GM is governed by a Board of Directors and committees of the Board that meet throughout the year. The Board of Directors’ mission is to represent the owners’ interest in the long-term health and the overall success of the business and its financial strength.
The Board is elected by shareholders to oversee and provide guidance on GM’s business and affairs and is the ultimate decision-making body of the company, except for those matters specifically reserved to shareholders. It is highly engaged in developing GM’s strategic plan and overseeing execution of that plan. The Board is committed to sound corporate governance structures and policies that enable GM to operate our business responsibly and with integrity, and to position GM to compete more effectively, sustain our success and build long-term shareholder value.
The Board is comprised of 11 members, all but one of whom —Chairman and CEO Mary Barra — are independent, as defined by the Board’s Corporate Governance Guidelines, which reflect the independence standards of the New York Stock Exchange and the U.S. Securities and Exchange Commission.
The Board has the flexibility to decide its optimal leadership structure, specifically when the positions of Chairman and CEO should be combined or separated and whether an executive or independent director should be Chairman. This allows the Board to choose the most appropriate leadership structure for the company to best serve the interests of our shareholders at any particular time. Currently, the Board is led by our Chairman and CEO, Mary Barra, whose role as Board Chairman is complemented by that of our Independent Lead Director, Tim Solso. The Board believes that Ms. Barra’s in-depth knowledge of GM’s business and understanding of day-to-day operations brings focused leadership to our Board and reinforces accountability for the company’s performance. Our Corporate Governance Guidelines, available on our website, specify the duties of the Independent Lead Director and independent directors.
The Board has the following standing Committees: Audit; Executive; Executive Compensation; Finance; Governance and Corporate Responsibility; and Risk and Cybersecurity. The Board has adopted governance structures and policies that it believes promote Board independence and the interests of shareholders. These structures and policies include, among others:
- Annual election of all directors
- Majority vote with director resignation policy for directors in uncontested elections
- Annual review of the Board’s leadership structure by the independent directors
- Independent Lead Director empowered with robust and clearly delineated duties
- Independence of 10 out of 11 directors
Please refer to our 2020 Proxy Statement for more background on the Board’s strong governance structures.
All standing committees other than the Executive Committee are composed entirely of independent directors. Each committee has a written charter setting forth its purpose, authority and duties. The committees enhance the Board’s oversight of areas that are critical to GM’s corporate responsibility and sustainability efforts, including: transparent and reliable financial reporting, risk identification and mitigation, ethics, vehicle and workplace safety, pay-for-performance, diversity, Board and management succession planning, shareholder proposals and nominations, corporate responsibility and political and lobbying expenditures.
In 2019, members of the Board and senior management engaged with shareholders representing approximately 50 percent of GM’s outstanding shares of common stock. These engagements help the Board and management gain feedback on a variety of topics, including strategic and financial performance, operations, products, executive compensation, and Board composition and leadership structure, as well as on important environmental and social issues. The constructive insights, experiences, and ideas exchanged during these engagements have helped the Board evaluate and assess key initiatives during GM’s ongoing transition to an all-electric future.
The Board has the overall responsibility for risk oversight, with a focus on the most significant risks facing the company. While GM does not follow the precautionary approach, the company does have a comprehensive risk management plan in place. Effective risk management is the responsibility of the CEO and other members of management, including the senior leadership team. Our Board implements its risk oversight function both as a whole and through delegation to Board committees, particularly the Risk and Cybersecurity Committee. Each of the Board committees is responsible for oversight of risk management practices for categories of risks relevant to its functions. Our Board recognizes that cybersecurity is critical to GM’s operations — particularly as management continues to execute on its future mobility strategies, such as self-driving vehicles and connected-vehicle technology. The Board believes that its structure for risk oversight provides for open communication between management and the Board and its committees.
ESG Governance and Oversight
The Board is committed to overseeing the company’s integration of environmental, social and governance (ESG) principles throughout the enterprise. This includes an annual multiday session devoted to discussing, debating and validating management’s overall strategy. In the past year, these strategic reviews and discussions included labor and workforce issues, EV and AV execution, Cadillac rebranding, fuel economy regulation, capital allocation, workplace and vehicle safety, international reorganization and various alternative future business scenarios.
Additionally, ESG oversight includes frequent ESG strategic discussions by the Board’s Governance and Corporate Responsibility Committee. This Committee is charged with overseeing:
- Risks related to public policy and political activities.
- Risks related to director independence and related party transactions.
- Risks related to the sustainability of our operations.
The Committee has recently reviewed the company’s ESG strategy, with a broader focus on corporate purpose and culture and how those attributes align with the company’s corporate strategy. GM is fortunate that several of its Board members have extensive business experience in managing ESG- and climate-related issues, such as transitioning from high- to low-carbon-emitting technologies or managing environmental impacts within the supply chain. The Board is committed to elevating GM’s leadership profile and reputation among investors, policymakers and others on ESG issues and practices and believes GM has a unique opportunity to address these important issues.
ESG performance is a focus for the company and our shareholders, and GM has an ongoing commitment to ESG performance outcomes. The Compensation Committee considers ESG performance when making compensation determinations for certain members of management. The Compensation Committee factors ESG performance related to strategic goals, which account for 25 percent of the short-term incentive plan (STIP) for each named executive officer. Linking total compensation to the achievement of these individual measures increases focus on efficiency and performance across the business for our sustainability initiatives. Please see GM’s 2020 Proxy Statement for further discussion of individual performance results that had a positive impact on ESG measures.
Corporate Political Contributions and Lobbying Expenditures
The Board has an active role in overseeing how GM participates in the political process and believes it should have a role in helping to shape public policy and address legislation that impacts the company, our industry and our shareholders and other stakeholders. GM has supported and will continue to support public policies that drive the achievement of our long-term, sustainable growth. The following are highlights of the Board’s role:
- To guide activities, the Board has adopted a U.S. Corporate Political Contributions and Expenditures Policy (Political Contributions Policy).
- The Governance Committee oversees the Political Contributions Policy and annually reviews the company’s engagement in the public policy process.
- The Governance Committee also annually reviews all corporate political contributions, reviews GM Political Action Committee contributions and expenditures (which are funded entirely by voluntary employee contributions) and the process by which they are made and receives multiple updates each year regarding the company’s direct and indirect lobbying expenditures.
- The Governance Committee annually conducts a benchmarking exercise to confirm its political contribution and lobbying expenditure disclosures aligns with peers and discusses emerging shareholder expectations.
- The Board also receives a monthly report on the most pressing public policy issues. It uses this report to continuously assess which issues are important to the company’s long-term interests and which organizations the company is working with to advance those interests.