2018 Guide to Effective Proxies

2.17.9 Performance metrics | 445 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES EXECUTIVECOMPENSATION ActualSTIPawards,ifany,aredeterminedfollowingthecompletionoftheplanyeartoreflecttheachievementagainsttheperformance measuresdisplayedbelow.ThetablebelowdescribeseachSTIPperformancemeasure,itsweighting,itstarget,andthebehaviorseach measuredrives: STIPMeasure Weight Target LeadershipBehaviors EBIT-adjusted 50% $12.7 Focusonoperatingprofitanddrivingstrongprofitability AdjustedAFCF (1) 25% $ 6.3 Focusondrivingstrongcashflowtoinvestinthebusiness IndividualPerformance 25% 25pts. Focusonindividualperformancegoalsthatimpactbusinessresults (1) AdjustedAFCFforincentivepurposesexcludespaymentsrelatedtocertainrecall-relatedexpensesattributabletoeventsoccurringin2014. Thepotentialpayoutsforeachcompanyperformancemeasurerangefrom0%to200%oftarget,basedonactualCompanyperformance withthethresholdperformancelevelbeing50%ofeachSTIPmeasure.TheSTIPcalculationforthe2017performanceperioddetermined theresultforeachNEO: Base Salary Individual Target Award% EBIT- adjusted 50% Adjusted AFCF 25% X X Target Incentive Opportunity Company Performance Individual Results25% Short-Term IncentiveAward = + Individual Performance 2017–2019 LTIPPerformanceMeasuresfor NEOs GrantsundertheLTIPareintendedtolinkthefinancialinterestsofNEOswiththelong-terminterestsofshareholders.Thestructurefor NEOs included 75% PSUs and 25% Stock Options. PSUs cliff-vest following the three-year performance period, and Stock Options vest ratablyoverthreeyears. TIME-BASED VESTING AT-RISK PERFORMANCE- BASEDVESTING 75% PSUs 25% Stock Options The2017–2019PSUsareawardedbasedonperformanceagainstthefollowingmeasuresrelativetoourOEMpeers:RelativeROIC-adjusted andRelativeTSRoverthethree-yearperformanceperiod.ThePSUperformancemeasureswerechosentopromotebothefficientuseof capitalandlong-termgrowthtocreatevaluefortheshareholdersandanincreasedfocusonstockpriceappreciation.Thefollowingtable shows thePSUperformancemeasuresandtheleadershipbehaviorsthateachdrivestomakeGMtheworld’smostvaluedautomotive company: LTIPMeasure Weight Target LeadershipBehaviors RelativeROIC-adjusted (1) 67% 60thPercentile Focusonmakingsoundinvestmentsthatfollowthedisciplinedcapitalapproach ofdriving20%orhigherreturnsinworld-classvehiclesandleadingtechnology RelativeTSR (1) 33% 50thPercentile FocusondeliveringshareholderreturnsthatoutperformourOEMpeers (1) RelativeperformanceismeasuredagainsttheOEMsintheDowJonesAutomobilesandPartsTitans30Indexondateofgrant.OEMsfor2017–2019PSUs aredisplayedonpage40. G E N E R A L M O T O R S 2018 PROXYSTATEMENT 45 Total of 02 pages in section GENERAL MOTORS GOODYEAR TIRE & RUBBER COMPANY EXECUTIVECOMPENSATION • Security – NEOs may receivesecurity services,including homesecurity systems and monitoring, forspecificsecurity-related reasons identifiedbyindependentthird-partysecurityconsultants. • Financial Counseling – NEOs are eligible to receive financial counseling, estate planning, and tax preparation services through an approvedprovider. • ExecutivePhysicals –NEOsareeligibletoreceiveexecutivephysicalswithapprovedproviders. 2017 Target Compensation OurtargettotaldirectcompensationforeachNEOin2017wasasfollows: AnnualBase Salary ($) STIP (%) STIP ($) TargetTotalCash Compensation ($) LTIP TargetTotal Compens tion ($) Name PSUs (2) ($) Stock Options ($) MaryT.Barra 2,100,000 200% 4,200,000 6,300,000 9,750,000 3,250,000 19,300,000 CharlesK.Stevens,III 1,100,000 125% 1,375,000 2,475,000 2,793,750 931,250 6,200,000 DanielAmmann 1,450,000 125% 1,812,500 3,262,500 3,703,125 1,234,375 8,200,000 MarkL.Reuss 1,200,000 125% 1,500,000 2,700,000 3,037,500 1,012,500 6,750,000 AlanS.Batey 1,025,000 125% 1,281,300 2,306,300 2,020,275 673,425 5,000,000 Karl-ThomasNeumann (1) 1,050,000 125% 1,312,500 2,362,500 1,781,250 593,750 4,737,500 (1) ThetargetedTotalDirectCompensationforDr.NeumannreflectsthebasesalaryandSTIPinU.S.dollars.Dr.Neumannreceivedasalaryof € 811,864and anannualSTIPtargetof € 1,014,830. (2) ThenumberofPSUsawardedisdeterminedbyusingthetargetPSUvaluedividedbytheclosingpriceonthedateofgrant.PSUswithperformancetiedto relativeTSRarevaluedusingaMonteCarloanalysis,andSummaryCompensationTableamountsmaybehigherorlowerthantarget. Performance Measures HowWe Set Performance Targets Annually,theCompensationCommitteeapprovestheperformancemeasuresfortheSTIPandLTIP.TheCompensationCommitteereviews recommendations from management, receives input from the Compensation Committee consultant, evaluates the annual budget and midtermbusinessplan,andreviewsprior-yearperformancetoapprovevalue-creatinggoalstiedtolong-termshareholdervalue. 