General Motors Company · NYSE:GM
General Motors — Proxy Contest (May 2017)
62 slides from General Motors's proxy contest presentation, May 2017
Slide 1: Shareholder Engagement May 2017
MAY 2 0 1 7 S HARE HO L DE R E NG AG E ME NT
Slide 2: Overview
Overview Our Strategy and Record Performance Board Oversight Assessment of Greenlight Proposal Responsible Corporate Governance: Candidate Evaluation Process GM and its Board are on the Right Track 2
Slide 3: About GM
About GM • Headquartered in Detroit, MI; Over 100 years of automotive experience • 2016 Net Revenue: $166.4B; 2016 EBIT-Adj: $12.5B; 2016 Net income: $9.4B • Meeting the needs of our customers through our 10 distinct brands in 140+ countries • Delivered 10.0M retail1 sales and 6.2M wholesale2 units
Slide 4: Our Strategy and Record Performance
O UR S TRATE G Y AND RE CORD PERFORMANCE
Slide 5: GM Is Successfully Transforming its Business
GM Is Successfully Transforming its Business • Establishing a leadership position in technology that is reshaping the automotive landscape • Making tough, strategic decisions to position GM’s business for long-term outperformance through the cycle (e.g., announced sale of Opel/Vauxhall) • Building o
Slide 6: GM is a Stronger Company Consistently Delivering Results
GM is a Stronger Company Consistently Delivering Results • Winning product and brand portfolio • Strong and growing profit/margins in North America, China and at GM Financial • Well positioned to perform through the cycle • Capitalizing on advancements in technology • Returning cash to shareholders
Slide 7: Creating Shareholder Value
Creating Shareholder Value • Established track record of strong financial performance • Driving cost efficiencies • Compelling growth opportunities in adjacencies • Disciplined capital allocation framework • An industry leader in return on invested capital Delivering results today while preparing fo
Slide 8: GM Team Delivering Record Results
GM Team Delivering Record Results $B, except where noted Earnings per Share ($/share) Earnings $8.00 $15 $12.5 $6.12 $6.00 $10 $8.6 $4.00 $3.18 $5 $9.4 $6.00 $2.00 $3.8 $2.38 $- $- 2013 2016 Record Q1 2017 2013 2016 EBIT-adjusted Revenue +11% EPS-diluted EPS-diluted-adj Net Income attributable to
Slide 9: 20+% ROIC-Adj. Target Driving Capital Allocation Discipline
20+% ROIC-Adj. Target Driving Capital Allocation Discipline • Investing in our business and making tough trade-offs to drive 20+% ROIC-Adj. 1 • Allocating capital to healthy and growing segments and markets to optimize profitability 2 Target ≥20% Directing Investment to Higher Return Opportunities;
Slide 10: GM Has a Disciplined, Transparent Capital Allocation Framework
GM Has a Disciplined, Transparent Capital Allocation Framework Reinvest in business to drive growth Return all available and 20+% ROIC-adj. free cash flow to shareholders New $5B Share $18B target cash1 Buyback >75% distribution Authorization ratio in 2017E2 Announced in 2017 ~$25B Expected to be Re
Slide 11: Commitment to Return Significant Cash to Shareholders
Commitment to Return Significant Cash to Shareholders GM expects to deliver $25 billion to shareholders from 2012-2017E, including $8.6 billion in dividends $B Expect to repurchase ~10% of market cap1 in 2017E, in addition to $2.2B of dividends 1 Based on GM market cap of $52B as of May 1, 2017 11
Slide 12: Proactively Managing the Cycle
Proactively Managing the Cycle Cost Efficiencies & Prudent Capital Deployment (U.S. Breakeven at ~10-11M Units vs Making Strategic 16M Units in 20071) Investments in New Managing U.S. Dealer Opportunities that Enhance Inventories and Days Supply Adjacencies (connectivity, Appropriately electrificati
Slide 13: Lead in Technology and Innovation
Lead in Technology and Innovation Connectivity Alternative Propulsion Autonomous Sharing >12 million Chevrolet Bolt Cruise Lyft/Maven connected vehicles 238 mile range Automation 13
