NO. 2--Ratification of the selection of Deloitte & Touche
LLP as independent public accountants for the
year 2002................................................ 20
ITEM NO. 3--Approval of the 2002 incentive compensation
program.................................................. 21
ITEM NO. 4--Stockholder proposal that GM report on accidents
related to Internet or cell phone use in cars............ 25
ITEM NO. 5--Stockholder proposal to require independent
directors on key Board committees........................ 27
ITEM NO. 6--Stockholder proposal that GM increase the stock
dividend................................................. 28
ITEM NO. 7--Stockholder proposal to require stockholder approval
of "poison pill"......................................... 29
ITEM NO. 8--Stockholder proposal to pay GM directors their
retainer in GM stock..................................... 31
Expenses of Solicitation............................................. 32
Other Matters........................................................ 32
Exhibit A -- Text of the 2002 Annual Incentive Plan, the 2002 Stock
Incentive Plan, and the 2002 Long-Term Incentive Plan... A-1
i
GENERAL INFORMATION FOR STOCKHOLDERS
PROXY PROCEDURE
Although you may not be able to attend the annual meeting in person, you
have the opportunity to vote by using the proxy solicited by the Board of
Directors, which is enclosed with this document. After you sign and return your
proxy card or vote through the Internet or by telephone, the Proxy Committee
will vote your shares according to your instructions. You can indicate your
choices by marking the enclosed proxy card. If you sign and return your proxy
card and do not specify a choice, your shares will be voted as the Board of
Directors has recommended. If you prefer, you may also vote by ballot at the
annual meeting, which will cancel any proxy you previously gave.
By signing and returning the proxy card or by voting through the Internet
or by telephone, you will authorize the Proxy Committee to vote your shares of
common stock as you direct and on any proposals that General Motors does not
know about now but that may be presented properly at the meeting. The Proxy
Committee is composed of three executive officers of the Corporation: J. F.
Smith, Jr., G. R. Wagoner, Jr., and J. M. Devine, each of whom is authorized to
act on behalf of the Committee.
As a matter of policy, GM believes your vote should be private. Therefore,
we use an independent specialist to receive, inspect, count, and tabulate
proxies. Representatives of the independent specialist also act as judges at the
annual meeting.
PROXY STATEMENT PROPOSALS
At the annual meeting each year, the Board of Directors submits its
nominees for election as directors. In addition, GM's By-laws require that at
each annual meeting the stockholders approve the independent public accountants
selected by the Audit Committee and the Board of Directors. The Board of
Directors also may submit other matters for your approval at the annual meeting.
In addition to these matters presented by the Board of Directors, you may
be asked to vote on one or more stockholder proposals. We have been asked from
time to time why the Board opposes the stockholder proposals included in the
Proxy Statement.
THE BOARD DOES NOT DISAGREE WITH ALL STOCKHOLDER PROPOSALS SUBMITTED TO THE
CORPORATION. WHEN WE AGREE WITH A PROPOSAL AND THINK IT IS IN THE BEST INTERESTS
OF THE CORPORATION AND ITS STOCKHOLDERS, IT USUALLY CAN BE IMPLEMENTED WITHOUT A
STOCKHOLDER VOTE. THE STOCKHOLDER PROPOSALS THAT APPEAR IN THE PROXY STATEMENT
ARE ONLY THOSE WITH WHICH THE BOARD OF DIRECTORS DISAGREES AND BELIEVES IT MUST
OPPOSE IN FULFILLING ITS OBLIGATIONS TO REPRESENT AND SAFEGUARD THE BEST
INTERESTS OF STOCKHOLDERS AS A WHOLE.
The deadline for including a proposal in the Corporation's Proxy Statement
for the 2003 annual meeting is December 20, 2002. Any proposals intended to be
presented at the 2003 meeting must be received by the Corporation on or before
that date. Please send proposals to the Secretary, General Motors Corporation,
by mail to MC 482-C38-B71, Renaissance Center, P.O. Box 300, Detroit, MI
48265-3000, or by fax at 313-667-3166.
DIRECTORS
The Board of Directors held a total of eight meetings in 2001. It is
currently composed of 14 members. Thomas E. Everhart and J. Willard Marriott,
Jr. are not standing for re-election pursuant to the Director Retirement Policy.
If you elect all 12 nominees at the 2002 annual meeting, the Board will be
composed of ten directors who are not employed by General Motors and two who are
currently officers of the Corporation.
In addition to being members of the Board, most directors served on one or
more of its six standing Committees, which cover a total of 26 memberships.
(Please refer to "Committees of the Board of Directors" commencing on page iii
for information concerning each Committee's responsibility and current
membership.) Directors spend a considerable amount of time preparing for Board
and Committee meetings and, from time to time, are called upon for their counsel
between meetings. In 2001, average attendance at Board and Committee meetings
was 92%.
SELECTING CANDIDATES TO SERVE ON THE BOARD OF DIRECTORS
Under the Corporation's By-laws, each year prior to the annual meeting of
stockholders the Committee on Director Affairs recommends the Board's nominees
to serve as GM directors for the next year. The Board
ii
is soliciting proxies to elect these individuals. Except for John F. Smith, Jr.
and G. Richard Wagoner, Jr., who are employees of the Corporation, all
candidates nominated by the Board of Directors have been determined to be
"Independent Directors" as defined under Section 2.12 of the Corporation's
By-laws. (If you would like a copy of GM's By-laws, please write to the
Secretary, General Motors Corporation, MC 482-C38-B71, Renaissance Center, P.O.
Box 300, Detroit, MI 48265-3000.)
To recommend an individual for Board membership, write to the Secretary at
the address given above. If you intend to nominate a candidate for director at
the annual meeting, or to introduce any other matter (aside from a stockholder
proposal under Rule 14a-8 of the Securities and Exchange Commission's proxy
rules, which is discussed on page ii), you must give the Corporation written
notice. Such notice must be received by the Secretary of the Corporation not
more than 180 days and not less than 120 days before the date of the annual
meeting. For the 2003 annual meeting, such notice must be received between
December 5, 2002, and February 3, 2003.
DIRECTOR COMPENSATION
Only non-employee directors receive payment for serving on the Board. Since
Messrs. Smith and Wagoner are employees of the Corporation, they are not
compensated as directors. Non-employee directors are not eligible to participate
in the executive incentive program, Savings-Stock Purchase Program, or any of
the Retirement Programs for General Motors employees. Other than as described in
this section, there are no separate benefit plans for directors. Compensation
paid to non-employee directors is as follows:
* Annual retainer -- $120,000(a)
* Retainer for Committee chair -- $ 5,000
* Per diem for special services -- $ 1,500
(a) Under the General Motors Compensation Plan for Non-Employee Directors (the
"Plan"), non-employee directors are required to defer $60,000 of the above
annual retainer in restricted units of Common Stock. In addition, under the
Plan directors may also elect to defer all or a portion of the remaining
compensation in cash or units of Common Stock.
Outside directors also receive an annual stock option grant of 3,000 shares
of Common Stock. These options will be awarded on the same date and at the
same exercise price as stock options that are awarded to GM executives.
Restricted stock units under the Plan are credited with dividend
equivalents in the form of additional stock units. Amounts deferred under the
Plan are generally not available until after the director retires from the Board
at age 70. After the director leaves the Board, payment under the Plan is made
in cash based on the number of stock units valued at the average quarterly mean
market price at the time of payment.
Non-employee members of the General Motors Board of Directors who serve as
directors of Hughes Electronics Corporation receive an annual retainer of
$100,000 under the Hughes Electronics Corporation Compensation Plan for
Non-Employee Directors. Outside directors also received a one-time stock option
grant of 5,000 shares of Class H Common Stock on the same date as GM directors.
In 2001, T. E. Everhart and E. Pfeiffer were members of the Hughes board of
directors.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE met five times in 2001. The primary function of the
Committee is to assist the Board of Directors in fulfilling its oversight
responsibilities with respect to the financial reports and other financial
information provided by the Corporation to the stockholders and others, the
Corporation's system of internal controls and the Corporation's audit,
accounting, and financial reporting processes generally. All members of the
Audit Committee are independent directors as defined by the Corporation's
By-laws and New York Stock Exchange rules.
Membership: Eckhard Pfeiffer (Chair) Karen Katen
John H. Bryan Lloyd D. Ward
Nobuyuki Idei
iii
CAPITAL STOCK COMMITTEE met five times in 2001. The Committee oversees the
relationship between General Motors and its wholly owned subsidiary, Hughes
Electronics Corporation, to ensure that transactions between the two companies
are in the best interests of each corporation and are fair to the holders of
both classes of GM's common stock.
Membership: Eckhard Pfeiffer (Chair) Thomas E. Everhart
John H. Bryan
COMMITTEE ON DIRECTOR AFFAIRS met seven times in 2001. The Committee
researches and recommends candidates for membership on the Board and conducts
continuing studies of the size, composition, and compensation of the Board. The
Committee is also responsible for implementing and periodically reviewing GM's
guidelines for corporate governance and proposing improvements.
Membership: J. Willard Marriott, Jr. (Chair) Thomas E. Everhart Karen Katen
Percy N. Barnevik George M. C. Fisher
EXECUTIVE COMPENSATION COMMITTEE met seven times in 2001. The Committee
determines the compensation of senior executives, including all officers of the
Corporation, and approves any benefit or incentive compensation plan of the
Corporation or its major subsidiaries which affects employees subject to its
review. The members of the Committee are not eligible to participate in any of
the compensation plans or programs it administers.
Membership: John H. Bryan (Chair) J. Willard Marriott, Jr.
George M. C. Fisher Eckhard Pfeiffer
INVESTMENT FUNDS COMMITTEE met three times in 2001. The Committee serves as
the named fiduciary of GM's and a number of its subsidiaries' benefit plans
governed by the Employee Retirement Income Security Act (ERISA).
Membership: Percy N. Barnevik (Chair) Nobuyuki Idei John F. Smith, Jr.
George M. C. Fisher J. Willard Marriott, Jr.
PUBLIC POLICY COMMITTEE met four times in 2001. The Committee fosters GM's
commitment to operate its business worldwide in a manner consistent with the
rapidly changing demands of society. Topics reviewed by this Committee include
research and development, automotive safety, environmental and energy matters,
diversity, health care, education, communications, employee health and safety,
trade, and philanthropic activities. The Committee provides public policy
guidance to management to support GM's progress in growing the business globally
within the framework of GM's core values.
Membership: Karen Katen (Chair) Thomas E. Everhart
Percy N. Barnevik Lloyd D. Ward
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The Securities and Exchange Commission has approved a rule concerning the
delivery of annual reports and proxy statements. It permits us to send a single
set of these reports to any household at which two or more stockholders reside
if we believe they are members of the same family. Each stockholder will
continue to receive a separate proxy card. This procedure, referred to as
householding, reduces the volume of duplicate information you receive and
reduces our expenses. For 2002, General Motors has instituted this procedure for
all stockholders of record.
If all GM stockholders in your household received a single set of these
documents instead of multiple copies but you would prefer to receive your own
set, please contact our stock transfer agent, EquiServe, by phone at
1-800-331-9922 or 1-781-575-3990 (call collect if you live outside the
continental U.S. or Canada), or by Internet at www.equiserve.com.
If a broker or other nominee holds your GM shares, please contact your
broker or other nominee directly if you have questions, require additional
copies of the proxy statement or annual report, or wish to revoke your decision
to household, and thereby receive multiple reports.
iv
GENERAL MOTORS CORPORATION
RENAISSANCE CENTER, P.O. BOX 300, DETROIT, MICHIGAN 48265-3000
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 2002
This Proxy Statement is provided in connection with the solicitation of
proxies, by order of the Board of Directors of General Motors Corporation, to be
used at the annual meeting of stockholders of the Corporation. The accompanying
proxy card enclosed with this Statement represents your holdings of Common Stock
and Class H Common Stock in the registered account name shown. We expect that
this Proxy Statement and the enclosed proxy will be mailed, or will be available
through the Internet for those stockholders who elected to receive their proxy
materials electronically, on or after Thursday, April 18, 2002, to each
stockholder entitled to vote.
You may give instructions to grant or withhold authority to vote for
election of all the Board of Directors' nominees, or any individual nominee, and
to vote for or against, or abstain from voting upon, each of the
seven proposals. After you have signed and returned the enclosed proxy card or
voted through the Internet or by telephone, you may revoke your proxy at any
time until it is voted at the annual meeting by sending a written notice of
revocation or a subsequent proxy card, voting subsequently through the Internet
or by telephone, or by voting in person at the annual meeting. The shares
represented by a proxy will be voted unless the proxy card is received late or
in a form that cannot be voted.
If you participate in stock plans for employees -- the General Motors
Savings-Stock Purchase Program for Salaried Employees in the United States (the
"GM S-SPP"), the General Motors Personal Savings Plan for Hourly-Rate Employees
in the United States (the "GM PSP"), the General Motors Canadian Savings-Stock
Program for Salaried Employees (the "GM Canadian Plan"), the General Motors of
Canada Limited Group RRSP and Savings Plan for Hourly Employees (the "GM RRSP"),
the Fidelity Investments Canada Limited Next StepTM -- Personal Retirement Group
(the "FICL-PRG"), the Delphi Corporation stock plans for employees -- Delphi
Automotive Systems Corporation Savings-Stock Purchase Program for Salaried
Employees in the United States (the "Delphi S-SPP"), the Delphi Personal Savings
Plan for Hourly Rate Employees in the United States (the "Delphi PSP"), the
Hughes Non-Bargaining Employees Thrift and Savings Plan (the "Hughes Non-
Bargaining Plan"), the Hughes Bargaining Employees Thrift and Savings Plan (the
"Hughes Bargaining Plan"), the Saturn Individual Savings Plan for Represented
Members (the "Saturn ISP"), the GMAC Mortgage Group Savings Incentive Plan (the
"GMAC Mortgage Plan"), the GMAC Insurance -- Personal Lines Retirement Savings
Plan (the "GMAC Insurance Plan"), the Raytheon Savings and Investment Plan (the
"Raytheon Plan"), -- your proxy card will also serve as a voting instruction for
the Trustees, plan committees, or independent fiduciaries of those plans. If you
do not provide voting instructions with respect to stock in the GM S-SPP, the
Hughes Non-Bargaining Plan, the Hughes Bargaining Plan, or the Delphi S-SPP,
those shares may be voted by the Trustee, plan committee, or independent
fiduciary at its discretion. If you do not provide voting instructions with
respect to stock held in the GM PSP, the GM Canadian Plan, the GM RRSP, the
FICL-PRG, the Delphi PSP, the Saturn ISP, the GMAC Mortgage Plan, the GMAC
Insurance Plan, and the Raytheon Plan, the shares will not be voted.
If you participate in any of these plans or maintain other accounts under
more than one name (e.g., with and without a middle initial), you may receive
more than one set of proxy materials. To be sure that all shares are counted,
you must sign and return every proxy card you receive or alternatively vote all
these shares through the Internet or by telephone.
1
Brokers, dealers, banks, voting trustees, and their nominees who want a
supply of the Corporation's proxy soliciting material to send to beneficial
owners should write to:
General Motors Corporation
c/o Morrow & Co., Inc.
445 Park Avenue, 5th Floor
New York, NY 10022-2606
The Board of Directors designated April 5, 2002, as the record date for
determining stockholders entitled to vote at the annual meeting. On that date,
the Corporation had 560,146,724 shares of Common Stock and 877,786,498 shares of
Class H Common Stock outstanding and entitled to vote. Each share of
Common Stock entitles the holder to one vote, and each share of Class H Common
Stock entitles the holder to 0.2 vote.
Except for Item 1, or as otherwise noted, each proposal in this Proxy
Statement will be approved if it receives a majority of the votes present,
either in person or by proxy, at the meeting. Item 1, the election of directors,
is somewhat different: the 12 candidates who receive the most votes will be
elected to the 12 available memberships on the Board. If you submit your proxy
or attend the meeting but choose to abstain from voting on any proposal, you
will be considered present at the meeting and not voting in favor of the
proposal. Since most proposals pass only if they receive favorable votes from a
majority of votes present at the meeting, the fact that you are abstaining and
not voting in favor of a proposal will have the same effect as if you had voted
against the proposal. (In contrast, a "broker non-vote," where a broker
withholds authority to cast a vote as to a certain proposal, is deemed not
present at the meeting with regard to that proposal.)
ITEM NO. 1
NOMINATION AND ELECTION OF DIRECTORS
The Proxy Committee will vote your shares for the 12 nominees described in
the following section unless you withhold such authority. Each director will
serve until the next annual election of directors and until a successor is
elected and qualified or until the director's earlier resignation or removal. If
any nominees for director become unavailable before the annual meeting, which we
do not anticipate, the Board of Directors may decrease the number of directors
to be elected or designate substitute nominees, who would receive the votes of
the Proxy Committee.