2017 STIP Performance Measures for NEOs TheSTIPalignswithourplanstocreatetheworld’smostvaluedautomotivecompanyandtoincreaseshareholdervalue.TheSTIPrewards NEOs for performance linked to the Company’s achievement of annual financial goals, operational performance goals, and individual performanceresults.TheSTIPisanannualcashincentiveawardintendedtobedeductibleasperformance-basedcompensationunderU.S. InternalRevenueCode(“IRC”)Section162(m)andisfundedforeachcoveredNEOoncetheCompanyachievesthethresholdofpositive EBIT-adjusted. The Compensation Committee annually reviews and approves STIP goals to assess the difficulty in level of achievement and overall linkagetoshareholdersthroughtheachievementofthebusinessplanandstrategicobjectives.Forthe2017STIP,alltargetsweresetator abovefinal2016performance.TheCommitteeelectedtoadjusttheweightstoincreaseEBIT-adjustedto50%andremovedbothglobal MarketShareandGlobalQualityasoverallmeasures.TheCommitteeaddedindividualperformancewithaweightof25%asameasureto evaluateindividualperformanceforeachleader.Individualperformanceresultsandfinalindividualcompensationdecisionsarediscussed beginning on page 48. Individual performance is assessed with an individual performance scorecard measuring results against pre-established goals that the Committee approvesat the beginningofthe year. Global marketshare and globalquality arestill focus itemsthattheCommitteeconsiderswhenevaluatingindividualperformanceresults. 44 G E N E R A L M O T O R S 2018 PROXYSTATEMENT COMPENSATIONDISCUSSIONANDANALYSIS Executive Summary 2017SHAREHOLDERENGAGEMENT Webelievethatitisimportantforustocommunicateregularlywithshareholdersregardingareasofinterestorconcern.Over thelastseveralyears,inadditiontoourday-to-dayinteractionsregardingourfinancialperformance,wehaveenhancedour shareholderengagementprogramtoincludeanannualoutreachthatisfocusedonourlong-termbusinessstrategy,executive compensation,corporategovernance,corporateresponsibilityandothertopicssuggestedbyourshareholders.Thisannual outreachhelpstoensurethatourshareholdersareheardandabletocommunicatedirectlywithusontheseimportantmatters. Aspartofour2017annualoutreach,werequestedtheopportunitytomeetwithapproximately60%ofourshareholdersand weultimatelyengagedwithshareholdersrepresentingover50%ofouroutstandingCommonStockasofSeptember30,2017. In2017,ourLeadDirectorandourChairmanmetwithseveralofourlargestshareholderstoprovideadirectlineof communicationbetweenourshareholdersandtheBoardofDirectors. OuroutreachmeetingsgaveusthechancetohighlightthestrongoperatingperformancedeliveredbytheCompanyoverthe pastseveralyearsandthechallengingindustrydynamicswefacedin2017.Specifically,wediscussedourthoroughprocess forsettingchallengingtargetsandaligningpayandperformance,aswellasourcommitmenttosoundexecutivecompensation practices.Wealsotooktheopportunitytodiscussourongoingcommitmenttostrongcorporategovernanceandcorporate responsibility.Wereceivedpositivefeedbackonourexecutivecompensationprogram,specificallythemetricsinourannual andlong-termincentiveplansandourproportionofperformance-basedpay.Thisfeedbackwasconsistentwiththesuccessof lastyear’ssayonpayproposal,whichwasapprovedby96%ofourvotingshareholdersatour2017annualmeeting. AlloftheshareholderfeedbackthatwereceivedwasreportedtotheCompensationCommitteeandtheBoardofDirectorsfor itsconsideration. ELEMENTSOFEXECUTIVECOMPENSATION CompensationforNEOsiscomprisedofamixofvariableandfixedcompensationthatisstronglylinkedtocompany performanceandtargetedtothemedianofthebenchmarkdatathatweuse. For2017,themixofperformancemetricswasasfollows: IncentiveProgram FinancialMetrics Weighting ANNUAL INCENTIVES AnnualPerformancePlan EBIT 40% FreeCashFlowfromOperations 40% OperatingDrivers 20% LONG-TERM AWARDS Performance-BasedAwards (PaidoutinEquityandCash) NetIncome 50% Relative + / – 20% CashFlowReturnonCapital 50% StockOptions Webelievethatourcompensationprogramisconsistentwithourperformance-basedcompensationphilosophyandservesthe long-terminterestsofourshareholders.Wewillcontinuetoseekfeedbackfromourinvestorsandconsiderongoing enhancementstotheprogram. 24