Slide 14: Industry Factors Impacting Valuation - GM Well-Positioned
Industry Factors Impacting Valuation - GM Well-Positioned Issue Comments Limited future earnings growth expectations given point in cycle Cyclical Peak As evidence, Ford, GM’s Current point in cycle viewed as peak closest comparable, GM: 2017 EPS-diluted-adj. of $6.00 to $6.50 trades at a lowe
Slide 15: Market is Recognizing GM's Progress – Strong Relative TSR
Market is Recognizing GM’s Progress – Strong Relative TSR Total Shareholder Returns (%) 1 GM TSR #1 - Global Volume OEM in As of May 1, 2017 2016 80.0% 2 GM Ford Auto OEM Peers 70.0% 2016 TSR GM 7.5% 60.0% Hyundai 0.8% VW (0.2)% FCA (0.6)% 50.0% Nissan (4.1)% Toyota (4.9)% 40.0% 80.4% Renault (6.0)%
Slide 16: Board Oversight
GENERAL MOTORS BOARD OVERSIGHT
Slide 17: Strong Board and Committee Oversight
Strong Board and Committee Oversight • The Board’s Role in Oversight of Strategic Development and Execution - The Board is actively engaged in shaping and overseeing the Company’s strategy - Every year, the Board holds a multi-day session devoted to reviewing and providing feedback on Management’s s
Slide 18: Assessment of Greenlight Proposal
AS S E S S ME NT O F G RE E NLIGHT PROPOSAL
Slide 19: Summary of Greenlight's Dividend Shares Proposal
Summary of Greenlight’s Dividend Shares Proposal Receive current dividend only (fixed, deferrable, perpetual) Missed dividends accumulate until paid in full No return of capital (no dividends or share repurchases) on Capital Appreciation Shares unless dividends on Dividend Shares are paid in f
Slide 20: Greenlight's Dividend Shares Proposal Carries Significant Risks
Greenlight’s Dividend Shares Proposal Carries Significant Risks 1 Fundamental Factors Driving GM No impact Valuation GM Investment Grade 2 Downgrade to sub-investment grade Credit Rating 3 Market Demand and Liquidity Unknown and uncertain 4 Valuation Impact Speculative and unproven 5 Governance Mate
Slide 21: No Impact on Fundamental Factors Driving GM's Valuation
1 No Impact on Fundamental Factors Driving GM’s Valuation Addressed by Dividend Shares Proposal? Cyclical Peak NO Valuation issues are Secular Headwinds / sector-wide, Industry Disruption NO not GM- specific Ability to Withstand a Downturn / Maximize Financial Flexibility NO Dividend Shares will not
Slide 22: Dividend Shares Would Downgrade GM to Sub-Investment Grade
2 Dividend Shares Would Downgrade GM to Sub-Investment Grade • Consulted with principal rating agencies, in addition to several external advisors • We believe that Dividend Shares would result in loss of GM’s investment grade credit rating • Critical factors affecting our credit assessment: – Signal
Slide 23: Significant Negative Impact of Move to Sub-Investment Grade
2 Significant Negative Impact of Move to Sub-Investment Grade GM and GMF access to debt GMF captive strategy GM profitability Reduction in available liquidity capital markets • GM/GMF debt stack (~$80B • Largest high-yield unsecured • Limits lease / sub-prime (~40% • Access to revolver (current tota
Slide 24: There Is No Established Market for Dividend Shares
3 There Is No Established Market for Dividend Shares Greenlight Common Stock Unsecured Convertible Preferred Dividend Debt Debt Stock Shares Dividend No Dividend Earnings Upside Participation O P O O P P Downside Protection (Liquidation Preference) P P P O O O Fixed Obligation P P P P O O Rating Age
Slide 25: Uncertain Demand for Unconventional New Securities
3 Uncertain Demand for Unconventional New Securities Proposed Security Investor Type Key Factors Limiting Investor Demand • Lack of upside participation in GM’s future earnings performance Equity Investors • Any potential retail demand unlikely to offset lack of institutional demand Dividend Shares
Slide 26: Greenlight's Perspective on Value Creation Is Speculative