Pursuant to the Director Retirement Policy of the Board of Directors,
Thomas E. Everhart and J. Willard Marriott, Jr. are not standing for reelection.
Mr. Everhart joined the General Motors Board of Directors in 1989 while serving
as President and Professor of Electrical Engineering and Applied Physics,
California Institute of Technology. He is currently a member of the Capital
Stock, Director Affairs, and Public Policy Committees.
Mr. Marriott joined the General Motors Board of Directors in 1989 while
serving as President and Chief Executive Officer, Marriott Corporation. He is
currently Chair of the Committee on Director Affairs and a member of the
Executive Compensation and Investment Funds Committees.
Of the nominees in the following section, Armando M. Codina,
Alan G. Lafley, and E. Stanley O'Neal were elected directors of General Motors
Corporation since the last annual meeting of stockholders.
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information about each nominee's principal occupation or
employment and other affiliations and about the Common Stock and Class H Common
Stock beneficially owned as of February 28, 2002, has been furnished to the
Corporation by the nominees for director. In addition to the affiliations
mentioned on the following pages, the nominees are active in many local and
national cultural, charitable, professional, and trade organizations.
2
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PERCY N. BARNEVIK AGE 61 JOINED GM BOARD 1996
Chairman of AstraZeneca PLC, United Kingdom, since 1999; Chairman of Sandvik AB,
Sweden (1983-May 7, 2002); Former Chairman, Investor AB, Sweden (1997-2002);
Former Chairman, ABB Ltd., Switzerland (1997-2001)
COMMITTEES -- Investment Funds (Chair), Director Affairs, Public Policy
DIRECTORSHIPS -- AstraZeneca PLC
AFFILIATIONS -- Representative of the European Commission to the ASEM
(Asia-Europe) Vision Group; Chairman of the EU Enlargement Work Group; Vice
Chairman of the World Economic Forum Foundation Board; Member of The European
Round Table of Industrialists and its Steering Committee, the Advisory Board of
the Council on Foreign Relations, The Business Council, the American Academy of
Arts and Sciences, the International Investment Council advising the South
African Government, the International Advisory Council of the Federation of
Korean Industries, the India Business Council, the IMF's Capital Markets
Consultative Group, the Advisory Council of Centre for European Reform - UK,
Advisory Councils at the Graduate Business School of Stanford University,
Wharton School of Business Administration, and Humboldt University (Berlin);
Member of the Academies of Engineering in Sweden, United Kingdom, and Finland
--------------------------------------------------------------------------------
JOHN H. BRYAN AGE 65 JOINED GM BOARD 1993
Retired Chairman and Chief Executive Officer, Sara Lee Corporation, Chicago,
Illinois, since October 5, 2001; held offices of Chairman (1976-2001), and
Chairman and Chief Executive Officer (1976-2000)
COMMITTEES -- Executive Compensation (Chair), Audit, Capital Stock
DIRECTORSHIPS -- Sara Lee Corporation, BP p.l.c., Bank One Corporation, Goldman
Sachs Group Inc.
AFFILIATIONS -- Member of The Business Council and the Board of Directors of
Catalyst; Trustee of the University of Chicago and life Trustee of
Rush-Presbyterian-St. Luke's Medical Center; Chairman of the Board of Trustees
of the Art Institute of Chicago; Chairman of Americans United to Save the Arts
and Humanities
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ARMANDO M. CODINA AGE 55 JOINED GM BOARD 2002
Chairman and Chief Executive Officer, the Codina Group, a full-service
commercial real estate firm based in Coral Gables, Florida, since 1979
DIRECTORSHIPS -- AMR Corporation, BellSouth Corporation, FPL Group, Inc.,
Winn-Dixie Stores, Inc. (through October 2002)
AFFILIATIONS -- Chairman of the Board of Trustees of Florida International
University; Member of the Florida Council of 100, the Panama Canal Advisory
Board, and the Community Partnership for the Homeless, Inc.
--------------------------------------------------------------------------------
GEORGE M. C. FISHER AGE 61 JOINED GM BOARD 1996
Retired Chairman and Chief Executive Officer, Eastman Kodak Company, Rochester,
New York, since January 1, 2001; held offices of Chairman (January-December
2000), Chairman and Chief Executive Officer (January 1997-January 2000), and
Chairman, President, and Chief Executive Officer (December 1993-January 1997)
COMMITTEES -- Director Affairs, Executive Compensation, Investment Funds
DIRECTORSHIPS -- AT&T, Delta Air Lines, Inc., Eli Lilly & Company
AFFILIATIONS -- Chairman of the National Academy of Engineering; Member of The
Business Council, the President's Advisory Council for Trade Policy and
Negotiations, and the International Academy of Astronautics; Fellow of the
American Academy of Arts and Sciences
--------------------------------------------------------------------------------
3
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NOBUYUKI IDEI AGE 64 JOINED GM BOARD 1999
Chairman and Chief Executive Officer, Sony Corporation, Tokyo, Japan, since June
2000; held offices of President and Chief Executive Officer (June 1999-May
2000), President and Co-Chief Executive Officer (1998-99), and President and
Representative Director (1995-98)
COMMITTEES -- Audit, Investment Funds
DIRECTORSHIPS -- Sony Corporation, Nestle S.A.
AFFILIATIONS -- Member of Japan's IT Strategy Headquarters
--------------------------------------------------------------------------------
KAREN KATEN AGE 52 JOINED GM BOARD 1997
Executive Vice President, Pfizer Inc., New York, New York, and President, the
global Pfizer Pharmaceuticals Group since April 1, 2001; held offices of
Corporate Senior Vice President (1999-April 2001), and Executive Vice President,
Pfizer Pharmaceuticals Group and President, Pfizer U.S. Pharmaceuticals Group
(1995-April 2001)
COMMITTEES -- Public Policy (Chair), Audit, Director Affairs
DIRECTORSHIPS -- Harris Corporation
AFFILIATIONS -- Member of the International Council of J.P. Morgan Chase & Co.
and the Pharmaceutical Research and Manufacturers Association of America;
Trustee of the University of Chicago and council member of the Graduate School
of Business; Member of the Board of Directors of the National Pharmaceutical
Council, the National Alliance for Hispanic Health, the American Bureau for
Medical Advancement in China, Catalyst, National Board of Trustees for the
American Cancer Society Research Foundation, RAND, and the NCAA Foundation
--------------------------------------------------------------------------------
ALAN G. LAFLEY AGE 54 JOINED GM BOARD 2002
President and Chief Executive, The Procter & Gamble Company, Cincinnati, Ohio,
since 2000; held offices of President -- Global Beauty Care and North America
(1999-2000), Executive Vice President and President -- North America, Procter &
Gamble North America (1998-99), Executive Vice President and President -- Asia,
Procter & Gamble Asia (1995-98)
DIRECTORSHIPS -- The Procter & Gamble Company
AFFILIATIONS -- Member of the Board of Trustees of reflect.com, the Board of
Trustees of Hamilton College, The Business Roundtable, The Business Council, and
the Lauder Institute Board of Governors (Wharton School of Arts & Sciences)
--------------------------------------------------------------------------------
E. STANLEY O'NEAL AGE 50 JOINED GM BOARD 2001
President and Chief Operating Officer, Merrill Lynch & Co., Inc., New York, New
York, since 2001; held offices of President, U.S. Private Client Group
(2000-01), Executive Vice President and Chief Financial Officer (1998-2000),
Executive Vice President and Co-Head, Global Markets and Investment Banking
Group (1997-98)
DIRECTORSHIPS -- Merrill Lynch & Co., Inc., NASDAQ Stock Market
AFFILIATIONS -- Member of the Capital Markets Advisory Committee of the New York
Stock Exchange; Trustee of the National Urban League, Ronald McDonald House of
New York, Catalyst, and the Buckley School
--------------------------------------------------------------------------------
4
--------------------------------------------------------------------------------
ECKHARD PFEIFFER AGE 60 JOINED GM BOARD 1996
Retired President and Chief Executive Officer, Compaq Computer Corporation,
Houston, Texas, since 1999; held offices of President and Chief Executive
Officer (1991-99)
COMMITTEES -- Audit (Chair), Capital Stock (Chair), Executive Compensation
DIRECTORSHIPS -- Chairman, Intershop Communication AG, Biogen, Inc.,
Telefonaktiebolaget LM Ericsson, IFCO Systems, N.V., Syntek Capital AG
AFFILIATIONS -- Member of the Advisory Board of Deutsche Bank, the Executive
Board of Southern Methodist University Cox School of Business, Board of Visitors
M.D. Anderson Cancer Center, and The Business Council
--------------------------------------------------------------------------------
JOHN F. SMITH, JR. AGE 64 JOINED GM BOARD 1990
Chairman, General Motors Corporation since January 1, 1996; held offices of
Chief Executive Officer (1992-2000), and President (1992-98); joined General
Motors Corporation in 1961
COMMITTEE -- Investment Funds
DIRECTORSHIPS -- The Procter & Gamble Company, Delta Air Lines, Inc., Suzuki
Motor Corporation
AFFILIATIONS -- Director of the U.S.-Japan Business Council; Chairman of the
Board of Directors of Catalyst; Member of the American Society of Corporate
Executives, The Business Council, the Advisory Board of DB Capital Partners, the
Chancellor's Executive Committee of the University of Massachusetts, the Board
of Trustees of Boston University, and the Board of Directors of The Nature
Conservancy
--------------------------------------------------------------------------------
G. RICHARD WAGONER, JR. AGE 49 JOINED GM BOARD 1998
President and Chief Executive Officer since June 1, 2000; held offices of
President and Chief Operating Officer (1998-2000), and Executive Vice President
and President GM's North American Operations (1994-98); joined General Motors
Corporation in 1977
AFFILIATIONS -- Member of the Duke University Board of Trustees, The Business
Council, The Business Roundtable, and the Board of Trustees for Detroit Country
Day School; Chairman of the Society of Automotive Engineers A World in Motion
Executive Committee
--------------------------------------------------------------------------------
LLOYD D. WARD AGE 53 JOINED GM BOARD 2000
Chief Executive Officer, United States Olympic Committee, Colorado Springs,
Colorado, since November 1, 2001; Chairman and Chief Executive Officer, iMotors,
San Francisco, California (January-July 2001); Chairman and Chief Executive
Officer, Maytag Corporation, Newton, Iowa (August 1999-November 2000),
President and Chief Operating Officer (1998-99), and Executive Vice President
and President Maytag Appliances (1996-98)
COMMITTEES -- Audit, Public Policy
DIRECTORSHIPS -- J.P. Morgan Chase & Co., Belo Corporation
AFFILIATIONS -- Member of the Executive Leadership Council, Washington, D.C.
--------------------------------------------------------------------------------
5
SECURITY OWNERSHIP OF DIRECTORS, NAMED EXECUTIVE OFFICERS,
AND CERTAIN OTHERS
The beneficial ownership as of February 28, 2002, of all classes of common
stock of the Corporation for each director, each Named Executive Officer, and
all directors and executive officers as a group is shown in the following
tables. The shares listed below do not include any common stock of the
Corporation held by the pension or profit sharing plans of any other corporation
or other entity, or of any endowment funds of an educational or charitable
institution of which a director or executive may serve as director or trustee.
Each of the individuals listed below, as well as all the directors and executive
officers as a group, owns less than one percent of the outstanding shares and
voting power of any class of common stock of the Corporation.
DIRECTORS
SHARES DEFERRED
BENEFICIALLY OWNED STOCK UNITS (a) STOCK OPTIONS (b)
------------------------- -------------------------- -------------------------
NAME COMMON CLASS H COMMON CLASS H COMMON CLASS H
------------------------- ---------- ---------- ---------- ----------- ---------- ----------
P. N. Barnevik........... 9,628 1,188 4,873 2,525 0 0
J. H. Bryan.............. 6,603 1,266 11,077 3,733 8,738 1,797
A. M. Codina............. 2,000 0 0 0 0 0
T. E. Everhart........... 1,702 420 14,962 41,401(c) 1,093 5,000(c)
G. M. C. Fisher.......... 4,752 792 3,292 13,291(c) 5,908 1,236
N. Idei.................. 4,250 2,250 3,649 1,562 0 0
K. Katen................. 4,000 3,000 4,251 2,542 5,141 1,377
A. G. Lafley............. 1,000 0 0 0 0 0
J. W. Marriott, Jr....... 752 15,792 14,976 21,112 0 0
E. S. O'Neal............. 1,000 1,400 264 834 0 0
E. Pfeiffer.............. 4,512 4,752 6,450 15,253(c) 7,436 14,572(c)
L. D. Ward............... 1,000 0 2,981 1,320 0 0
---------------
(a) Deferred Stock Units -- These amounts have been deferred under the General
Motors Corporation Compensation Plan for Non-Employee Directors, as well as
amounts deferred under the Hughes Electronics Corporation Compensation Plan
for Non-Employee Directors. The only material difference between the Hughes
Plan and the General Motors Corporation Compensation Plan for Non-Employee
Directors is that all stock amounts refer exclusively to Class H Common
Stock. For more information about this plan, please refer to the section on
Director Compensation on page iii.
(b) Number of shares that may be acquired through the exercise of stock options
within 60 days of February 28, 2002.
(c) Also includes 8,052 deferred stock units and 5,000 options
(T. E. Everhart), 514 deferred stock units (G. M. C. Fisher), and 12,250
deferred stock units and 12,775 options (E. Pfeiffer) granted under the
Hughes Deferred Compensation Plan.
NAMED EXECUTIVE OFFICERS AND
ALL DIRECTORS AND EXECUTIVE OFFICERS
SHARES DEFERRED
BENEFICIALLY OWNED (a) STOCK UNITS (b) STOCK OPTIONS (c)
------------------------- -------------------------- -------------------------
NAME COMMON CLASS H COMMON CLASS H COMMON CLASS H
------------------------- ---------- ---------- ---------- ----------- ---------- ----------
J. M. Devine............. 14,330 3,503 200,818 0 166,668 0
J. D. Finnegan........... 15,474 3,214 40,196 11,541 173,434 0
R. A. Lutz............... 7,999 0 9,777 0 0 0
J. F. Smith, Jr.......... 270,039 162,098 48,796 83,313 1,993,354 0
G. R. Wagoner, Jr........ 94,013 63,574 23,046 16,755 1,050,470 0
All directors and
executive officers as a
group.................. 689,503 342,855 465,745 214,348 4,972,401 23,982
---------------
(a) Shares beneficially owned include shares credited under the General Motors
Savings-Stock Purchase Program for Salaried Employees (the "GM S-SPP") and
the General Motors Canadian Savings-Stock Program for Salaried Employees
(the "Canadian Plan"). The GM S-SPP program is generally available to all
salaried employees in the U.S. and provides that participants may contribute
up to 40% of eligible salary, subject to maximum limits established by the
Internal Revenue Code (the "IRC"). The Canadian Plan program is available to
all salaried employees in Canada, and there is no maximum contribution
limit.
6
(b) Deferred Stock Units include shares under the General Motors Benefit
Equalization Plan-Savings (the "BEP-S"). The BEP-S is a non-qualified
"excess benefits" plan that is exempt from ERISA and the IRC limitations and
provides executives with the full GM matching contribution without regard to
the IRC limitations. Amounts credited under the Plan are maintained in share
units of Common Stock. Following termination of employment, an employee may
elect to receive a complete distribution of amounts in the BEP-S account,
which will be paid in cash. Deferred units also include undelivered
incentive awards that will vest upon the occurrence of certain events and
that are subject to forfeiture under certain circumstances.
(c) Number of shares that may be acquired through exercise of stock options
within 60 days from February 28, 2002. The shares reported in this column
reflect adjustments to the original option grants resulting from the
recapitalization of the Class H Common Stock in December 1997, the spin-off
of Delphi Automotive Systems in 1999, and a 3-for-1 Class H Common Stock
split in the form of a 200% stock dividend in 2000. Additional information
regarding stock options is provided on pages 13 and 14.
CERTAIN BENEFICIAL OWNERS
The following table gives information about each entity known to GM to be
the beneficial owner of more than five percent of any class of GM common stock.
NUMBER OF PERCENT OF
NAME AND ADDRESS TITLE OF STOCK SHARES CLASS
---------------------------------------- -------------------- ----------- ----------
State Street Bank and Trust Company(a)
225 Franklin Street Common 85,527,882 15.4%
Boston, MA 02110 Class H 50,552,166 5.8%
% of Total Vote(b) 13.0%
Southeastern Asset Management, Inc.
6410 Poplar Ave., Suite 900 Class H 43,963,766 5.0%
Memphis, TN 38119 % of Total Vote(b) 1.2%
Fiat S.p.A.
