8-KLeadership ChangesMaterial Agreements

General Motors Co 8-K Report, Material Agreement (Oct 8, 2010)

Filed October 8, 2010For Securities:GM

Summary

General Motors Company (GM) filed an 8-K on October 8, 2010, reporting on the approval of key executive compensation plans. The company adopted the 2009 Long-Term Incentive Plan (LTIP), as amended, the 2009 Salary Stock Plan (SSP), and the 2010 Short-Term Incentive Plan (STIP). These plans are designed to incentivize executives through various equity and cash-based awards, reflecting a critical period for GM as it navigated its post-bankruptcy restructuring and prepared for a potential Initial Public Offering (IPO). The approved plans establish a fungible pool of 25 million shares for the LTIP, SSP, and STIP, with specific ratios for how different award types count against this pool. The LTIP allows for stock options and restricted stock units (RSUs), while the SSP provides for compensation to be paid in salary stock convertible to RSUs, settling over three years. The STIP enables cash and/or RSU awards based on performance metrics, with a maximum payout of $7.5 million per individual. These compensation arrangements are crucial for retaining talent and aligning executive interests with shareholder value as GM aims to re-establish its market position.

Key Highlights

  • 1Approval of the 2009 Long-Term Incentive Plan (LTIP), as amended, the 2009 Salary Stock Plan (SSP), and the 2010 Short-Term Incentive Plan (STIP).
  • 2Establishment of a fungible share pool of 25 million for LTIP, SSP, and STIP.
  • 3Specific share counting ratios for awards: 1:1 for stock options/SARs, and 2.5:1 for full value awards (RSUs) granted after October 5, 2010.
  • 4LTIP awards can include stock options and Restricted Stock Units (RSUs), with individual limits of 1 million options or 250,000 RSUs.
  • 5SSP compensation is paid in 'salary stock' which converts to RSUs, settling ratably over three years, and can be settled in cash or stock post-IPO.
  • 6STIP allows for cash and/or RSU awards based on performance metrics, with a maximum individual payout of $7.5 million.
  • 7These plans are effective as of October 5, 2010, and are intended to align executive compensation with company performance and shareholder interests during a significant period for GM.

Frequently Asked Questions

General Motors Company approved three key executive compensation plans: the 2009 Long-Term Incentive Plan (LTIP), as amended; the 2009 Salary Stock Plan (SSP); and the 2010 Short-Term Incentive Plan (STIP).

A fungible pool of 25 million shares is authorized for these plans. Stock options and stock appreciation rights (SARs) count at a 1:1 ratio. Full value awards, such as Restricted Stock Units (RSUs), granted after October 5, 2010, count at a 2.5:1 ratio against the pool.

The SSP allows for executive compensation to be paid in the form of 'salary stock.' This compensation is converted into RSUs and typically settles over a three-year period in one-third increments. The plan aims to defer compensation and vest it over time, with potential for cash or stock settlement after an IPO.

Under the STIP, executives can receive target awards based on achieving performance metrics set by the compensation committee. Payments for finalized awards can be in cash and/or RSUs. The maximum payout to any single executive under the STIP is $7.5 million.