4 Greenlight’s Perspective on Value Creation Is Speculative Greenlight’s Hypothesis Key Issues O Justification for expanded P/E: Distribute unprecedented • No change in GM’s intrinsic value “Just the inverse amount of Dividend $25 - $33B of the yield” Shares, assumed to trade $17 - $22 / share -Gree
Slide 27: Dividend Shares Create Material Governance Conflicts
5 Dividend Shares Create Material Governance Conflicts and Deviate From One-Share/One-Vote Model • The interests of holders of Capital Appreciation Shares and Dividend Shares would be at odds – The Board and Management, owing fiduciary duties to holders of both classes, would find itself conflicted
Slide 28: GM Conducted an Exhaustive Review of Greenlight's Proposal
GM Conducted an Exhaustive Review of Greenlight’s Proposal • Evaluated Greenlight proposal over 8-month period, with active participation of GM CEO, CFO and Board of Directors • Engaged services of two leading investment banking firms, with third independent bank consulted for additional views on “b
Slide 29: GM Presented Greenlight's Idea to the Rating Agencies Fully and Fairly
GM Presented Greenlight’s Idea to the Rating Agencies Fully and Fairly • GM advisors discussed potential impact on industrial investment grade issuer with two agencies No-Names Discussions • Provided illustrative impact of transaction proposed by Greenlight on net income / EPS, cash flow and balance
Slide 30: Rating Agency Response to Greenlight Assertions
Rating Agency Response to Greenlight Assertions Greenlight Assertion Rating Agency View * • “The transaction would represent a recapitalization of GM’s equity, resulting in a more complex capital structure.” No meaningful change ‒ Moody’s Issuer In-Depth Report, 3/30/17 to the balance sheet No chang
Slide 31: Greenlight's Baseless Claims Regarding GM's Changes to the Term Sheet
Greenlight’s Baseless Claims Regarding GM’s Changes to the Term Sheet • From the start, GM has represented Greenlight’s proposal fully and fairly to the rating agencies • The Dividend Shares term sheet that Greenlight originally provided GM was not in standard form and was incomplete • In its named
Slide 32: Greenlight Consistently Characterized Security as Cumulative
Greenlight Consistently Characterized Security as Cumulative Greenlight Capital Presentation – September 15, 2016 Greenlight Capital Presentation– October 31, 2016 Greenlight Capital Summary of Terms for Dividend Shares – January 30, 2017 Greenlight Capital Preliminary Proxy Filing – April 12, 2017
Slide 33: Dividend Shares Align with Accepted Definitions of Cumulative
Dividend Shares Align with Accepted Definitions of “Cumulative” • A cumulative dividend, by standard definition, is a dividend that cumulates if not paid, and must be repaid in arrears before any dividends are paid or share repurchases are made on common shares ‒ This is completely consistent with a
Slide 34: Sell-Side Analysts Support GM's Perspective on Greenlight's Proposal
Sell-Side Analysts Support GM’s Perspective on Greenlight’s Proposal GM’s Perspective Analyst Reaction* • “The structure creates no intrinsic value, rather it tries to solve GM's ‘valuation conundrum’.” (Joseph Spak, RBC Capital Markets) We believe the fundamental • “We are cautious on prospects for
Slide 35: Greenlight Proposal is Not in the Best Interests of Shareholders
Greenlight Proposal is Not in the Best Interests of Shareholders • We believe the fundamental factors driving GM’s valuation are NOT addressed by Greenlight’s proposed experiment in financial engineering • We believe the implementation of the proposed dual-class structure would lead to the loss of G
Slide 36: Responsible Corporate Governance: Candidate Evaluation Process
RESPONSIBLE CORPORATE GOVERNANCE: CANDIDATE EVALUATION PROCESS
Slide 37: Evaluation of Greenlight's Candidates