Via Nizza 250 Common 32,053,422 5.6%
10126 Turin, Italy % of Total Vote(b) 4.4%
U.S. Trust Corporation(c)
114 West 47th Street Class H 181,891,754 20.7%
New York, NY 10036 % of Total Vote(b) 5.0%
---------------
(a) Acting in various fiduciary capacities for various employee benefit plans.
(b) Combined voting power of Common and Class H Common Stock. Each share of
Common Stock is equivalent to one vote, and each share of Class H Common
Stock is equivalent to 0.2 vote.
(c) Includes shares beneficially owned by U.S. Trust Corporation acting as the
independent trustee for the Corporation's employee pension plan and VEBA
plan trust.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lloyd D. Ward, a member of GM's Board, was named Chief Executive Officer of
the U.S. Olympic Committee (the "USOC") effective November 1, 2001. General
Motors has been a Corporate Sponsor of the USOC and its affiliates for several
years and has made the U.S. Olympic marketing rights that GM receives as a
Corporate Sponsor an important element in its marketing and advertising
strategies. In 2001, prior to Mr. Ward's appointment, GM as a Corporate Sponsor
provided approximately $7.5 million in cash contributions, the use of vehicles
valued at approximately $1.4 million, and $750,000 in other fees to the USOC.
(The USOC's total revenues in 2000 were approximately $177.7 million.)
E. Stanley O'Neal, a member of GM's Board, is the President and Chief
Operating Officer of Merrill Lynch & Co., Inc., which provided services
including underwriting and investment banking services to GM in 2001.
General Motors has invested $2 million in Cunningham Motor Company ("CMC").
Robert A. Lutz, an officer of the Corporation, is the principal owner and vice
chairman of the board of CMC. In consideration for this investment, GM has taken
an equity interest in CMC of 22.9%, with minimal voting rights. Presently in the
development stage, CMC is a virtual car company which is seeking to develop and
produce a world
7
class grand touring car that would compete with Ferrari, Aston Martin, and other
world class touring cars in North America and Europe. Under a framework approved
by the Executive Compensation Committee designed to oversee the relationship
between GM, CMC, and Mr. Lutz, Mr. Lutz will not participate in any
transactions, meetings, or decisions pertaining to the relationship between the
two companies. Mr. Lutz will continue to serve as a member of the CMC Board of
Directors. General Motors' investment will entitle it to name a GM
representative to the CMC Board. Any further business arrangements between GM
and CMC will be subject to arms' length negotiation and periodically reviewed by
the Committee to ensure that they are in the best interests of GM and its
stockholders.
Executive officers of General Motors have from time to time received
mortgage loans from GMAC or its subsidiaries, or acted as co-signers for loans
made to family members. These loans were made in the ordinary course of business
and on the same terms and conditions, including interest rates and collateral,
as those prevailing at the same time for comparable transactions with other
employees of General Motors, which are substantially the same as those offered
to unrelated customers.
Marriott International, Inc. received loans in the ordinary course of
business from GMAC or its subsidiaries, which were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time such loans were entered into for comparable transactions with unrelated
parties. These loans did not involve more than the normal risk of collectibility
and did not present any other unfavorable features. J. W. Marriott, Jr., who
will retire from the GM Board following the 2002 annual meeting, is the Chairman
and Chief Executive Officer of Marriott International, Inc.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities law requires that the executive officers and directors
of the Corporation must report to the SEC and the Corporation, within certain
periods, how many shares of the Corporation's equity securities they own and if
they conducted any transactions in that stock. Based upon information furnished
by these stockholders, the Corporation believes that all required filings for
2001 and prior years have been timely made, except that in 2001, E. S. O'Neal
inadvertently filed his Initial Statement of Beneficial Ownership (Form 3) after
the due date. All transactions have now been reported.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
This is a report on the compensation paid to the Corporation's executives,
including the Named Executive Officers. The Named Executive Officers for 2001
are:
John F. Smith, Jr......... Chairman of the Board of Directors
G. Richard Wagoner, Jr.... President and Chief Executive Officer (CEO)
John M. Devine............ Vice Chairman and Chief Financial Officer
Robert A. Lutz............ Vice Chairman -- Product Development and Chairman, GM North America
John D. Finnegan.......... Executive Vice President and Chairman and President, General Motors
Acceptance Corporation
COMPENSATION PLANS -- As discussed in greater detail in Item No. 3 on page
21, the Corporation's current incentive plans will expire in May 2002. 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. A survey
of several global industrial and service corporations was conducted during this
comprehensive process. To assist in the review process the Committee and the
Corporation engaged the services of an outside consulting firm. Although the
formal incentive plans that resulted from this review will not be put into
effect unless and until appropriate stockholder approval is received, certain
provisions resulting from the review which do not require stockholder approval
have already been implemented.
During 2001, the Board of Directors met in executive session to review the
Corporation's performance and the performance of the CEO and other senior
leaders, including the Named Executive Officers. The Committee advised the Board
with respect to all compensation determinations for these executives.
8
COMPENSATION PHILOSOPHY -- Executive compensation programs for General
Motors and its major subsidiaries are based on the belief that the interests of
employees should be closely aligned with those of GM's stockholders. Under this
philosophy:
* A significant portion of each executive's total compensation is linked to
accomplishing specific, measurable results intended to create value for
stockholders in both the short- and long-term.
* Executives are motivated to improve the overall performance and
profitability of the Corporation, as well as the specific region/unit to
which they are assigned, and will be rewarded only when and if the
business goals previously established by Management and the Committee
have been achieved.
* Each executive's individual performance and contribution will be
reflected through differentiated salary adjustments and the amount of
incentive awards paid, if any.
* Long-term incentive awards are paid in GM common stocks to further
reinforce the link between executives' and stockholders' interests.
* In years of strong performance, executives can earn highly competitive
levels of compensation as compared to executives in positions of similar
complexity and scope of responsibility at comparator companies. The
Corporation will thus be able to attract, retain, and motivate the
leadership talent it needs to maintain and grow its businesses
successfully. Conversely, in years of below average performance,
executives will receive compensation that is less than competitive
benchmarks.
STOCK OWNERSHIP GUIDELINES -- The Corporation feels strongly that the best
way to reinforce the link between the executives' and stockholders' interests is
to require that executives own a significant amount of GM stock. As a result,
the Committee has established formal stock ownership guidelines for all
Corporate officers, including the Named Executive Officers, and other select
senior executives. The guidelines are as follows:
MINIMUM AGGREGATE
POSITION VALUE EQUIVALENT
---------- ---------------------
GM Chairman, President & CEO, and Vice Chairmen....... 5 times base salary
Executive Vice Presidents............................. 4 times base salary
Group Vice Presidents................................. 3 times base salary
Vice Presidents....................................... 2 times base salary
COMPENSATION DEDUCTIBILITY POLICY -- In 1997, GM stockholders approved an
incentive compensation program effective until 2002, which includes provisions
allowing the Corporation to comply with regulations under Section 162(m) of the
Internal Revenue Code. As a result, the Corporation is able to take a tax
deduction for performance-based compensation in excess of $1 million per taxable
year paid to each of the Named Executive Officers. The Code does not permit
companies to take a tax deduction for salary paid in excess of $1 million. While
the Corporation makes every effort to ensure that it will be able to deduct the
compensation it pays, if compliance with Section 162(m) conflicts with the
Corporation's compensation philosophy, or what is believed to be the best
interests of the Corporation and its stockholders, we may conclude that paying
non-deductible compensation is more consistent with that philosophy and in the
Corporation's and stockholders' best interests.
TYPES OF COMPENSATION -- In addition to benefits, which will be reviewed in
the tables following this report, there are three major components to an
executive's total compensation package:
* Base Salary
* Annual Incentives
* Long-Term Incentives
In determining the proper amount for each compensation component, we review
the compensation paid for similar positions at other large corporations with
which GM competes for executive talent. Since the job market for these
executives is not limited to the auto industry alone, a group consisting of
significant, global industrial/service corporations was identified as our
"comparator group." Each year we review the compensation paid at these
companies, as well as their corporate performance, and other factors in
determining the appropriate performance measures and compensation levels for our
executives. We also rely on information and advice provided by outside
consultants.
Base Salary -- Base salaries for GM executives are targeted at the upper
end of the third quartile of salaries paid for similar positions at our
comparator group of companies. The base salaries of individual
9
executives can and do vary from this salary benchmark based on such factors as
individual performance, potential for future advancement, responsibilities, and
length of time in their current position.
Annual Incentives -- Annual incentives for all executive officers were
granted under the General Motors 1997 Annual Incentive Plan that was approved by
the stockholders at the 1997 annual meeting. All executives are eligible to be
considered for annual incentive awards. Payment, if any, however, is based on
GM's overall performance against previously established business objectives, as
well as region/unit and individual performance. We may choose to make
adjustments to awards to reflect the impact of unplanned events.
When we establish the target award and performance objectives, we also set
a minimum performance level that must be achieved before any awards can be paid.
If this minimum level is not met, there will be no annual incentive payout. The
maximum award was approved by stockholders as part of the 1997 Annual Incentive
Plan. When we establish this payout range, we assess the degree of performance
necessary to achieve the objective by reviewing both past and projected
performance levels, as well as external marketplace conditions such as the
economic outlook, competitive performance levels, projected automotive industry
volumes, projected market share, and quality improvements. We do not assign a
specified weight to these factors, but rather we use our judgment to establish a
targeted performance level and related payout range that we believe are in the
best interests of the Corporation's stockholders and executives. The size of
final awards depends on the actual level of performance achieved in comparison
with the pre-established objectives.
As in previous years, management recommended that the Committee establish
very aggressive performance targets for 2001. We tied the payment of annual
incentive awards to meeting specific levels of net income, Return On Net Assets
("RONA"), market share, and quality that were based upon the Corporation's
business plans. At the end of 2001, we reviewed the Corporation's overall
operating performance and determined that financial results for net income and
RONA were below threshold performance requirements. In addition, for geographic
regions/operating units, we reviewed performance against pre-established targets
for quality and market share within those regions/units. Several regions met or
exceeded regional target expectations, but no payout was made since overall
Corporate financial performance was lower than the minimum level required before
any payout could be made.
Stock Options -- Stock options are also granted under the provisions of the
1997 Stock Incentive Plan. All executives are eligible to be considered for
stock option grants. Options are granted to emphasize the importance of
improving stock price performance and increasing stockholder value over the
long-term and to encourage executives to own GM stock. These options are granted
at 100% of the average price of the stock on the date of grant. In this way
executives can be rewarded only if the stock price increases, which will benefit
both stockholders and executives. Our Plan does not allow the re-pricing of
options.
Options are granted based on competitive long-term incentive compensation
practices. The size of these grants and other long-term awards is intended to
place executives at the upper end of the third quartile of long-term incentives
granted at comparator companies. In determining the size of new grants to each
Named Executive Officer, we consider the number of option shares each executive
has previously been granted. Options are denominated in Common Stock.
Other Long-Term Incentives -- Stock Performance Program awards under the GM
Performance Achievement Plan are normally granted only to the Corporation's
senior executives. Like annual incentive awards, these awards are made annually;
however, any payout depends upon the Total Shareholder Return ("TSR")
performance ranking of Common Stock compared to that of other stocks in the S&P
500 Index over a three-year period. Executives were granted target awards in the
form of shares of the Corporation's common stocks for the 2001-2003 performance
period. The final number of shares to be delivered at the end of the three-year
performance period, if any, will depend on GM's TSR ranking (based on market
price appreciation plus the compounding effect of reinvested dividends) relative
to other companies in the S&P 500 Index. If the Corporation's ranking in the S&P
500 Index, over the three-year period falls below the 25th percentile, no payout
will be made. If the Corporation ranks within the top 10% of the companies in
the S&P 500 Index, the maximum payout level would be achieved. Between threshold
and maximum, payout percentages will be related to the ranking position. By
establishing awards in this fashion, executives will be highly motivated to
improve stock price performance, which would be to their benefit as well as that
of the Corporation's stockholders. The 1999-2001 performance period under the
Stock Performance Program is the
10
first performance period to be paid on the basis of relative TSR. Performance
during the period was slightly above the threshold level required for a payout,
despite significant stock market volatility and price devaluation during the
last half of the performance period, and therefore, awards were paid at the
threshold payout level.
AWARDS TO CHIEF EXECUTIVE OFFICER
Prior to year-end, we met to determine the 2001 compensation level for
Mr. Wagoner. During this review we observed that 2001 was a challenging year for
the company, the automotive industry, and the country. We noted that quality
gains as assessed in the 2001 J. D. Power Initial Quality Survey showed an
improvement of 11% - the highest percentage of any domestic automotive
manufacturer, and that manufacturing productivity improvements as measured by
the Harbour Report were significant -- about 8.5% during the calendar year and
substantially closing the gap with other domestic manufacturers in 2001.
Important progress was also made in the area of market share, with the U.S.
market share increasing for the first time since 1990. The Asia Pacific and
Latin America regions also posted market share gains, while Europe maintained
its share despite a difficult year. Sales leadership in trucks was achieved with
U.S. record sales of more than 2.6 million units and GM was the first automaker
to sell more than 1 million SUVs in a calendar year. However, lower industry
sales volume and strong pricing competition did impact financial results in
North America and Europe, notwithstanding the record earnings of GMAC, and the
events of September 11 intensified the economic slowdown. Management responded
to the challenges in the European market by developing and implementing a
substantial cost reduction strategy and broad restructuring aimed at returning
the region to profitability. We noted also that the "Keep America Rolling"
program of zero-percent financing after September 11 significantly increased
2001 sales in the North American market. Reflecting a very competitive global
market and general devaluation of the equity markets, TSR targets established
for the long-term incentive plan were achieved at slightly above the threshold
level. Although better than many of our competitors, GM's Corporate Net Income
and RONA were below the threshold levels of performance required for a payout
under the Annual Incentive Plan. We, therefore, determined Mr. Wagoner's
compensation as follows:
Base Salary -- Recognizing his strong leadership and promotion to CEO in
2000, effective January 1, 2001 we increased Mr. Wagoner's salary to $2,000,000.
Annual Incentives -- In early 2001, we established an individual target
award for Mr. Wagoner based on achievement of specified levels of net income,
RONA, market share, and quality, in line with the Corporation's compensation
philosophy and reflecting his position as President and Chief Executive Officer.
At the end of the year we reviewed the award in relation to the established
performance measures, noting that final Corporate performance for the year was
below the threshold we established for 2001, and determined that no award
payment was appropriate.
Stock Options -- As part of the Corporation's continuing compensation
review process, we reviewed the size and estimated value of the options granted
to Mr. Wagoner in comparison with option grants to CEOs of our comparator group
of companies. After considering the number of options previously granted to him,
we established his 2001 stock option grant at 400,000 shares of Common Stock.
Other Long-Term Incentives -- The Performance Achievement Plan (PAP) target
awards are disclosed starting on page 14. The awards cover the three-year period
2001-2003. The award for Mr. Wagoner was denominated and will be paid in shares
of GM common stocks in one installment, if earned. The size of the target award
was developed in line with the methodology discussed above for the broader
executive group. The cumulative TSR for the 1999-2001 performance period, which
concluded at year-end 2001, was above threshold but below target. The final
award for Mr. Wagoner was paid at the threshold payout level.
During 2001, the Committee met with the Board of Directors in an executive
session to review the Corporation's performance and the performance of Mr.
Wagoner and other members of senior management, including the Named Executive
Officers. We explained our compensation determinations for the Named Executive
Officers to the Board, and the Board concurred with our decisions.
EXECUTIVE COMPENSATION COMMITTEE
John H. Bryan, Chair J. Willard Marriott, Jr.
George M. C. Fisher Eckhard Pfeiffer
11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows the pre-tax compensation paid during the last three
fiscal years to Chairman J. F. Smith, Jr., President and CEO G. R. Wagoner, Jr.,
and each of the three other most highly compensated executive officers during
2001.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------- -------------------------
PAYOUTS
OTHER AWARDS -------
ANNUAL ------ LONG-TERM ALL OTHER
NAME AND COMPEN- STOCK INCENTIVE COMPEN-
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) SATION(3) OPTIONS(4) PAYOUTS(5) SATION(6)
------------------------- --------- ------------- ------------- ----------- ----------- ----------- -----------
$ $ $ # Shares $ $
J. F. Smith, Jr.......... 2001 1,452,000 0 120,613 400,000 835,000 118,567
Chairman of the Board 2000 2,050,000 1,169,000 74,797 400,000 3,120,000 128,557
1999 1,950,000 4,840,000 105,330 420,700 5,250,000 108,518
G. R. Wagoner, Jr........ 2001 2,000,000 0 N.A. 400,000 480,000 84,160
President and CEO 2000 1,554,000 784,000 N.A. 250,000 1,616,000 80,675
1999 1,350,000 2,597,000 N.A. 210,350 2,250,000 60,950
J. M. Devine............. 2001 1,450,000 1,500,000 69,721 200,000 1,380,000 418,168
Vice Chairman and Chief
Financial Officer
R. A. Lutz............... 2001 483,333 500,000 N.A. 200,000 0 0
Vice Chairman --
Product Development and
Chairman, GMNA
J. D. Finnegan........... 2001 1,000,000 0 N.A. 140,000 255,000 38,000
Executive Vice
President and 2000 883,000 428,000 N.A. 100,000 800,000 43,366
Chairman and President,
GMAC 1999 638,000 991,000 N.A. 48,080 1,120,000 28,266
---------------
(1) On June 1, 2001, Mr. Smith transfered his day-to-day operating
responsibility to Mr. Wagoner, President and Chief Executive Officer.
