General Motors Company (NYSE:GM) designs, builds, and sells cars, crossovers, trucks, and automobile parts worldwide. It is one of the stocks in my portfolio. Their annual meeting is coming up on 6/9/2015. ProxyDemocracy.org had the vote of two funds when I checked and voted on 5/3/2015. I voted with management 62% of the time and assigned General Motors a proxy score of 62.
View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the General Motors 2015 proxy in order to enhance corporate governance and long-term value.
General Motors: ISS Rating
General Motors: Compensation
General Motors Summary Compensation Table (p. 52) shows the highest paid named executive officer (NEO) was CEO Mary T. Barra, at about $16.2M in 2014. I’m using Yahoo! Finance to determine market cap ($58B) and Wikipedia’s rule of thumb regarding classification.
General Motors is a large-cap company. According to Equilar (page 6), the median CEO compensation at large-cap corporations was $10.1 million in 2013, so General Motors’ pay is far above that number. General Motors shares under-performed the S&P 500 over the most recent one, two, and five year periods.
The GMIAnalyst report I reviewed gave General Motors an overall grade of ‘F.’ According to the report:
- Unvested equity awards partially or fully accelerate upon the CEO’s termination. Accelerated equity vesting allows executives to realize pay opportunities without necessarily having earned them through strong performance.
- The company has not disclosed specific, quantifiable performance target objectives for the CEO. Disclosure of performance metrics is essential for investors to assess the rigor of incentive programs.
With far above median relative pay, under-performance and the above issues, I voted against the pay package.
General Motors: Board of Directors and Board Proposals
Generally, when I vote against the pay package I also vote against the compensation committee, since they recommended the pay package to the full board: James J. Mulva, Patricia F. Russo, and Carol M. Stephenson (who also serves on four boards).
General Motors: Accounting
I voted to ratify General Motors’ auditor, since less than 25 percent of total audit fees paid are attributable to non-standard audit work.
Shareholder Proposals at General Motors
With regard to shareholder proposals, of course I voted in favor of my (James McRitchie) proposal to move to an independent chair. GM wants to have the flexibility to move back to a combined CEO/Chair. In my experience, even CEOs need a boss. Sitting as both CEO and chair dilutes the board as boss.
I also voted in favor of Mr. Chevedden’s proposal for cumulative voting. Being able to focus our votes on a few candidates will facilitate the ability of shareholders to at least have few directors fully accountable to us.
CorpGov Recommendations for General Motors – Votes Against Board Position in Bold
| # | PROPOSAL TEXT | CorpGov | CBIS | TRILLIUM |
|---|---|---|---|---|
| 1a | Elect Director Joseph J. Ashton | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1b | Elect Director Mary T. Barra | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1c | Elect Director Stephen J. Girsky | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1d | Elect Director Linda R. Gooden | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1e | Elect Director Joseph Jimenez, Jr. | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1f | Elect Director Kathryn V. Marinello | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1g | Elect Director Michael G. Mullen | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1h | Elect Director James J. Mulva | Against | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1i | Elect Director Patricia F. Russo | Against | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1j | Elect Director Thomas M. Schoewe | For | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1k | Elect Director Theodore M. Solso | For | Against | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).Significant risks to shareholders stemming from severe ESG controversies have been identified at the company, which reflects a failure by the board to proficiently guard against and manage material environmental, social and governance risks.Votes AGAINST board chair Theodore M. Solso are warranted given that the chair of the board ultimately shoulders the most responsibility amongst all board members for failing to effectively supervise the management of risks to the company and its shareholders, and should therefore be held the most accountable for poor board oversight of ESG risk exposures at the firm. Votes FOR the remaining nominees are warranted as a majority of the board comprises independent directors, the key board committees are independent, and there is both gender and racial diversity on the board.There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 1l | Elect Director Carol M. Stephenson | Against | For | Against |
| Trillium Asset Management: Research A shareholder proposal received at least 20% shareholder support in the last year (shares outstanding).A shareholder proposal received at least 20% shareholder support in the last year (shares cast).There is both gender and racial diversity on the board.There is at least 30 percent diversity. | ||||
| 2 | Ratify Deloitte & Touche LLP as Auditors | For | Against | For |
| Trillium Asset Management: Research Less than 25 percent of total audit fees paid are attributable to non-audit work. | ||||
| 3 | Advisory Vote to Ratify Named Executive Officers’ Compensation | Against | For | Against |
| Trillium Asset Management: Research Total CEO compensation exceeds 7 million dollars. Total compensation to outside directors exceeds 100,000 dollars. | ||||
| 4 | Require Independent Board Chairman | For | For | For |
| Trillium Asset Management: Research A vote FOR this proposal is warranted given the importance of having an independent chairman of the board and given that the company faces significant reputational challenges in light of the recently announced vehicle recalls. | ||||
| 5 | Provide for Cumulative Voting | For | Against | For |
| Trillium Asset Management: Research A vote FOR this proposal is warranted, as the company does not have a proxy access right. | ||||
Governance Issues at General Motors
Looking at SharkRepellent.net for provisions unfriendly to shareowners:
- No action can be taken without a meeting by written consent.
- Special meetings can only be called by shareholders holding not less than 25% of the voting power.
General Motors Proxy Proposal Deadline for Next Year
Mark your calendar to submit future proposals:
The deadline for stockholders to submit a proposal under Rule 14a-8 of the SEC’s proxy rules for inclusion in the Company’s proxy statement for the 2016 annual meeting is December 26, 2015. Any proposals intended to be included in the proxy statement for the 2016 annual meeting must be received by the Company on or before that date. Please send proposals to the Corporate Secretary at the mailing address, or e-mail address given below.
Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime). I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from percent of earnings in 1993-1995 to about 10 percent in 2001-2003.
Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the % if our economy is not to become third world. The rationale for peer group benchmarking is a mythological market for CEOs.
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