Evaluation of Greenlight’s Candidates • The selection of qualified Board candidates is fundamental to the successful oversight of GM’s strategy during this period of change and challenge • The Governance and Corporate Responsibility Committee (“GCRC”) of the Board is responsible for evaluating candi
Slide 38: GM's Board Has the Right Skills; Greenlight Nominees Not Additive
GM’s Board Has the Right Skills to Drive Shareholder Value; Greenlight Nominees Not Additive Independent Leadership and Oversight Complementary Mix of Skills 9 of 11 directors are independent Strong Independent Lead Director with clearly M. Barra (Chr./CEO) delineated duties T. Solso (
Slide 39: GM's Candidates vs. Greenlight's Candidates
GM’s Candidates vs. Greenlight’s Candidates • After a formal review of Greenlight’s candidates, the Board’s Governance and Corporate Responsibility Committee concluded that Greenlight’s candidates do not have the depth or breadth of relevant experience, at the same level of complexity, that our dire
Slide 40: GM Directors are Better Positioned to Drive Shareholder Value
GM Directors are Better Positioned to Drive Shareholder Value Finance, None of the Greenlight candidates can match the depth and breadth of experience of GM’s Board nominees or the Investment, and Capital Markets capabilities our nominees already have – including in finance, investment and capital m
Slide 41: General Motors World-Class Board of Directors (1 / 5)
General Motors World-Class Board of Directors (1 / 5) Chief Executive Officer (since 2014) Former Non-Executive Chairman of GM’s Board from (2014 to In-depth knowledge of the Company and the global 2016) automotive industry Experience and insight into the complexities of managing a Extensi
Slide 42: General Motors World-Class Board of Directors (2 / 5)
General Motors World-Class Board of Directors (2 / 5) Retired President & Chief Executive Officer, Harvard Management Company (since 2014) Strong senior leadership and risk management experience, as well as capital markets expertise, brings a unique financial and shareholder perspective from her
Slide 43: General Motors World-Class Board of Directors (3 / 5)
General Motors World-Class Board of Directors (3 / 5) 17th Chairman of the Joint Chiefs of Staff from 2007 unit his retirement in 2011 Extensive senior leadership experience gained over 43-year career in the U.S. military, culminating in appointment and Senate confirmation as Chairman of the Joi
Slide 44: General Motors World-Class Board of Directors (4 / 5)
General Motors World-Class Board of Directors (4 / 5) Retired Dean, Ivey Business School, The University of Western Ontario (since 2013) Diverse perspectives and senior leadership experience acquired during a 30 year career in telecommunications and technology industry and 10 years as Dean of Iv
Slide 45: General Motors World-Class Board of Directors (5 / 5)
General Motors World-Class Board of Directors (5 / 5) Retired Vice President, United Auto Workers Retired Executive Vice President, Chief Executive Officer, Novartis AG (since (since 2014) Information Systems & Global Solutions, 2010) Experience in organizing campaigns and Lockheed Martin Co
Slide 46: GM and Its Board Are on the Right Track
GM AND ITS BOARD ARE ON THE RIGHT TRACK
Slide 47: GM and its Board are On the Right Track
GM and its Board are On the Right Track • Growing the core business • Making tough, strategic decisions to position GM’s business for long-term outperformance through the cycle (e.g., announced sale of Opel/Vauxhall) • Building out a profitable and strategically important GM Financial • Delivering r
Slide 48: Summary of Our Views
Summary of Our Views • GM, its Board and management team are on the right track and executing a well-articulated and transformational strategic plan • Greenlight’s proposal doesn’t make sense for GM or its shareholders – it would not add value and it carries significant risks • Electing any of Green