(2) Mr. Devine commenced GM employment on December 13, 2000. As part of his
employment agreement, he is guaranteed a bonus of $1,500,000 for 2001 and
has elected to defer 100% into Common Stock. Mr. Lutz commenced GM
employment on September 1, 2001. As part of his employment agreement, he is
guaranteed a bonus of $500,000 for 2001, and has elected to defer 100% into
Common Stock.
(3) Amounts in this column reflect the value of perquisites and other personal
benefits, including $53,767 (2001), $21,626 (2000) and $31,495 (1999) for
Mr. Smith and $26,599 (2001) for Mr. Devine related to use of company
aircraft.
(4) All shares are Common Stock.
(5) Amounts reflect long-term incentive payouts under the General Motors 1997
and 1992 Performance Achievement Plans. The awards cover three year
performance periods (1999-2001, 1998-2000, and 1997-1999) and are paid in
the form of shares of Common and Class H stocks. The 1999-2001 awards vest
and are paid in one installment at the time the final award is determined.
The 1997-1999 and 1998-2000 awards vested and were paid in two installments.
For Mr. Devine the payout also includes $1,000,000, the value of the vested
portion of a grant of restricted stock units. The grant, which vests 10%
annually for the first five years with the balance 18 months after
retirement, was made under Mr. Devine's employment agreement.
In addition, as of December 31, 2001, Named Executive Officers held the
following amounts of unvested restricted stock units or Performance
Achievement Plan installments, based on December 31, 2001 closing stock
prices of $48.60 for Common Stock and $15.45 for Class H Common Stock: Mr.
Smith 33,786 units Common Stock ($1,642,000), 34,386 units Class H Common
Stock ($531,264); Mr. Wagoner
12
16,454 units Common Stock ($799,664), 16,755 units Class H Common Stock
($258,865); Mr. Devine 171,360 units Common Stock ($8,328,096); and Mr. Lutz
91,060 units Common Stock ($4,425,516).
(6) These amounts include contributions by the Corporation under various savings
plans and imputed income for endorsement split-dollar life insurance. In the
event of the executive's death, the Corporation would be reimbursed for its
premiums from the life insurance policy. Additional information regarding
the savings plans will be found in footnote (a) on page 6. For 2001, the
respective amounts are as follows: Mr. Smith $56,375 (savings plans),
$63,388 (life insurance); Mr. Wagoner $76,000 (savings plans), $8,160 (life
insurance); Mr. Finnegan $38,000 (savings plans). Messrs. Devine and Lutz
commenced employment recently and are not yet participating in the plans,
however, the amount shown for Mr. Devine includes periodic pension
replacement payments totaling $418,168 as compensation for foregone
non-qualified pension benefits from a previous employer.
OPTION/SAR GRANTS IN 2001
The following table shows the stock options granted to the Named Executive
Officers in 2001. They were granted in a combination of Non-qualified and
Incentive Stock Options (ISOs) on January 8, 2001, and for Mr. Lutz, September
4, 2001. These options become exercisable in three equal annual installments
commencing on the first anniversary of the date of grant. The ISOs expire ten
years from the date of grant, and the non-qualified options expire two days
later.
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED GRANT DATE
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) IN 2001 PRICE DATE VALUE(2)
------------------------------ --------- ------------- ----------- ------------ -------------
# Shares % $/Share $
J. F. Smith, Jr............... 400,000 2.35 52.35 1/9/11 4,948,000
G. R. Wagoner, Jr............. 400,000 2.35 52.35 1/9/11 4,948,000
J. M. Devine.................. 200,000 1.17 52.35 1/9/11 2,474,000
R. A. Lutz.................... 200,000 1.17 54.91 9/5/11 2,712,000
J. D. Finnegan................ 140,000 0.82 52.35 1/9/11 1,732,000
---------------
(1) All grants are exercisable only for Common Stock.
(2) These values were determined based on the Black-Scholes option-pricing model
at the time of grant. The following assumptions were used in the
calculation:
* Expected price volatility -- 31% for the January 8 grants and 32% for the
September 4 grant;
* Options will be exercised in the fifth year;
* An interest rate based upon the corresponding yield of a government bond
maturing five years from the date of grant;
* Dividends at the rate in effect on the date of grant;
* No adjustments for non-transferability.
The fact that we use the Black-Scholes model does not necessarily mean we
believe or acknowledge that it can accurately determine the value of
options. The ultimate value of the option, if any, will depend on the future
market price of Common Stock and the optionee's individual investment
decisions, neither of which can be predicted with any degree of certainty.
13
AGGREGATED OPTION/SAR EXERCISES IN 2001 AND
OPTION/SAR VALUES AT DECEMBER 31, 2001
The following table provides information concerning the options held by
each of the Named Executive Officers at the end of 2001. The year-end value is
based on the closing prices of Common Stock on December 31, 2001 ($48.60). None
of the Named Executive Officers exercised any options during 2001.
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DEC. 31, 2001 DEC. 31, 2001
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
------------------------ ------------------------- -----------------------
# Shares $
J. F. Smith, Jr......... 1,586,453 / 806,898 7,309,337 / 0
G. R. Wagoner, Jr....... 780,354 / 636,778 3,850,363 / 0
J. M. Devine............ 100,000 / 600,000 0 / 0
R. A. Lutz.............. 0 / 200,000 0 / 0
J. D. Finnegan.......... 77,409 / 222,690 24,158 / 0
LONG-TERM INCENTIVE AWARDS
The following table shows target long-term incentive awards granted to
Named Executive Officers in 2001. The awards cover the 2001-2003 performance
period and were granted under the General Motors 1997 Performance Achievement
Plan, except as noted below. If the minimum or threshold performance level is
met or exceeded, the percentage of the target award that will eventually be paid
to participants will depend on the Corporation's TSR ranking relative to other
companies in the S&P 500 Index over the three-year period. If the minimum
performance level is not met, no awards will be paid.
ESTIMATED FUTURE PAYOUTS
NUMBER OF UNDER NON-STOCK PRICE-BASED PLANS
SHARES, UNITS OR --------------------------------------------------------------------------------
OTHER RIGHTS THRESHOLD TARGET MAXIMUM
------------------ PERFORMANCE ------------------ ------------------ ------------------
NAME COMMON CLASS H PERIOD COMMON CLASS H COMMON CLASS H COMMON CLASS H
---------------------- ------ ------- ----------- ------ ------- ------ ------- ------ -------
Shs. Shs. Shs. Shs. Shs. Shs. Shs. Shs.
J. F. Smith, Jr....... 18,597 10,231 2001-2003 9,299 5,116 18,597 10,231 37,194 20,462
G. R. Wagoner, Jr..... 31,099 17,109 2001-2003 15,550 8,555 31,099 17,109 62,198 34,218
J. M. Devine.......... 15,550 8,555 2001-2003 7,775 4,278 15,550 8,555 31,100 17,110
R. A. Lutz............ 15,550 8,555 2001-2003 7,775 4,278 15,550 8,555 31,100 17,110
(1)................... 91,060 2001-2004 91,060 91,060 91,060
J. D. Finnegan........ 13,995 7,699 2001-2003 6,998 3,850 13,995 7,699 27,990 15,398
---------------
(1) Mr. Lutz received a Restricted Stock Unit grant under the Stock Incentive
Plan that will vest in one-third increments over a three-year period based
on achievement of Basic Earnings Per Share.
RETIREMENT PROGRAM
General Motors executives in the United States may receive benefits in
retirement from both a tax-qualified plan that is subject to the requirements of
the Employee Retirement Income Security Act (ERISA) and from non-qualified
plans. Together, these plans are referred to here as the "GM Salaried Program."
Retired executives' tax-qualified benefits are pre-funded and are paid out of
the assets of the General Motors Retirement Plan for Salaried Employees;
however, non-qualified benefits are not pre-funded and are paid out of the
Corporation's general assets.
Two formulas are used to calculate the total of both the tax-qualified and
non-qualified retirement benefits available to eligible U.S. executives. One
formula, the regular Supplemental Executive Retirement Plan ("SERP") Formula,
offers benefits that are calculated based upon an average of the highest five
years of salary during the last ten years of the executive's career, and also
takes into account both the executive's
14
contributory and non-contributory service to GM. These benefits are subject to
an offset of a portion of the maximum Social Security Benefit available to an
individual at age 65.
The alternative SERP Formula determines benefits based upon average annual
total direct compensation, calculated as the sum of [a] the average of the
highest five years of salary in the ten years before retirement plus [b] the
average of the highest five years of bonus received in the ten years preceding
retirement -- each average calculated independently. The alternative SERP
Formula also takes into account the executive's contributory (or
non-contributory) service subject to a maximum of 35 years and provides for an
offset of 100% of the maximum Social Security Benefit available to an individual
at age 65. Only executives who satisfy certain criteria, including not working
for any competitor or otherwise acting in any manner which is not in the best
interests of the Corporation, are eligible to receive benefits calculated under
the alternative SERP Formula in lieu of benefits calculated under the regular
SERP Formula.
The total of the tax-qualified and non-qualified retirement benefits made
available under either the regular or the alternative SERP Formulas are
compared, and eligible executives receive retirement benefits under whichever
formula provides the greater benefit. Non-qualified benefits under either the
regular or alternative formulas can be reduced or eliminated for both retirees
and active employees by the Committee and/or the Board of Directors.
Table I, below, shows the estimated total of both the tax-qualified and
non-qualified retirement benefits, as calculated under the regular SERP Formula
(based upon an Average Annual Base Salary as of December 31, 2001), that would
be paid in monthly installments as a single life annuity to GM executives
retiring as early as age 62 in 2002.
Table II shows the estimated total of both the tax-qualified and
non-qualified retirement benefits, as calculated under the alternative SERP
Formula (based upon Average Annual Total Direct Compensation as of December 31,
2001), that would be paid in monthly installments as a single life annuity to GM
executives retiring as early as age 62 in 2002.
If an eligible executive elects to receive the retirement benefits shown in
Tables I or II in the form of a 65% joint and survivor annuity, the single life
annuity amounts shown in each of the tables would generally be reduced by 5% to
12%, depending upon the age differential between spouses.
TABLE I
PROJECTED TOTAL ANNUAL RETIREMENT BENEFITS FROM ALL COMPONENTS OF THE GM
SALARIED PROGRAM ASSUMING EXECUTIVE'S BENEFITS ARE CALCULATED
UNDER THE REGULAR SERP FORMULA (a)
YEARS OF CREDITED SERVICE
AVERAGE ANNUAL ---------------------------------------------------------------------------
BASE SALARY 7 14 21 28 35 42
--------------- ------- ------- --------- --------- --------- ---------
$ $ $ $ $ $ $
500,000 67,211 134,422 201,634 268,845 336,056 403,267
1,000,000 137,211 274,422 411,634 548,845 686,056 823,267
1,500,000 207,211 414,422 621,634 828,845 1,036,056 1,243,267
2,000,000 277,211 554,422 831,634 1,108,845 1,386,056 1,663,267
2,500,000 347,211 694,422 1,041,634 1,388,845 1,736,056 2,083,267
---------------
(a) The Average Annual Base Salary and the Years of Credited Service as of
December 31, 2001, for each of the Named Executive Officers were as follows:
John F. Smith, Jr. $1,915,000 (41 years); G. Richard Wagoner, Jr. $1,383,000
(24 years); and John D. Finnegan $666,583 (26 years) John M. Devine had 1
year of service with the Corporation and his annual salary for 2001 was
$1,450,000. Robert A. Lutz had 4 months of service with the Corporation, and
his 2001 annual salary rate is $1,450,000. The Annual Base Salaries for the
most recent year(s) considered in the calculations reported here are shown
in the Summary Compensation Table on page 12 in the column labeled "Salary."
15
TABLE II
PROJECTED TOTAL ANNUAL RETIREMENT BENEFITS FROM ALL COMPONENTS OF THE GM
SALARIED PROGRAM ASSUMING EXECUTIVE'S BENEFITS ARE CALCULATED
UNDER THE ALTERNATIVE SERP FORMULA (a)
AVERAGE ANNUAL ELIGIBLE YEARS OF CREDITED SERVICE
TOTAL DIRECT ---------------------------------------------------------------
COMPENSATION 7 14 21 28 35
--------------- ------- --------- --------- --------- ---------
$ $ $ $ $ $
1,075,000 92,955 205,830 318,705 431,580 544,455
2,275,000 218,955 457,830 696,705 935,580 1,174,455
3,475,000 344,955 709,830 1,074,705 1,439,580 1,804,455
4,675,000 470,955 961,830 1,452,705 1,943,580 2,434,455
5,875,000 596,955 1,213,830 1,830,705 2,447,580 3,064,455
7,075,000 722,955 1,465,830 2,208,705 2,951,580 3,694,455
8,275,000 848,955 1,717,830 2,586,705 3,455,580 4,324,455
---------------
(a) The Average Annual Total Direct Compensation and the Eligible Years of
Credited Service (shown in parentheses and capped at 35 years) which may be
considered in the alternative SERP calculation as of December 31, 2001, for
each of the Named Executive Officers were as follows: John F. Smith, Jr.
$4,428,000 (35 years); G. Richard Wagoner, Jr. $2,644,333 (24 years); and
John D. Finnegan $1,139,383 (26 years). John M. Devine had 1 year of service
with the Corporation. His Annual Total Direct Compensation for 2001 was
$2,950,000. Robert A. Lutz had 4 months of service with the Corporation, and
his estimated annualized Total Direct Compensation (the sum of his annual
2001 salary rate plus the $500,000 bonus he received in 2001) was
$1,950,000. The Annual Total Direct Compensation for the most recent year(s)
considered in the calculations reported here will be found in the Summary
Compensation Table on page 12 in the columns labeled "Salary" and "Bonus."
EMPLOYMENT AGREEMENTS
General Motors Corporation believes that continuity in the Corporation's
senior leadership group serves the Corporation best. To encourage this, each
Named Executive Officer has agreed that if he leaves the Corporation he will not
work for a competitor for up to two years. In addition, like other senior
executives of the Corporation, the Named Executive Officers would be eligible to
participate in certain incentive plans that will be submitted to stockholders
for approval at the 2002 annual meeting. Each of the plans provides for vesting
upon certain change in control events, as described in the discussion of Item 3
on page 25, and set forth in Exhibit A included at the end of this Proxy
Statement.
In December 2000, the Corporation entered into an employment agreement with
John M. Devine. Under this agreement, Mr. Devine is guaranteed a bonus of not
less than $1,500,000 for 2001 and $1,000,000 for 2002. If the Corporation
terminates Mr. Devine's employment without cause, the Corporation will pay him
up to two years base salary and target bonus. Mr. Devine also received a grant
of 19,228 stock units which will vest and be paid in shares of Common Stock if
the Corporation meets certain net margin goals during the period from October 1,
2000, to December 31, 2003. Also in connection with his employment agreement,
the Corporation agreed to pay Mr. Devine other cash payments, replace certain
supplemental pension obligations, and grant an option to purchase 300,000 shares
of Common Stock, in each case to compensate Mr. Devine for benefits from a
previous employer which were forfeited when his employment with General Motors
commenced.
In August 2001, the Corporation entered into an employment agreement with
Robert A. Lutz for a term of three years. Under this agreement, Mr. Lutz is
guaranteed a bonus of no less than $1,500,000 for the first 12 months of
employment and $1,000,000 for the second twelve months of employment. At the
time of hire, Mr. Lutz was granted restricted stock units, which will vest in
equal installments during the term of the employment agreement. Mr. Lutz also
received a grant of 19,228 stock units which will vest and be paid in shares of
Common Stock if the Corporation meets certain net margin goals during the period
from October 1, 2000, to December 31, 2003.
16
PERFORMANCE PRESENTATION
The following graphs compare five-year cumulative return to stockholders
for each of the two classes of General Motors common stocks against the Standard
& Poor's (S&P) 500 Composite Stock Index and comparator data. Except as
explained below, each line represents an assumed initial investment of $100 on
January 1, 1997, and reinvestment of dividends over the period.
