GM » Topics » Long-Term Incentives

These excerpts taken from the GM 10-K filed Mar 5, 2009.

Long-Term Incentives

All long-term incentives are linked closely to our common stock price because one of our key compensation goals is to maintain a direct link with stockholders’ interests. The Named Executive Officers are eligible to participate in two long-term incentive programs (previously three separate plans):

 

   

The General Motors 2007 Long-Term Incentive Plan (LTIP) under which SPP awards, stock options, and RSUs may be granted; and

 

   

The 2007 CRSU Plan

Each year, the Committee considers both the overall target compensation opportunity to be provided by long-term incentives, and how that opportunity should be allocated among the different types of incentives. As part of this review, the Committee considers market practices, individual performance, retention considerations, succession plans, and any other significant factors such as the business environment, employee relations issues, and public perception. In 2008, based on low historic payout levels and on the difficulty of developing meaningful objectives over a three-year period under volatile economic conditions, the Committee determined that a remix of long-term compensation opportunities would provide greater incentive for most executives and targets were adjusted accordingly.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

 

Long-Term Incentives

STYLE="margin-top:12px;margin-bottom:0px; text-indent:2%">All long-term incentives are linked closely to our common stock price because one of our key compensation goals is to maintain a direct link with
stockholders’ interests. The Named Executive Officers are eligible to participate in two long-term incentive programs (previously three separate plans):

 







  

The General Motors 2007 Long-Term Incentive Plan (LTIP) under which SPP awards, stock options, and RSUs may be granted; and

STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> 







  

The 2007 CRSU Plan

Each year, the
Committee considers both the overall target compensation opportunity to be provided by long-term incentives, and how that opportunity should be allocated among the different types of incentives. As part of this review, the Committee considers market
practices, individual performance, retention considerations, succession plans, and any other significant factors such as the business environment, employee relations issues, and public perception. In 2008, based on low historic payout levels and on
the difficulty of developing meaningful objectives over a three-year period under volatile economic conditions, the Committee determined that a remix of long-term compensation opportunities would provide greater incentive for most executives and
targets were adjusted accordingly.

 


273








GENERAL MOTORS CORPORATION AND SUBSIDIARIES

STYLE="margin-top:0px;margin-bottom:0px"> 

This excerpt taken from the GM DEF 14A filed Apr 25, 2008.

Long-Term Incentives

      All long-term incentives are linked closely to Common Stock because one of our key compensation goals is to maintain a direct link with stockholders’ interests. The Named Executive Officers are eligible to participate in two long-term incentive programs (previously three separate plans):

• The General Motors 2007 Long-Term Incentive Plan (“LTIP”) under which SPP awards, stock options, and RSUs may be granted; and

• The 2007 CRSU Plan.

      Each year, the Committee considers both the overall target compensation opportunity to be provided by long-term incentives, and how that opportunity should be allocated among the different types of incentives. As part of this review, the Committee considers market practices, individual performance, retention considerations, succession plans, and any other significant factors such as the business environment, employee relations issues, and public perception.

      The Committee has taken several actions with regard to GM’s long-term incentives to help manage our Common Stock dilution and overhang level (the number of stock options granted and outstanding as a percentage of common shares outstanding). Our overhang remains at a high level, largely due to our stock price performance which resulted in a majority of outstanding options being underwater. While, we would prefer to have any long-term incentives settled in stock, we are continuing to focus on reducing dilution by delivering final SPP awards in cash, granting CRSUs, and limiting our use of stock options. The Committee believes that the allocation among the various incentive types should be determined each year based on anticipated business performance rather than adopting a fixed allocation.

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      Stock Performance Program

      Since 1999, the SPP has measured long-term performance based on the TSR performance ranking of Common Stock compared to that of all stocks in the S&P 500 Index over a three-year period. This index is used as the point of comparison because it has a broad representation of companies reflecting general economic and market conditions, and because there is no automotive industry index.

      Payouts under the SPP are based on GM’s TSR ranking for a three-year period (market price appreciation plus the compounding effect of reinvested dividends) relative to other companies in the S&P 500 Index as shown in this chart:

This excerpt taken from the GM DEF 14A filed Apr 27, 2007.
Long-Term Incentives — The Named Executive Officers are eligible to participate in GM’s three long-term incentive programs: the 2002 Stock Incentive Plan (the “SIP”) under which stock options and RSUs may be granted, the General Motors 2002 Long-Term Incentive Plan (the “LTIP”), and the 2006 Cash-Based Restricted Stock Unit Plan. All long-term incentives are based on Common Stock, creating a direct link with stockholders’ interests.

      Each year, the Committee considers both the overall target compensation opportunity to be provided by long-term incentives and how that opportunity should be allocated across the different types of incentives. As part of this review, the Committee considers market practices, individual performance, retention considerations,

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succession plans, and any other significant factors such as the business environment, employee relations concerns, and public perception.

      The Committee has taken several actions with regard to GM’s long-term incentives to help manage our dilution (the number of stock options granted and outstanding as a percentage of common shares outstanding). Our dilution level is largely due to our stock price performance which has resulted in a majority of outstanding options being underwater and thus, not economic to exercise. So, while the Committee prefers to have any long-term incentives settled in stock, beginning in 2005, we determined that any final awards under the LTIP should be paid in cash until GM’s dilution is reduced. In addition, in 2006 the Committee approved the use of CRSUs to further manage GM’s dilution. The Committee also eliminated stock options for the broader executive population and replaced them with CRSUs to retain the link to stockholders’ interests. We also reduced the size of the grants for those executives continuing to receive them. For additional discussion of our dilution, please refer to the management proposal for the approval of our 2007 Long-Term Incentive Plan on page 50.

      The Committee believes the allocation across the different long-term incentive vehicles needs to be determined each year based on relevant considerations at the time. As such, the Committee prefers not to adhere to a fixed allocation as that can result in grants that do not appear to be consistent with overall business performance or conditions.

      For 2006, the Committee decided the long-term incentive compensation opportunity for the Named Executive Officers would continue to be provided through stock options and the LTIP (described below). The total target 2006 long-term incentive compensation opportunity ranges from approximately 50 percent stock options and 50 percent LTIP for the CEO to a mix of about 40 percent stock options and 60 percent LTIP for the other Named Executive Officers.

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