Slide 49: Additional Materials: GM Overview
ADDITIONAL MATERIALS GM OVERVIEW
Slide 50: Winning Product & Brand Portfolio
Winning Product & Brand Portfolio Quality Buick - 2016 J.D. Power: 2016 J.D. Power: 2016 J.D. Power: 2016 Consumers Reports’ Vehicle Dependability Initial Quality APEAL Study Top 3 in Reliability (8 segments winners) (7 segments winners) (6 segments winners) Chevrolet Colorado Diesel – Bolt EV – 201
Slide 51: GM Evolution: Focusing On Profitable Growth
GM Evolution: Focusing On Profitable Growth New leadership establishing Period of reorganization, Focus on driving track record of delivering including development of shareholder value while results while putting the new capabilities post leading the transformation customer at the center of all econ
Slide 52: GM is Growing Faster than the Industry
GM is Growing Faster than the Industry 2013–2016 CAGR (Revenue adjusted for FX) Adjacent businesses fueling growth 52
Slide 53: We Have Made Bold Global Decisions to Improve Profitability
We Have Made Bold Global Decisions to Improve Profitability Chevy Europe Thailand Opel/Vauxhall Indonesia Russia Brazil Australia (mfg) Corrective Action And continue to deploy capital where it will generate strong returns 53
Slide 54: Additional Materials: Executive Compensation Aligned with Shareholder Interests
ADDITIONAL MATERIALS EXECUTIVE COMPENSATION ALIGNED WITH SHAREHOLDER INTERESTS
Slide 55: Executive Compensation: Program Evolution Leading to Greater Shareholder Alignment
Executive Compensation: Program Evolution Leading to Greater Shareholder Alignment in 2017 We have enhanced our executive compensation program to further align with our strategic priorities and reward long-term business success 55
Slide 56: Performance-Based Compensation
Performance-Based Compensation Changes to the STIP and LTIP for 2017 (based on feedback and discussions with investors) STIP • The 2017 STIP continues a focus on important financial measures and individual performance, the total payout will be 0% to 200% of target based on actual performance against
Slide 57: Important Information
Important Information Cautionary Note on Forward-Looking Statements: This document may include forward-looking statements. These statements are based on current expectations about possible future events and thus are inherently uncertain. Our actual results may differ materially from forward-looking
Slide 58: Important Additional Information Regarding Proxy Solicitation
Important Additional Information Regarding Proxy Solicitation General Motors Company (“GM”) has filed a definitive proxy statement and form of WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies for GM’s 2017 Annual Meeting. GM
Slide 59: Select Supplemental Financial Information
SELECT SUPPLEMENTAL FINANCIAL INFORMATION
Slide 60: Reconciliation of EBIT-adjusted and EPS-diluted-adjusted
Reconciliation of EBIT-adjusted and EPS-diluted-adjusted ($B, except Margin and EPS) 2013 2014 2015 2016 Net income attributable to stockholders 5.3 3.9 9.7 9.4 Subtract: Automotive Interest Expense (0.3) (0.4) (0.4) (0.6) Automotive Interest Income 0.2 0.2 0.2 0.2 Gain (loss) on extinguishment of d
Slide 61: Reconciliation of Adjusted Automotive Free Cash Flow
Reconciliation of Adjusted Automotive Free Cash Flow ($B) 2013 2014 2015 2016 Automotive Operating Cash Flow 11.0 10.1 10.0 14.3 Less: Capital Expenditures (7.5) (7.0) (7.8) (9.4) Adjustments¹ 0.2 — — 2.0 Adj. Automotive Free Cash Flow 3.7 3.1 2.2 6.9 Recall Related² — 1.6 2.5 — Adj. Automotive Free
Slide 62: Reconciliation of ROIC-adjusted
Reconciliation of ROIC-adjusted ($B) 2012 2013 2014 2015 2016 Numerator: Net income attributable to stockholders 6.2 5.3 3.9 9.7 9.4 Subtract: Automotive Interest Expense (0.5) (0.3) (0.4) (0.4) (0.6) Automotive Interest Income 0.3 0.2 0.2 0.2 0.2 Gain (loss) on extinguishment of debt (0.3) (0.2) 0.