For Common Stock, a comparison is made with Ford Motor Company and
DaimlerChrysler Corporation. The data for DaimlerChrysler assumes an initial
investment in Chrysler Corporation and conversion of Chrysler stock to
DaimlerChrysler as a result of its merger with Daimler.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
GENERAL MOTORS COMMON STOCK, S&P 500 INDEX, FORD, AND DAIMLERCHRYSLER
DATE GM COMMON STOCK S&P 500 INDEX FORD DAIMLERCHRYSLER
1996 100 100 100 100
1997 119 133 157 106
1998 145 171 291 158
1999 182 208 273 132
2000 132 189 227 73
2001 130 166 159 77
17
Class H Common Stock was registered under Section 12 of the Exchange Act in
late December 1997 and for purposes of this chart it is assumed that an initial
$100 investment was made on December 31, 1997. Since 1999, the Class H Common
Stock has been compared with the S&P 500 Index and the C. E. Unterberg-Towbin
Satellite Index, which consists of satellite manufacturing and satellite
services companies comparable with Hughes Electronics. However, publication of
this Unterberg Index was discontinued in November 2001, and data included below
reflects returns for that index through December 31, 2000. An additional
comparison based on industry peer companies (the "Industry Peer Index") which
includes AOL Time Warner, AT&T, Comcast Corporation, Cox Communications,
EchoStar Communications Corporation, Gilat Satellite Networks, Ltd., Pegasus
Communications, and SES Global-FDR has been developed to complete the analysis.
The comparison assumes $100 invested in General Motors Class H Common Stock, in
the S&P 500 Index and in the Industry Peer Index on December 31, 1997, and
reflects dividend reinvestment and annual weighting of the Industry Peer Index
by individual company market capitalization. Although the companies in the
Industry Peer Index were selected because of similar industry characteristics,
they are not entirely representative of the Corporation's business.
COMPARISON OF CUMULATIVE RETURN
GENERAL MOTORS CLASS H COMMON STOCK, S&P 500 INDEX,
C. E. UNTERBERG-TOWBIN SATELLITE INDEX, AND INDUSTRY PEER INDEX
C.E. UNTERBERG-TOWBIN INDUSTRY
DATE GM CLASS H STOCK S&P 500 SATELLITE INDEX PEER INDEX
1997 100 100 100 100
1998 107 129 107 176
1999 260 156 250 248
2000 187 141 130 121
2001 125 125 125
18
AUDIT COMMITTEE REPORT
The Audit Committee of the General Motors Board of Directors (the
"Committee") is a standing committee comprised of five independent directors. It
operates under a written charter adopted by the Board of Directors. The members
of the Committee are Eckhard Pfeiffer (Chair), John H. Bryan, Nobuyuki Idei,
Karen Katen, and Lloyd D. Ward. The Committee annually recommends to the Board
of Directors the selection of the Corporation's independent accountants. That
recommendation is subject to ratification by the Corporation's stockholders.
Management is responsible for the Corporation's internal control and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States of America and issuing a report thereon. As provided in its
Charter, the Committee's responsibilities include the monitoring and oversight
of these processes.
Consistent with its Charter responsibilities, the Committee has met and
held discussions with management and the independent accountants. In this
context, management represented to the Committee that the Corporation's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America. The Committee has
reviewed and discussed the consolidated financial statements with management and
the independent accountants and discussed with the independent accountants
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Corporation's independent accountants have also provided to the
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with the independent accountants that firm's independence.
The Audit Committee has also considered whether the provision of non-audit
services is compatible with maintaining the independent accountants'
independence.
Based upon the Committee's discussions with management and the independent
accountants as described in this report and the Committee's review of the
representation of management and the report of the independent accountants to
the Committee, the Committee recommended that the Board of Directors include the
audited consolidated financial statements in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 2001, filed with the Securities and
Exchange Commission.
Eckhard Pfeiffer (Chair)
John H. Bryan
Nobuyuki Idei
Karen Katen
Lloyd D. Ward
19
ITEM NO. 2
The By-laws of the Corporation provide that the selection of independent
public accountants by the Audit Committee and the Board of Directors shall be
submitted for ratification by the stockholders at the annual meeting. In
accordance with the By-laws, the firm of Deloitte & Touche LLP has been selected
as independent public accountants for the year 2002, and this selection is being
presented to you for ratification. Representatives of Deloitte & Touche LLP will
attend the annual meeting and will have the opportunity to make a statement if
they desire to do so. They will also be available to answer any questions that
you may have.
Deloitte & Touche LLP has offices or affiliates in or convenient to most of
the localities in the United States and other countries where the Corporation
operates and is considered to be well qualified. The firm uses the work and
reports of other independent auditors who have examined the financial statements
of subsidiaries or investments included in the financial statements of the
Corporation. Deloitte & Touche LLP rotates its personnel assigned to General
Motors at least once every five years. The Audit Committee reviews and approves
in advance any instance where the supervising partner responsible for the
General Motors account is assigned for more than three years. If you do not
ratify the selection of Deloitte & Touche LLP as independent public accountants,
the Audit Committee will seek other accountants. Because of the difficulty and
expense of making any change in public accountants so long after the beginning
of the current year, however, it is likely that the appointment would stand for
2002 unless there were compelling reasons for making an immediate change.
In addition to retaining Deloitte & Touche LLP to audit the Corporation's
consolidated financial statements for the year ended December 31, 2001, the
Corporation, its subsidiaries, and associates retained Deloitte & Touche LLP, as
well as other accounting and consulting firms, to provide various other services
in 2001, and expects to continue to do so in the future. Deloitte & Touche LLP
includes Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu,
and their respective affiliates, which include Deloitte Consulting. Deloitte &
Touche LLP has recently announced its intent to separate Deloitte Consulting
from the firm. The aggregate fees billed to the Corporation in 2001 for
professional services by Deloitte & Touche LLP, including Deloitte Consulting,
for these various services were:
* Audit Fees: $21 million for the audit of the Corporation's consolidated
financial statements for the year ended December 31, 2001, and reviews of
the Corporation's consolidated financial statements included in the
Corporation's Quarterly Reports on Form 10-Q. None of these fees was
billed by Deloitte Consulting;
* Financial Information Systems Design and Implementation Fees: $6 million
for services provided by Deloitte Consulting in connection with the
design or implementation of financial information hardware or software
systems;
* All Other Fees:
* $9 million for tax services provided by Deloitte & Touche LLP;
* $21 million for audit-related services provided by Deloitte & Touche
LLP, such as fees for statutory and employee benefit plan audits,
consultation on accounting matters, procedures on SEC registration
statements, and due diligence procedures associated with mergers and
acquisitions;
* $20 million for services provided by Deloitte Consulting for customer
satisfaction process reengineering consulting at a subsidiary; and
* $25 million for all other services (comprised of $23 million for
services provided by Deloitte Consulting and $2 million for services
provided by Deloitte & Touche LLP) consisting primarily of project
management, process improvements, and assistance for systems not
associated with the financial statements.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT
THE BOOKS, RECORDS, AND ACCOUNTS OF THE CORPORATION AND ITS SUBSIDIARIES FOR THE
YEAR 2002. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS YOU SPECIFY A DIFFERENT CHOICE.
20
ITEM NO. 3
The General Motors executive incentive program currently consists of the
General Motors 1997 Annual Incentive Plan, the General Motors 1997 Stock
Incentive Plan, and the General Motors 1997 Performance Achievement Plan. The
incentive program has been administered since 1937 by the Executive Compensation
Committee (the "Committee"), a standing committee of the Board of Directors
comprised entirely of independent directors.
The current plans are scheduled to terminate on May 31, 2002. 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 Committee and the Corporation engaged the services of William M.
Mercer, Incorporated's executive compensation group.
The Board of Directors believes that the Corporation's continued ability to
attract, motivate, and retain highly qualified employees will have a direct
impact on the future success and profitability of the Corporation. To that end,
the incentive plans provide the Corporation with the ability to maintain
competitive pay practices as benchmarked against two peer groups: a group of
large, high-performing global companies (the "Comparator" group) and a group of
companies recognized for the quality of their compensation practices (the "Best
Practices" group). The Corporation's executive compensation program is designed
so that a meaningful portion of each executive's total compensation opportunity
is placed at-risk through awards made under the incentive plans. The final value
of such awards is tied to the achievement of financial and operational
excellence and the degree to which value is created for stockholders.
As discussed in the Report on Executive Compensation, the 2002 plans have
been designed to meet the requirements of Section 162(m) of the Internal Revenue
Code for "performance-based" compensation. Consistent with the Committee's
compensation deductibility policy, in the future the Corporation plans to seek
stockholder approval where necessary to comply with appropriate rules and/or
regulations. The foregoing, however, shall not preclude the Committee from
making other compensation payments under different programs even if they do not
qualify for tax deductibility under Section 162(m).
If approved by a majority of the shares of common stock voted on the
proposal at the 2002 annual meeting, the Corporation's executive incentive
program, effective June 4, 2002, will include the General Motors 2002 Annual
Incentive Plan, the General Motors 2002 Stock Incentive Plan, and the General
Motors 2002 Long-Term Incentive Plan (previously titled the Performance
Achievement Plan). If not approved, the Plans will not be adopted; however, in
such event the Corporation may adjust cash compensation arrangements as it deems
appropriate. The Plan documents are attached as Exhibit A and the Plan
descriptions set forth below are qualified in their entirety by the complete
Plan documents.
2002 ANNUAL INCENTIVE PLAN
Under the 2002 Annual Incentive Plan, the Committee may grant awards at any
time from June 4, 2002, through May 31, 2007.
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 Chief Executive Officer determination of individual awards to employees
who are not officers of the Corporation. Any such determinations by the Chief
Executive Officer shall be subject to a maximum funding amount, which shall be
approved by the Committee. No individual shall be granted an award in excess of
$7.5 million in any calendar year.
TARGET AWARDS. Under the Plan, early each year the Committee will establish
a targeted performance level at which a target performance award 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 will establish the
corresponding minimum awards. In determining the performance criteria applicable
to any grant of awards, the Committee may use one or more of the following
business criteria: asset turnover, cash flow, contribution margin, cost
objectives, cost reduction, earnings per share, economic value added, increase
in customer base, inventory turnover, market price appreciation of one or more
of the Corporation's common stocks, market share, net income, net income margin,
operating profit margin, pre-tax income, productivity, profit margin, quality,
return on assets, return on net assets, return on capital, return on equity,
revenue, revenue growth, and/or total shareholder return. The business criteria
may be expressed in absolute terms or
21
relative to the performance of other companies or to an index. If any event
occurs during a performance period that requires changes to preserve the
incentive features of this Plan, the Committee may make appropriate adjustments.
The percentage of each target award that will become a final award will be
determined by the Committee on the basis of the performance goals established
and the performance achieved, as well as the quality of the employee's
individual performance during the period, which for covered officers, whose
compensation is subject to Section 162(m), will only involve negative
discretion. Final awards may be less than or greater than 100% of the target
award.
ELIGIBILITY. To be eligible to receive an award under the Plan, a person
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. It
is anticipated that approximately 3,300 employees annually will be eligible to
participate in the Plan, including approximately 25 officers of the Corporation.
2002 STOCK INCENTIVE PLAN
Under the 2002 Stock Incentive Plan, the Committee may grant stock options
or restricted stock units (RSUs) at any time from June 4, 2002, through May 31,
2007.
AMOUNT OF GRANTS. The Plan provides for a pool of 27,400,000 shares of
General Motors Common Stock from which options and RSUs may be granted, subject
to adjustment in certain circumstances. The maximum number of shares which may
be granted as RSUs shall not exceed one million shares of Common Stock. In
addition, the Plan provides for the use of authorized but previously unissued
and/or reacquired shares.
Within the limits previously described, the Plan permits the Committee to
make grants in such amounts and at such times as it may determine. The Committee
may delegate to the Chief Executive Officer determination of individual grants
for employees who are not officers of the Corporation. Any such determinations
by the Chief Executive Officer shall be subject to a maximum number of shares
approved by the Committee.
ELIGIBILITY. To be eligible to receive an award under the Plan, a person
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. It
is anticipated that approximately 3,600 employees annually will participate in
the Plan, including approximately 25 officers of the Corporation.
STOCK OPTION GRANTS. Subject to adjustment as set forth in the Plan, the
maximum option grant to any individual in any calendar year will not exceed one
million shares. The Committee currently anticipates that the granting of stock
options will normally be made on an annual basis.
OPTION EXERCISE AND TERMINATION PROVISIONS. The Plan provides, in
accordance with past practice, that Incentive Stock Options will be exercisable
for a term of ten years from the date of grant, 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 also 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 ten years
from date of termination of employment or, if earlier, the end of the original
option term. However, if termination is due to death, the options will expire
three years from the date of death or, if earlier, the end of the original
option term.
By accepting an option grant, an employee agrees to remain employed by the
Corporation for a period of one year following the exercise of any option
granted under this Plan. If the employee retires or terminates employment
without the consent of the Committee and is employed by a competitor of the
Corporation within one year of the date of exercise of a stock option, the
employee will be required to repay 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.
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
22
of previously acquired shares of the same class of the Corporation's common
stock, or through a broker-assisted cashless exercise program.
RESTRICTED STOCK UNIT GRANTS. Subject to adjustment as set forth in the
Plan, the maximum RSU grant to any individual in any calendar year will not
exceed 250,000 shares. It is not intended that RSU awards will be made on a
regular basis. In determining the performance criteria applicable to any grant
of awards, the Committee may use one or more of the following business criteria:
asset turnover, cash flow, contribution margin, cost objectives, cost reduction,
earnings per share, economic value added, increase in customer base, inventory
turnover, market price appreciation of one or more of the Corporation's common
stocks, market share, net income, net income margin, operating profit margin,
pre-tax income, productivity, profit margin, quality, return on assets, return
on net assets, return on capital, return on equity, revenue, revenue growth,
and/or total shareholder return. The business criteria may be expressed in
absolute terms or relative to the performance of other companies or to an index.
If any event occurs during a performance period that requires changes to
preserve the incentive features of this Plan, the Committee may make appropriate
adjustments.
FEDERAL INCOME TAX CONSEQUENCES. Certain of the Federal income tax
consequences applicable to the 2002 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 transfer, 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 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
that commences on the date of exercise.
23
2002 LONG-TERM INCENTIVE PLAN
Under the Long-Term Incentive Plan, the Committee may grant target awards
at any time from June 4, 2002, through May 31, 2007.
ELIGIBILITY. Eligibility under the Plan is the same as under the proposed
Annual Incentive and Stock Incentive Plans 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. It is anticipated that approximately 475
employees annually will participate in the Plan, including approximately 25
officers of the Corporation.
PERFORMANCE PERIOD. It is anticipated that new grants will be made annually
and will relate to a performance period which shall be determined at time of
grant.
TARGET AWARDS. Employees selected to participate in the Plan will be
granted target awards 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 following business criteria: asset turnover, cash flow,
contribution margin, cost objectives, cost reduction, earnings per share,
economic value added, increase in customer base, inventory turnover, market
price appreciation of one or more of the Corporation's common stocks, market
share, net income, net income margin, operating profit margin, pre-tax income,
productivity, profit margin, quality, return on assets, return on net assets,
return on capital, return on equity, revenue, revenue growth, and/or total
shareholder return. 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 that will become a final
award will be determined by the Committee on the basis of the performance goals
established and the performance achieved, as well as the quality of the
employee's individual performance during the period, which for covered
executives, whose compensation is subject to Section 162(m), will involve only
negative discretion. Final awards may be less than or greater than 100% of the
target award. The Committee may delegate to the Chief Executive Officer
determination of individual final awards for employees who are not officers of
the Corporation. Any such determinations by the Chief Executive Officer 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 $10 million for any Plan
period. If any event occurs during a performance period that requires changes to
preserve the incentive features of this Plan, the Committee may make
adjustments.
FORM OF FINAL AWARD. Final awards may relate to, and upon vesting, be paid
in the form of Common Stock, cash, or partly in stock and partly in cash, as the
Committee may determine. 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 may be subject to a vesting
schedule, as determined by the Committee, except that a portion of the award may
be deferred until after retirement. 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.
PROVISIONS COMMON TO EACH OF THE PLANS
CONDITIONS PRECEDENT. Each of the Plans sets forth conditions, which must
be satisfied if a participant is 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
Plan are realized in accordance with Corporate goals.
24
CHANGE IN CONTROL PROVISIONS. The 2002 Plans provide for the vesting of
certain awards for active and retired executives in the event of a "Change in
Control," which generally will be found to occur in one or more of the following
events: a replacement of a majority of the members of the Board of Directors at
one time or during any two-year period; acquisition by any person, other than GM
or a subsidiary, of 20% or more of the voting power of Common Stock; certain
mergers, consolidations, or other reorganizations in which General Motors is not
the surviving company, and disposition of one-third or more of the fair market
value of the Company's assets (excluding dispositions approved by the Board of
Directors). Such a change in control event would have the following
consequences:
Annual Incentive Plan -- Outstanding awards vest and are paid on a pro rata
basis at the greater of target award level or actual performance.
Stock Incentive Plan -- Outstanding stock options vest and become
exercisable. Outstanding restricted stock units vest immediately on a pro rata
basis. Satisfaction of the conditions precedent described above will not be
enforced in the event of a change in control.
Long-Term Incentive Plan -- Outstanding awards vest and are paid on a pro
rata basis at the greater of target award level or actual performance.
The Committee believes it is important to include these provisions at this
time to provide a measure of continuity and protection for the leadership team
consistent with competitive compensation practices at major U.S. companies
within our comparator group.
NEW PLAN BENEFITS. The benefits or amounts that will be received by or
allocated to the CEO, the named executive officers, all current executive
officers as a group, and all employees who are not executive officers are not
presently determinable. If the Plans had been in effect in 2001, the awards
received by the Corporation's executive officers would have been the same as the
awards actually received by such persons for 2001 under the 1997 Plans. The
Summary Compensation Table on page 12 and the Long-Term Incentive Awards Table
on page 14 list the 2001 awards for the CEO and the four other highest paid
executive officers.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THE PROPOSAL TO APPROVE THE 2002
INCENTIVE PROGRAM, CONSISTING OF THE GENERAL MOTORS 2002 ANNUAL INCENTIVE PLAN,
THE GENERAL MOTORS 2002 STOCK INCENTIVE PLAN, AND THE GENERAL MOTORS 2002
LONG-TERM INCENTIVE PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 4
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave. N.W.,
Suite 215, Washington, DC 20037, owner of 104 shares of Common Stock, has given
notice that she intends to present for action at the annual meeting the
following resolution:
"Resolved:
Whereas General Motors intends to include Internet access as
well as cell phones in some of its car models, and when driving,
this will lead to distraction, and accidents, be it
RESOLVED: That General Motors provide each year, in its Proxy
Statement and/or Annual Report as well as its Environmental,
Health and Safety Report, a detailed report of accidents caused
by driver distraction due to driver use of the internet or cell
phone in General Motors cars.
REASONS: Roads are becoming more and more cluttered. A certain
percentage of Internet users are "addicted" to the use of
cyberspace and could create hazardous situations like holding up
traffic lights or pulling off to park on shoulders if they
access the Internet while driving.
In addition, the risks of potential driver distractions, like
using cell phones while driving, are already well known and
causing considerable amounts of accidents.
Stockholders are entitled to know full details on those
accidents as well as GM's program to reduce driver distraction
and accidents.
25
Last year the owners of 25.6 million shares, representing
approximately 6% of shares voting, voted FOR this proposal.
If you AGREE, please mark your proxy FOR this proposal."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
In 2001, Mrs. Davis made this proposal and General Motors responded by
providing a summary of our efforts until that point in time. Below is an excerpt
of that summary, along with updated information about GM's efforts to address
the issue of driver distraction.
"General Motors agrees that driver distraction is an important issue.
However, distractions can come in many forms besides using a cell phone while
driving. Common driver distractions range from noisy children in the back seat
to eating fast food when driving. While any driver distraction may be implicated
in a collision, determining what actually "caused" the collision is not a simple
task.
In general, vehicle manufacturers can thoughtfully integrate cell phone and
telematics technologies into a vehicle with safeguards that make them
appropriate for in-vehicle use. Comparable stand alone technologies may not
contain similar safeguards.
General Motors has taken a leadership role in addressing the issue of
driver distraction. Since its outset in 1996, GM's OnStar System has been based
on hands free, voice activated technology that has enabled its users to keep
their hands on the steering wheel and eyes on the road.
In April 2000, in part as a result of its experience with OnStar, GM became
the first and so far only automaker to announce a set of common sense
safety-driven principles to guide the research and development of future
information delivery systems in our vehicles. Our systems will be designed to do
four things:
* Keep the driver's eyes on the road and hands on the wheel;
* Minimize the number of steps required for the driver to perform any task;
* Create a common interface for how drivers interact with the system; and
* Utilize a lock-out protocol to prohibit especially demanding tasks while
driving -- for example, such tasks as programming a navigation screen or
using the type of computer screen that should be used only when the
vehicle is in park."
In October 2000, GM announced its "SenseAble Driving" campaign, which
combines research, technology, and education to address the issue of driver
distraction. As part of that program, GM created an education initiative,
piloted with the Michigan Secretary of State and recently offered to state
driver's licensing agencies across the country, to spread the message that
drivers should drive with eyes on the road, hands on the wheel, and mind on the
task of driving.
This program is aimed at improving drivers' understanding about the
importance of minimizing all forms of distractions while driving. Arming them
with this kind of information will help drivers to make sensible choices about
what they should and should not do while driving.
In addition, in August 2001 GM announced the first comprehensive study of
the OnStar database. Based on five years worth of cellular calls to the OnStar
call centers for personal assistance, the research revealed that the embedded
cellular phone has had an outstanding safety performance record. The study is
the world's first analysis of a database that has extensive and actual -- not
estimated -- information about whether a crash involving an airbag deployment
occurred at the same time a cell phone was in use. The GM research concludes
that the frequency of an airbag deployment crash at the same time that OnStar's
embedded phone system was in use was rare, and that the chance an embedded cell
phone actually caused a crash was even rarer.
Finally, in November 2001, GM's "SenseAble Driving" program issued a policy
encouraging employees to use hands-free devices while driving if they are using
a cellular phone.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 4. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
26
ITEM NO. 5
Nick Rossi, P.O. Box 249, Boonville, CA 95415, owner of 525 shares of
Common Stock and 237 shares of Class H Common Stock, has given notice that he
intends to present for action at the annual meeting the following resolution:
This topic won 45% approval at the PG&E 2000 shareholder meeting
"Resolved:
INDEPENDENT DIRECTORS
General Motors Corporation shareholders recommend a bylaw
be adopted that the board (and/or management, if applicable)
nominate independent directors to key board committees to the
fullest extent possible.
An independent director is a director whose only nontrivial
professional, familial or financial connection to the company,
its Chairman, CEO or any other executive officer is his or her
directorship. Further information on this definition is under
">Independent Director Definition" at the Council of
Institutional Investors website www.cii.org.
In addition to the Council of Institutional Investors many
equity analysts and portfolio managers support this topic.
Institutional Investors own 55% of GM stock.
The key board committees are:
* Audit
* Nominating
* Compensation
Also, request that any change on this proposal topic be put to
shareholder vote -- as a separate proposal and apply to
successor companies.
What incentive is there for good corporate governance --
highlighted by independent directors on key committees?
A survey by McKinsey & Co. shows institutional investors
would pay an 18% premium for good corporate governance.
Source: Wall Street Journal June 19, 2000
A reason to take one step to improve
Common sense would seem to support that when a number of items
can be improved -- that making one improvement deserves
attention. Specifically, at our company there are/were a number
of practices allowed that institutional investors believe are
less than optimum, for instance:
1) Four of 12 directors (33%) can be non-independent inside
employees.
2) GM can have interlocking cross-directors at a company
that GM does significant business with.
3) One director can be affiliated with a company that does
significant business with GM.
American Society of Corporate Secretaries
This proposal is consistent with these significant trends in the
speech by Bradley Davis at the American Society of Corporate
Secretaries Technology Seminar, March 2001:
* Growing Focus on Independent Directors: Companies, both public
and private, are placing increasing value on the expertise and
perspective that independent directors can bring to their
boards.
* Increasing Scrutiny of Director Roles and Responsibilities:
Shareholders are becoming more proactive in defining
responsible governance and monitoring compliance.
* The evolution of corporate governance presents new challenges
for Corporate Secretaries, General Counsel and corporate
officers, and fundamentally affects the execution of their
27
roles. These changes are a direct reflection of the growing mobility,
accountability and independence of boards of directors.
To increase shareholder value through greater director
independence vote yes for:
INDEPENDENT DIRECTORS on KEY COMMITTEES
YES ON 5"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Board of Directors has been, and continues to be, a strong proponent of
board independence, and has already taken effective measures to ensure that its
Audit Committee, Executive Compensation Committee, and Committee on Director
Affairs (which acts as the Nominating Committee) are composed exclusively of
independent directors. General Motors' widely acclaimed Guidelines on
Significant Corporate Governance Issues, adopted by the Board in January 1994
and most recently revised in February 2002, states in Item 22: "Except for the
Investment Funds Committee, committee membership will consist only of
independent Directors as defined in By-law 2.12" (emphasis added). Section 2.12
of the GM By-laws gives a definition of "independent" that is consistent with
those as used by major pension funds, the NYSE, and investment advisory firms:
"[A] director who: (i) is not and has not been employed by the corporation
or its subsidiaries in an executive capacity within the five years
immediately prior to the annual meeting at which the nominees of the board
of directors will be voted upon; (ii) is not (and is not affiliated with a
company or firm that is) a significant advisor or consultant to the
corporation or its subsidiaries; (iii) is not affiliated with a significant
customer or supplier of the corporation or its subsidiaries; (iv) does not
have significant personal services contract(s) with the corporation or its
subsidiaries; (v) is not affiliated with a tax-exempt entity that receives
significant contributions from the corporation or its subsidiaries; and
(vi) is not a spouse, parent, sibling or child of any person described by
(i) through (v)."
In compliance with the Guidelines, the Board of Directors has six standing
committees, five of which are wholly comprised of independent directors as
defined by Section 2.12 of the GM By-laws. This includes the Audit Committee,
the Executive Compensation Committee, and the Committee on Director Affairs. Of
the total 26 committee memberships on the six standing committees, 25 are
considered independent. The Chairman's membership on the Investment Funds
Committee is the sole instance where an employee-director serves on a Board
committee.
The Board of Directors believes that the goal of this proposal has already
been achieved through the Guidelines, and that the proposal is therefore
unnecessary and not in the best interests of the stockholders.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 5. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 6
John S. Lauve, 200 North Saginaw, Holly, MI 48442, owner of 412 shares of
Common Stock, has given notice that he intends to present for action at the
annual meeting the following resolution:
"Proposal:
We recommend to the Directors that they increase the stock
dividend. It has been frozen for years. We recognize that the
Directors are protected from direct instruction by the SEC and
Delaware law, but mere stockholders can still express a desire.
Reasons:
Stockholder enthusiasm and value are a function of return
on their investment (ROI). If you hold on to the stock for
years, the only cash return is the dividend. The stock is worth
less than it was 2 years and 1 year ago. The Directors
authorized a strike that cost approximately $5 share. This money
could have been available for stockholder rewards. The Directors
should take care of the investor stockowner, as well as
themselves and management."
28
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The GM Board has established a track record of implementing stockholder
value enhancement initiatives. Since early 1997, the Corporation has returned
over $37 billion of capital to its GM $1 2/3 stockholders, through stock
buybacks, dividends, and distributions implementing spin-offs and split-offs of
portions of GM's operations.
Paying cash dividends is an important element of this program but certainly
not the only one. GM is focused on establishing a payout ratio for regular cash
dividends that can be sustained in the long run so that we can reduce the number
of downward adjustments that may be required during challenging periods in the
ebb and flow of the economic cycle. GM believes that reducing volatility in its
dividends is an important factor in maintaining stockholder value. GM's current
annual dividend has been $2.00 per share since 1997.
In addition, when considering the appropriate dividend level, the Board
reviews current and forecast global cash allocation and investments that are
expected to result in higher value for our stockholders.
Finally, it is important to note that as of March 2002, GM stockholders
benefit from one of the highest dividend yields among all stocks composing the
Dow Jones 30 Index.
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 Ave., No. 205, Redondo Beach, CA 90278, owner
of 50 shares of Common Stock, has given notice that he intends to present for
action at the annual meeting the following resolution:
This topic won 41% of the yes-no shareholder vote in 2001
General Motors shareholders request that our board seek
shareholder approval prior to adopting any pill and also redeem
or terminate any pill now in effect unless it has been approved
by a shareholder vote at the next shareholder meeting.
Why require a shareholder vote to adopt or maintain a poison
pill?
* Pills give directors absolute veto power over any proposed
business combination, no matter how beneficial it might be for
shareholders.
Power and Accountability
By Nell Minow and Robert Monks
* Shareholder right to vote on poison pill proposals won an
overall 57% approval from shareholders at 24 major companies
in 2000.
* This proposal topic won more than 50% shareholder yes-no votes
from the Delphi Automotive Systems (GM-spinoff) shareholders
in 2000 and 2001.
Negative Effects of Poison Pills on stock value
A study by the Securities and Exchange Commission found evidence
that the negative effect of poison pills to deter profitable
takeover bids outweigh benefits.
A study by Professor John Pound of Harvard's Corporate
Research Project found higher corporate performance when there
was no poison pill.
Many institutional investors believe poison pills should be
voted on by shareholders. At a minimum, many institutional
investors believe that shareholders should have the right to
vote on the need of such a powerful tool, which can entrench
existing management.
A poison pill can insulate management at the expense of
shareholders. A poison pill is such a powerful tool that
shareholders should be able to vote on whether it is
appropriate.
29
In my opinion, the right for a shareholder vote on poison
pills will avoid an unbalanced concentration of power in the
directors who could restrict the rights of shareholders.
GM at odds with institutional investors?
In reviewing our directors' stand on this proposal topic, and to
other shareholder proposal topics on the 2002 ballot, it may be
useful to ask whether our directors are at odds with the
recommendation of some key institutional investors and
influential proxy analysts. Our directors' at-odds stand was
clear in previous elections. Often directors' arguments are not
a balanced view of the pro and con arguments. They can be
focused on only one side of the issue.
Evaluating the merits of shareholder proposals
Some shareholders may look to institutional shareholders for
leadership in evaluating the merits of shareholder proposals.
Institutional shareholders have the fiduciary duty to encourage
an independent analysis -- plus the staff and resources to study
the issues thoroughly from a shareholder-value perspective.
Shareholders welcome more information
Shareholders welcome more information on the vote-no
solicitation that our company conducted against this proposal in
2001. For some reason our company assigned valued staff to lobby
shareholders to vote no on this topic. It is curious that our
company would go to this length to influence the vote when there
was no vote-yes campaign to react to.
Is our company friendly to shareholders beyond a
superficial level
Our company went to the length of filling (sic) papers to
entirely prevent shareholders from voting on this topic and 4
other topics at the annual meeting. This effort failed.
In the interest of shareholder value, vote yes for:
SHAREHOLDER VOTE ON POISON PILLS
This topic won 41% of yes-no shareholder votes in 2001
YES ON 7"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Board of Directors believes that the action requested in this proposal
is unnecessary and ill-advised. The Board of Directors has not adopted a
shareholder rights plan (sometimes called a "poison pill") and has no present
intention to adopt one. Circumstances could arise in the future, however, where
the adoption of such a plan would be an important tool for protecting the
interests of the Corporation's stockholders in compliance with the fiduciary
duties of the Board of Directors. Requiring stockholder approval for the
adoption of a rights plan would impede the ability of the Board of Directors to
adopt such a plan in a timely manner for the benefit of stockholders if
circumstances warrant.
Rights plans are designed to strengthen the ability of a board of
directors, in the exercise of its fiduciary duties, to maximize stockholder
value and protect stockholders from unfair and abusive takeover tactics. That is
why more than 2,000 companies, including more than half of the companies in the
S&P 500 Index, have adopted some type of rights plans.
Contrary to the proponent's suggestion, the ability to adopt a shareholder
rights plan does not give a board of directors absolute veto power over any
business combination. Rather, in upholding the legal validity of shareholder
rights plans, the Delaware Supreme Court has made it clear that far from having
absolute discretion a board is required to act in accordance with its fiduciary
duties in adopting and maintaining a rights plan. As a result, rights plans
neither prevent unsolicited proposals from being made nor prevent companies from
being acquired at prices that are fair and adequate. In fact, a study of
takeover data from 1992 through 1996 by Georgeson & Company, a nationally
recognized proxy solicitation and investor relations firm, found that the
presence of a rights plan neither increased the likelihood of defeat of an
30
unsolicited takeover proposal nor reduced the likelihood of a company becoming a
takeover target. The same Georgeson & Company study found that the premiums paid
to acquire companies with rights plans averaged eight percentage points higher
than premiums for companies without such plans.
In recommending a vote against the proposal, the Board of Directors has not
determined that a rights plan should be adopted by the Corporation. Any such
determination would be made only after careful deliberation, in light of all
circumstances then prevailing and in the exercise of the Board's fiduciary
duties. In this regard, it should be noted that under GM's widely respected
Corporate Governance Guidelines, the Board of Directors consists of a majority
of directors who are independent of the Corporation, and that the Board is not
classified into staggered terms but is annually elected in its entirety.
In addition, if the management of General Motors determines that
circumstances make a rights plan desirable, it will include a so-called "TIDE"
provision in any rights plan it might recommend to the Board of Directors. (TIDE
stands for Three-Year Independent Director Evaluation.) The TIDE provision would
establish a committee of independent directors who would review the rights plan
every three years and, if a majority of that committee deemed it appropriate,
would recommend that the full Board modify or terminate the plan. To support its
deliberations, the committee would engage investment bankers and lawyers to
evaluate company performance, markets, and developments in corporate law
relating to rights plans and provide a report and recommendations to the
committee. A simple majority of the full Board could then take action to modify
or terminate the rights plan (unless the terms of the plan required approval by
a larger proportion).
The recommendation against the proposal is based on the Board's belief that
it would not be wise to limit the flexibility of the Board of Directors to act
in the best interests of GM stockholders if circumstances arise in the future
that would warrant the adoption of a rights plan.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL,
ITEM NO. 7. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
ITEM NO. 8
Ray T. Chevedden, 5965 S. Citrus Ave., Los Angeles, CA 90043, owner of
2,000 shares of Common Stock, has given notice that he intends to present for
action at the annual meeting the following resolution:
General Motors shareholders request that our company adopt a
Directors' compensation bylaw for our Directors to be paid with
GM current voting stock as the major or full amount of their
retainer with an incentive award tied to the stock value.
This proposal requests the greatest flexibility to adopt the
spirit and the letter of this proposal to the fullest extent
possible and as soon as possible. This proposal topic is not
intended to interfere with existing agreements. It applies to
Directors who are not employees.
This proposal topic won 33% of the yes-no vote at the UAL Corp.
(United Airlines) 2001 annual meeting.
GM Directors may take more interest in our company if more
of their own money is on the line
GM directors are allowed to own only 1,000 shares.
Many companies require directors to own a minimum amount of
stock to ensure they have a personal interest in the firm's
performance -- just like shareholders. For example, oil refiner
Sunoco Inc. (SUN) expects directors to own $220,000 of stock.
GM directors can own token stock
In the interest of encouraging significant director stock
ownership, vote yes:
Director's $120,000 Retainer to be Paid in Stock
YES ON 8"
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THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
GM's compensation package for non-employee directors is designed to enable
the Board to attract and retain highly talented members while providing
appropriate incentives to enhance stockholder value. As a complex business, GM
must have Board members with a broad range of experience and knowledge and
backgrounds from a wide array of industries and other institutions. Corporations
compete vigorously for top director candidates, and compensation must be
competitive and multi-faceted to attract highly qualified and diverse directors.
In recent years, GM has increased its emphasis on stock and stock options
as the most significant element of director compensation to reinforce the
alignment of directors' and stockholders' interests. Currently, each
non-employee director receives at least 66% of total compensation in Common
Stock or stock based awards. Many directors also elect to defer all or a portion
of their remaining compensation in units of Common Stock.
Clearly, stock is already the most important part of the total compensation
GM pays non-employee directors. However, the proposal would force GM to
eliminate any cash compensation for non-employee directors. GM believes that it
must have the flexibility to design an appropriate, competitive compensation
package for directors, and annually benchmarks its non-employee director
compensation against comparable corporations. Rigid requirements like the
proposal could make it more difficult for GM to attract the kind of diverse
board members needed to represent the stockholders' interest in perpetuating a
successful business including optimizing long-term financial returns.
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.
EXPENSES OF SOLICITATION
The Corporation will pay the cost of this solicitation of proxies. General
Motors will solicit proxies by mail and electronic means, and the directors,
officers, and employees of GM may also solicit proxies. These persons will not
receive any additional compensation for such services. In addition, GM has
retained Morrow & Co., Inc., to assist in soliciting proxies for a fee of up to
$50,000, plus reasonable out-of-pocket expenses. The Corporation will reimburse
brokers and other stockholders of record for their expenses in forwarding proxy
material to beneficial owners.
OTHER MATTERS
The enclosed proxy gives the Proxy Committee discretionary authority to vote
your shares in accordance with its best judgment with respect to all additional
matters that might come before the annual meeting.
IF YOU VOTE BY MAIL, WE ENCOURAGE YOU TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES ON THE ENCLOSED PROXY CARD. YOU DO NOT NEED TO MARK ANY BOXES
IF YOU WISH TO VOTE ACCORDING TO THE BOARD OF DIRECTORS' RECOMMENDATIONS; JUST
SIGN, DATE, AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE. IF YOU VOTE THROUGH
THE INTERNET OR BY TELEPHONE, SIMPLY FOLLOW THE INSTRUCTIONS ON THE ENCLOSED
FORM. THANK YOU FOR YOUR COOPERATION AND YOUR PROMPT RESPONSE.
By order of the Board of Directors,
Nancy E. Polis, Secretary
April 18, 2002
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EXHIBIT A
GENERAL MOTORS 2002 ANNUAL INCENTIVE PLAN
1. The purposes of the General Motors 2002 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,
2007, 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 Chief Executive Officer
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: asset turnover, cash flow, contribution margin,
cost objectives, cost reduction, earnings per share, economic value added,
increase in customer base, inventory turnover, market price appreciation of one
or more of the Corporation's common stocks, market share, net income, net income
margin, operating profit margin, pre-tax income, productivity, profit margin,
quality, return on assets, return on net assets, return on capital, return on
equity, revenue, revenue growth, and/or total shareholder return. 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.
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, which for covered officers
will involve only negative discretion. A covered officer is any individual whose
compensation in the year of expected payment of an award will be subject to the
provisions of Section 162(m) of the Internal Revenue Code, as determined by the
Committee. Adjustments to awards to reflect individual performance for employees
who are not officers of the Corporation may be made by the Chief Executive
Officer. 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. The Committee shall certify the final awards earned by covered
officers in writing prior to any award payments.
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
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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 may 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 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, except for awards that
vest pursuant to paragraph 12 of this Plan.
4(b). 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 local, state, provincial, or federal
government service.
6(e). If employment of an employee is terminated by death, all final
awards not currently vested shall immediately vest.
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
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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(e) of the General
Motors 2002 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 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 Chief Executive Officer; provided, however, the
Committee shall not delegate to the Chief Executive Officer 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 Chief
Executive Officer. 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. Upon the effective date of any Change in Control of the Corporation as
defined in this paragraph all outstanding awards granted under this Plan shall
vest and be paid on a pro rata basis based on the greater of target award level
or actual performance. A "Change in Control" shall mean the occurrence of one or
more of the following events: (a) any "person" or "group" as those terms are
used in the Securities Exchange Act of 1934, as amended, other than any employee
benefit plan or GM or a trustee or other administrator or fiduciary holding
securities under an employee benefit plan of the Corporation, is or becomes the
current beneficial owner of GM voting securities representing 20% or more of the
combined voting power of GM's then outstanding securities; (b) during any
two-year period, individuals who at the beginning of such period constitute the
Board and any new directors whose election by the Board of nomination for
election by the Corporation's stockholders was approved by at least two-thirds
of the directors still in office who either were directors at the beginning of
the period or whose election was previously so approved, cease for any reason to
constitute a majority thereof; (c) GM merges or consolidates with any other
corporation or other entity, other than a merger or consolidation (i) that would
result in all or a portion of the voting securities of GM outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting securities of GM or such surviving
entity outstanding immediately after such merger or consolidation or (ii) by
which the corporate existence of GM is not affected and following which GM's
chief executive officer would retain his or her position with GM and the GM
directors would remain on the Board of the Corporation and constitute a majority
thereof; (d) GM sells or otherwise disposes of all or substantially all of its
assets; or (e) the stockholders of the Corporation approve a plan of complete
liquidation of GM.
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13. 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, 2007.
14. 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.
15. This Plan shall be effective on June 4, 2002, if approved by the
stockholders of the Corporation at the 2002 annual meeting.
GENERAL MOTORS 2002 STOCK INCENTIVE PLAN
1. The purposes of the General Motors 2002 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
Common Stock, $1 2/3 par value ("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.
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 27,400,000 shares of 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 1,000,000 shares of 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, and no
individual may be granted restricted stock units in any calendar year covering
more than 250,000 shares of Common Stock. If, prior to June 1, 2007, all or any
portion of an option granted under this Plan or the 1997 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. In
the event that any option granted hereunder or under the 1997
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Plan is exercised through the delivery of shares or in the event that
withholding tax liabilities arising from any award are satisfied by the
withholding of shares by the Corporation, the number of shares available for
awards under the Plan shall be increased by the number of shares so surrendered
or withheld.
3. The Committee may, at such time or times as it may determine prior to
June 1, 2007, 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 Chief Executive Officer may grant options and restricted stock
units, within the maximum number of shares established by the Committee, to
employees selected by him or her, except that no such grant may be made by the
Chief Executive Officer 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, or if such prices are not reported in The Wall Street Journal,
in another reliable, widely available source of such prices as designated by the
Committee 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, except as otherwise determined by the Committee:
5(a). Vesting and Exercise. Except in the case of death, no option shall
vest or become exercisable prior to the first anniversary date of the date of
the option grant (or such later date as may be established by the Committee or
its delegate(s)); after such date options shall be exercisable only in
accordance with the terms and conditions established at the time of grant.
Beginning on the first anniversary date of the option grant, stock options will
become exercisable in one-third increments. Subject to paragraph 5(d), the first
increment may be exercised on or after the first anniversary date and the second
and third increments may be exercised on or after the second and third
anniversaries of the date of grant. As a condition to the exercise of any
option, an employee may be required, among other things, to enter into such
agreements as are considered by the Committee to be appropriate and in the best
interests of the Corporation.
5(b). Term of the Option. The normal 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). Conditions Precedent. Except for options that vest pursuant to
paragraph 14, the exercise of any option shall be subject to satisfaction of the
following conditions precedent: (i) that 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 or with the specific approval of the Corporation,
shall not be considered to be an activity which is competitive with any activity
of the Corporation or any subsidiary; (ii) that the employee refrain from
otherwise acting in any manner inimical or in any way contrary to the best
interests of the Corporation; and (iii) that the employee furnish to the
Corporation such information with respect to the satisfaction of the foregoing
conditions precedent as the Committee shall reasonably request. In addition, by
accepting the grant of an option, the employee will thereby agree to remain in
the employment of the Corporation for a period of one year after the date of
exercise of any such option, unless such employment is terminated by death or
retirement.
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5(d). Termination of Employment. Notwithstanding the following provisions,
the Committee may at any time prior to any termination of employment under
circumstances covered by this clause, determine that options shall vest or
terminate on the date of notice of termination of employment, or such later date
as it may deem appropriate. In addition, the Committee may from time to time
determine in its discretion that optionees retiring from the organization during
specified time periods under specified circumstances may vest and retain some
portion of those options granted in the year the retirement occurs.
(i) If an employee is terminated for cause or quits employment without
the prior written consent of the Corporation, all options (both
vested and unvested) shall be forfeited and terminate on the date of
termination of employment or, if earlier, the date cause exists.
(ii) If an employee retires from the Corporation at age 62 or older with
ten or more years of credited service, subject to the other terms
and conditions of the Plan, all vested options will remain
exercisable for the full remaining term.
(iii) If employment is terminated by reason of death, all options shall
immediately vest and remain exercisable until the third anniversary
of the date of death or, if earlier, the expiration date of such
option.
(iv) If an employee becomes disabled, unvested options will continue to
vest while the employee remains on the disability leave and, subject
to the other terms and conditions of the Plan, vested options will
remain exercisable for the full remaining term.
(v) If employment terminates for any reason other than as set forth
above at any time on or after the first anniversary of the date of
grant of an option, subject to the other terms and conditions of the
Plan, all vested options will remain exercisable until the third
anniversary of the date of termination of employment or, if earlier,
the expiration date of such option.
(vi) If employment terminates for any reason (other than death) prior to
the first anniversary of the date an option is granted, the option
shall be forfeited and terminate on the date of termination of
employment.
5(e). Forfeiture of Gains on Exercise. If the employee terminates
employment in breach of the covenants and conditions precedent set forth in
Section 5(c) and becomes employed by a competitor of the Corporation within one
year 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, or if such prices are not reported
in The Wall Street Journal, in another reliable, widely available source of such
prices as designated by the Committee 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 becoming employed
by a competitor. By accepting an option grant under this Plan, the employee
consents, to the extent permitted by law, 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(f). Leave of Absence. 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
local, state, provincial, or federal government service.
5(g). Payment of Exercise Price; Withholding Taxes. All shares purchased
upon exercise of any option shall be paid for in full at the time of purchase.
Such payment shall be made (i) in cash, (ii) through delivery of shares
(provided that the shares, other than shares purchased on the open market, must
be held for at least six months) of the same class of stock as the option
shares, or (iii) a combination of cash and stock. Any shares delivered pursuant
to subsection (ii) or (iii) of the preceding sentence 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, or if such prices are not reported in
The Wall Street Journal, in another reliable, widely available source of such
prices as designated by the Committee 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 up to the statutory minimum required
withholding amount). To the extent authorized by the Committee, any exercise of
an option
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granted under this Plan may be made in accordance with any cashless exercise
program approved by the Committee.
5(h). Dividends. 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(i). Transferability. 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 "RSUs" or
"Units") granted under this Plan shall be subject to the following provisions:
6(a). Subject to adjustments contemplated under paragraph 10 of this Plan,
(i) a Unit granted hereunder shall relate to one share of 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 and the terms and conditions
applicable to the grant (a "Unit Grant") of such Units. 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 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: asset turnover, cash flow,
contribution margin, cost objectives, cost reduction, earnings per share,
economic value added, increase in customer base, inventory turnover, market
price appreciation of one or more of the Corporation's common stocks, market
share, net income, net income margin, operating profit margin, pre-tax income,
productivity, profit margin, quality, return on assets, return on net assets,
return on capital, return on equity, revenue, revenue growth, and/or total
shareholder return. 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) Except for Unit Grants that vest pursuant to paragraph 14 of
this Plan, 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
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in the immediate cancellation of any unvested or unpaid 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 involuntarily or
quits employment without the prior written consent of the Corporation, the
unvested or unpaid 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 procedures 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 local, state, provincial, or federal
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. 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 up to the
statutory minimum, 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.
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 Unit 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.
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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 and such awards will not count against this Plan reserve of
available shares.
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 individual award maximums,
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 Chief Executive
Officer; provided, however, the Committee shall not delegate to the Chief
Executive Officer 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 Chief
Executive Officer. 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. Upon the effective date of any Change in Control of the Corporation as
defined in this paragraph all outstanding stock options granted under this Plan
shall vest, and all outstanding RSUs shall vest on a pro rata basis. A "Change
in Control" shall mean the occurrence of one or more of the following events:
(a) any "person" or "group" as those terms are used in the Securities Exchange
Act of 1934, as amended, other than any employee benefit plan or GM or a trustee
or other administrator or fiduciary holding securities under an employee benefit
plan of the Corporation, is or becomes the current beneficial owner of GM voting
securities representing 20% or more of the combined voting power of GM's then
outstanding securities; (b) during any two-year period, individuals who at the
beginning of such period constitute the Board and any new directors whose
election by the Board of nomination for election by the Corporation's
stockholders was approved by at least two-thirds of the directors still in
office who either were directors at the beginning of the period or whose
election was previously so approved, cease for any reason to constitute a
majority thereof; (c) GM merges or consolidates with any other corporation or
other entity, other than a merger or consolidation (i) that would result in all
or a portion of the voting securities of GM outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting securities of GM or such surviving entity outstanding
immediately after such merger or consolidation or (ii) by which the corporate
existence of GM is not affected and following which GM's chief executive officer
would retain his or her position with GM and the GM directors would remain on
the Board of the Corporation and constitute a majority thereof; (d) GM sells or
otherwise disposes of all or substantially all of its assets; or (e) the
stockholders of the Corporation approve a plan of complete liquidation of GM.
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15. 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 re-pricing of outstanding stock options (except as otherwise permitted
by paragraphs 9 and 10 of this Plan), or permit exercise of the options unless
full payment is made at the time of exercise, or, except as contemplated by the
Plan, 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
grant any option or Unit under this Plan after May 31, 2007.
16. 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.
17. This Plan shall be effective on June 4, 2002, if approved by the
stockholders of the Corporation at the 2002 annual meeting.
GENERAL MOTORS 2002 LONG-TERM INCENTIVE PLAN
1. The purpose of the General Motors 2002 Long-Term Incentive 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, 2007, authorize the granting of target awards to employees of the
Corporation. 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 Chief Executive Officer
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 be determined at time
of grant. 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: asset turnover, cash flow, contribution margin,
cost objectives, cost reduction, earnings per share, economic value added,
increase in customer base, inventory turnover, market price appreciation of one
or more of the Corporation's common stocks, market share, net income, net income
margin, operating profit margin, pre-tax income, productivity, profit margin,
quality, return on assets, return on net assets, return on capital, return on
equity, revenue, revenue growth, and/or total shareholder return. The business
criteria may be expressed in absolute terms or relative to the performance of
other companies or to an index.
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2(d). If any event occurs during a performance period that requires
changes to preserve the incentive features of this Plan, the Committee may make
adjustments.
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, which for covered officers shall only
involve negative discretion. A covered officer is any individual whose
compensation in the year of expected payment of an award will be subject to the
provisions of Section 162(m) of the Internal Revenue Code, as determined by the
Committee. Adjustments to awards to reflect individual performance for employees
who are not officers of the Corporation shall be made upon the recommendation of
the Chief Executive Officer. Any target award, as determined and adjusted
pursuant to this paragraph and paragraph 3, is herein referred to as a "final
award" and, for covered officers, shall be certified by the Committee prior to
payment. The amount related to any final award for each performance period grant
paid to any employee shall not exceed $10 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, 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. 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 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(e) of the General
Motors 2002 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
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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 6, 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 and such awards will be paid at the time they would have been paid
absent an employment 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 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 local, state, provincial, or federal 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,
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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 that have become final awards may 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, except for awards that
vest pursuant to paragraph 12 of this Plan.
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.
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
A-13
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 Chief Executive Officer provided, however, the
Committee shall not delegate to the Chief Executive Officer 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 Chief
Executive Officer. 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. Upon the effective date of any Change in Control of the Corporation as
defined in this paragraph all outstanding awards shall vest and be paid on a pro
rata basis based on the greater of target award level or actual performance. A
"Change in Control" shall mean the occurrence of one or more of the following
events: (a) any "person" or "group" as those terms are used in the Securities
Exchange Act of 1934, as amended, other than any employee benefit plan or GM or
a trustee or other administrator or fiduciary holding securities under an
employee benefit plan of the Corporation, is or becomes the current beneficial
owner of GM voting securities representing 20% or more of the combined voting
power of GM's then outstanding securities; (b) during any two-year period,
individuals who at the beginning of such period constitute the Board and any new
directors whose election by the Board of nomination for election by the
Corporation's stockholders was approved by at least two-thirds of the directors
still in office who either were directors at the beginning of the period or
whose election was previously so approved, cease for any reason to constitute a
majority thereof; (c) GM merges or consolidates with any other corporation or
other entity, other than a merger or consolidation (i) that would result in all
or a portion of the voting securities of GM outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting securities of GM or such surviving entity outstanding
immediately after such merger or consolidation or (ii) by which the corporate
existence of GM is not affected and following which GM's chief executive officer
would retain his or her position with GM and the GM directors would remain on
the Board of the Corporation and constitute a majority thereof; (d) GM sells or
otherwise disposes of all or substantially all of its assets; or (e) the
stockholders of the Corporation approve a plan of complete liquidation of GM.
11. 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
A-14
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, 2007.
12. 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.
13. This Plan shall be effective on June 4, 2002, if approved by the
stockholders of the Corporation at the 2002 annual meeting.
A-15
[LOGO]
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IMPORTANT !
If you vote by mail, you are encouraged to specify your choices by marking
the appropriate boxes on the enclosed proxy. If you wish to vote in accordance
with the Board of Directors' recommendations, please sign, date, and return the
proxy in the enclosed envelope. It is not necessary to mark any boxes.
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RESULTS OF THE ANNUAL MEETING
Final certified results of voting at the annual meeting will be available on
our Web site, www.gm.com. To obtain a transcript of the meeting, stockholders
should write to GM Fulfillment Center, Mail Code 480-000-FC1,
30200 Stephenson Hwy., Madison Heights, MI 48071-1621.
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ELECTRONIC DELIVERY OF ANNUAL MEETING MATERIALS
You can save the Corporation postage and printing expense by consenting that
GM withhold the annual mailings of your annual report and proxy statement. With
your consent, you will receive an e-mail notification when these documents are
available electronically through the Internet.
Registered stockholders may sign up for this service through
www.econsent.com /gm.
Beneficial stockholders, who hold their GM stock through a bank or broker,
may sign up at www.icsdelivery.com /gm -- if their bank or broker is among the
majority that participate in electronic delivery.
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VISIT GM ON THE INTERNET
Explore the world of General Motors products and services on our corporate
Web site, WWW.GM.COM. Surf our home page to learn about "The Company," our
"Automotive" brands, and products and services that go "Beyond Automotive." From
the home page, you can access our many brand Web sites -- from Buick to Vauxhall
and from ACDelco to XM Radio -- to discover the GM product or service that's
just right for you.
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Printed on recycled paper 4000-PS-02
ANNUAL MEETING ADMISSION TICKET
2002 Annual Meeting of Stockholders
Tuesday, June 4, 2002, 9 a.m. local time
Hotel du Pont
11th & Market Streets
Wilmington, Delaware
PLEASE BRING GOVERNMENT-ISSUED PHOTOGRAPH IDENTIFICATION TO
PRESENT FOR ADMITTANCE TO THE MEETING.
PARKING INSTRUCTIONS
Complimentary self-parking is available at Hotel du Pont Car Park located on
Orange Street at the corner of 12th Street (parking vouchers will be provided to
stockholders at the meeting). The hotel's valet parking service is available for
a non-reimbursable charge.
PLEASE RETAIN AND PRESENT THIS TICKET FOR ADMISSION TO THE MEETING.
--------------------------------------------------------------------------------
[LOGO] GENERAL MOTORS CORPORATION
PROXY/VOTING INSTRUCTION CARD
Proxy Solicited by Board of Directors for Annual Meeting of Stockholders
Hotel du Pont, 11th & Market Streets, Wilmington, Delaware
Tuesday, June 4, 2002, 9 a.m. local time
The undersigned authorizes John F. Smith, Jr., G. Richard Wagoner, Jr., and
John M. Devine, and each of them as the Proxy Committee, to vote the Common
Stock and Class H Common Stock of the undersigned upon the nominees for Director
(P. N. Barnevik, J. H. Bryan, A. M. Codina, G. M. C. Fisher, N. Idei, K. Katen,
A. G. Lafley, E. S. O'Neal, E. Pfeiffer, J. F. Smith, Jr., G. R. Wagoner, Jr.,
and L. D. Ward), upon the other Items shown on the reverse side, which are
described on the pages identified in the Table of Contents to the Proxy
Statement (page i), and upon all other matters which may come before the 2002
Annual Meeting of Stockholders of General Motors Corporation, or any adjournment
thereof.
This card also provides voting instructions for the shares held in various
employee savings plans as described in the Proxy Statement. If your
registrations are not identical, you may receive more than one set of proxy
materials. Please sign and return all cards you receive.
TO VOTE BY INTERNET OR TELEPHONE -- SEE REVERSE SIDE.
You are encouraged to specify your choices by marking the appropriate boxes (see
reverse side), but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations.
SEE REVERSE
SIDE.
2002 ANNUAL MEETING
ADMISSION TICKET
This ticket will admit stockholder and one guest.
(See reverse side.)
General Motors Corporation
c/o EquiServe
P.O. Box 43068
Providence, RI 02940-3068
VOTE BY INTERNET OR TELEPHONE
For Internet or telephone voting, you will be asked to enter your Control Number
located above your name and address printed below.
VOTE BY INTERNET: www.eproxyvote.com/gm
VOTE BY TELEPHONE: Call toll-free on a touch-tone phone 1-877-779-8683.
From outside continental United States or Canada, call
collect 1-201-536-8073.
Board of Director nominee telephone codes:
(01) P. N. Barnevik, (02) J. H. Bryan, (03) A. M. Codina,
(04) G. M. C. Fisher, (05) N. Idei, (06) K. Katen,
(07) A. G. Lafley, (08) E. S. O'Neal, (09) E. Pfeiffer,
(10) J. F. Smith, Jr., (11) G. R. Wagoner, Jr., and
(12) L. D. Ward
VOTE BY MAIL: Detach and return the proxy/voting instruction card below.
IF YOU VOTE BY INTERNET OR TELEPHONE, DO NOT MAIL THE PROXY CARD.
DETACH PROXY CARD HERE
--------------------------------------------------------------------------------
Please mark
votes as in
this example: X
The Board of Directors recommends a vote "FOR" Items 1-3 and
"AGAINST" Items 4-8.
This proxy/voting instruction card will be voted "FOR" Items 1-3 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. Approve 2002 incentive compensation
program / / / / / /
This proxy/voting instruction card will be voted "AGAINST" Items 4-8 if
no choice is specified.
FOR AGAINST ABSTAIN
4. Stockholder proposal related to
Internet or cell phone use / / / / / /
5. Stockholder proposal to require
independent directors on key
Board committees / / / / / /
6. Stockholder proposal that GM
increase the stock dividend / / / / / /
7. Stockholder proposal on "poison pill" / / / / / /
8. Stockholder proposal to pay retainer
to GM directors in GM stock / / / / / /
This proxy/voting instruction card represents your holdings of Common Stock and
Class H Common Stock.
Signature(s): ____________________________________ Date ___________________ 2002
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.
COMMON
[LOGO] GENERAL MOTORS CORPORATION
PROXY/VOTING INSTRUCTION CARD
Proxy Solicited by Board of Directors for Annual Meeting of Stockholders
Hotel du Pont, 11th & Market Streets, Wilmington, Delaware
Tuesday, June 4, 2002, 9 a.m. local time
The undersigned authorizes John F. Smith, Jr., G. Richard Wagoner, Jr., and
John M. Devine, and each of them as the Proxy Committee, to vote the Common
Stock of the undersigned upon the nominees for Director (P. N. Barnevik,
J. H. Bryan, A. M. Codina, G. M. C. Fisher, N. Idei, K. Katen, A. G. Lafley,
E. S. O'Neal, E. Pfeiffer, J. F. Smith, Jr., G. R. Wagoner, Jr., and
L. D. Ward), upon the other Items shown on the reverse side, which are described
on the pages identified in the Table of Contents to the Proxy Statement
(page i), and upon all other matters which may come before the 2002 Annual
Meeting of Stockholders of General Motors Corporation, or any adjournment
thereof.
You are encouraged to specify your choices by marking the appropriate boxes
(see reverse side), but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations.
SEE REVERSE
SIDE
GM-503 Rev 4/02
COMMON
Please mark
votes as in
this example: /X/
The Board of Directors recommends a vote "FOR" Items 1-3 and
"AGAINST" Items 4-8.
This proxy/voting instruction card will be voted "FOR" Items 1-3 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. Approve 2002 incentive compensation
program / / / / / /
This proxy/voting instruction card will be voted "AGAINST" Items 4-8 if
no choice is specified.
FOR AGAINST ABSTAIN
4. Stockholder proposal related to
Internet or cell phone use / / / / / /
5. Stockholder proposal to require
independent directors on key
Board committees / / / / / /
6. Stockholder proposal that GM
increase the stock dividend / / / / / /
7. Stockholder proposal on "poison pill" / / / / / /
8. Stockholder proposal to pay retainer
to GM directors in GM stock / / / / / /
This proxy/voting instruction card represents your holdings of Common Stock.
Signature(s): ____________________________________ Date ___________________ 2002
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.
CLASS H
[LOGO] GENERAL MOTORS CORPORATION
PROXY/VOTING INSTRUCTION CARD
Proxy Solicited by Board of Directors for Annual Meeting of Stockholders
Hotel du Pont, 11th & Market Streets, Wilmington, Delaware
Tuesday, June 4, 2002, 9 a.m. local time
The undersigned authorizes John F. Smith, Jr., G. Richard Wagoner, Jr., and
John M. Devine, and each of them as the Proxy Committee, to vote the Class H
Common Stock of the undersigned upon the nominees for Director (P. N. Barnevik,
J. H. Bryan, A. M. Codina, G. M. C. Fisher, N. Idei, K. Katen, A. G. Lafley,
E. S. O'Neal, E. Pfeiffer, J. F. Smith, Jr., G. R. Wagoner, Jr., and
L. D. Ward), upon the other Items shown on the reverse side, which are described
on the pages identified in the Table of Contents to the Proxy Statement
(page i), and upon all other matters which may come before the 2002 Annual
Meeting of Stockholders of General Motors Corporation, or any adjournment
thereof.
You are encouraged to specify your choices by marking the appropriate boxes
(see reverse side), but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations.
SEE REVERSE
SIDE
GM-504 Rev 4/02
CLASS H
Please mark
votes as in
this example: /X/
The Board of Directors recommends a vote "FOR" Items 1-3 and
"AGAINST" Items 4-8.
This proxy/voting instruction card will be voted "FOR" Items 1-3 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. Approve 2002 incentive compensation
program / / / / / /
This proxy/voting instruction card will be voted "AGAINST" Items 4-8 if
no choice is specified.
FOR AGAINST ABSTAIN
4. Stockholder proposal related to
Internet or cell phone use / / / / / /
5. Stockholder proposal to require
independent directors on key
Board committees / / / / / /
6. Stockholder proposal that GM
increase the stock dividend / / / / / /
7. Stockholder proposal on "poison pill" / / / / / /
8. Stockholder proposal to pay retainer
to GM directors in GM stock / / / / / /
This proxy/voting instruction card represents your holdings of Class H
Common Stock.
Signature(s): ____________________________________ Date ___________________ 2002
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.
DIFFERENCE: WEB SITE PROXY/VOTING INSTRUCTION CARD
EQUISERVE VOTE
BY NET
VOTE BY NET
GM [LOGO] General Motors Corporation
GENERAL MOTORS CORPORATION
PROXY/VOTING INSTRUCTION CARD
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
HOTEL DU PONT, 11TH & MARKET STREETS, WILMINGTON, DELAWARE
TUESDAY, JUNE 4, 2002, 9 A.M. LOCAL TIME
The undersigned authorizes John F. Smith, Jr., G. Richard Wagoner, Jr., and John
M. Devine, and each of them as the Proxy Committee, to vote the Common Stock and
Class H Common Stock of the undersigned upon the nominees for Director
(P. N. Barnevik, J. H. Bryan, A. M. Codina, G. M. C. Fisher, N. Idei, K. Katen,
A. G. Lafley, E. S. O'Neal, E. Pfeiffer, J. F. Smith, Jr., G. R. Wagoner, Jr.,
and L. D. Ward), upon the other Items shown below, which are described on the
pages identified in the Table of Contents to the Proxy Statement (page i), and
upon all other matters which may come before the 2002 Annual Meeting of
Stockholders of General Motors Corporation, or any adjournment thereof. This
card also provides voting instructions for the shares held in various employee
savings plans as described in the Proxy Statement. If your registrations are not
identical, you may receive more than one set of proxy materials. Please sign and
return all cards you receive.
General Motors Corporation Board of Directors recommends a vote:
"FOR" all Nominees
"FOR" Item No. 2
"FOR" Item No. 3
"AGAINST" Item No. 4
"AGAINST" Item No. 5
"AGAINST" Item No. 6
"AGAINST" Item No. 7
"AGAINST" Item No. 8
Check this box to cast your vote in accordance with the recommendations of The
Board of Directors:
General Motors Corporation Board of Directors recommends a vote "FOR" all
Nominees.
1. Election of Directors / / FOR ALL NOMINEES, except as noted below / / WITHHOLD AS TO ALL NOMINEES
/ / P. N. Barnevik / / J. H. Bryan / / A. M. Codina / / G. M. C. Fisher
/ / N. Idei / / K. Katen / / A. G. Lafley / / E. S. O'Neal
/ / E. Pfeiffer / / J. F. Smith, Jr. / / G. R. Wagoner, Jr. / / L. D. Ward
General Motors Corporation Board of Directors recommends a vote "FOR" Item No. 2.
2. Ratify selection of independent accountants / / FOR / / AGAINST / / ABSTAIN
General Motors Corporation Board of Directors recommends a vote "FOR" Item No. 3.
3. Approve 2002 incentive compensation program / / FOR / / AGAINST / / ABSTAIN
General Motors Corporation Board of Directors recommends a vote "AGAINST" Item No. 4.
4. Stockholder proposal related to Internet or
cell phone use / / FOR / / AGAINST / / ABSTAIN
General Motors Corporation Board of Directors recommends a vote "AGAINST" Item No. 5.
5. Stockholder proposal to require independent
directors on key Board committees / / FOR / / AGAINST / / ABSTAIN
General Motors Corporation Board of Directors recommends a vote "AGAINST" Item No. 6.
6. Stockholder proposal that GM increase the
stock dividend / / FOR / / AGAINST / / ABSTAIN
General Motors Corporation Board of Directors recommends a vote "AGAINST" Item No. 7.
7. Stockholder proposal on "poison pill" / / FOR / / AGAINST / / ABSTAIN
General Motors Corporation Board of Directors recommends a vote "AGAINST" Item No. 8.
8. Stockholder proposal to pay retainer to GM
directors in GM stock / / FOR / / AGAINST / / ABSTAIN
To cast your vote please click "Submit".