2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 490 GENERAL DYNAMICS CORPORATION GENERAL MOTORS GOLDMAN SACHS GROUP, INC. INTEL CORPORATION Proxy Summary S HAREHOLDER E NGAGEMENT Our Board is Committed to Robust Shareholder Engagement. Our shareholder engagement program allows us to discuss corporategovernance,executivecompensationandcorporateresponsibilitymatterswithasignificantnumberofshareholders,aswell as other items of interest to our shareholders. As part of our ongoing program, in 2017 we reached out to holders representing approximately 65 percent of our outstanding common stock. At the Board level, an ad hoc group of directors, anchored by the chairman and the independent Lead Director, is in place to liaise with significant shareholders. Our Board remains committed to solicitingandunderstandingshareholderviewsandrespondingasappropriate. O UR S HAREHOLDER E NGAGEMENT P ROGRAM Engagement Spring Fall Engagement Annual Meeting (May) In thepast several years,we have engagedannuallywith holdersof approximately 65% of our common stock Voting resultsand shareholder engagement discussions inform reviews of our corporate governanceand executive compensation programs Weofferadditional engagement to address proxy statementmatters or questions Wemake changes,when appropriate, to our corporate governance andexecutive compensationprograms, and discuss those changes in our proxy statement 1.Receive feedback and updateson shareholder governance and executive compensation priorities 2.Provide updateson the company’sgovernanceand executive compensation Proxy (March) Statement Mailed K EY T HEMES D ISCUSSED WITH S HAREHOLDERS IN 2017 BoardRefreshmentand Composition ShareholdersexpressedsupportforrecentadditionstotheBoard,aswellastheexperienceandskillsetof incumbentdirectors RiskManagement ShareholdersreinforcedtheimportanceofastrongandeffectiveriskmanagementprogramoverseenbytheBoard, includingrisksassociatedwithcybersecuritythreats,humancapitalmanagementandkeyprograms ExecutiveCompensation Shareholdersexpressedstrongoverallsupportforourexecutivecompensationprogramandlinkbetweenpayand performance CorporateResponsibility Shareholdersdiscussedtheirprioritiesintheevolvingareaofcorporateresponsibility,includingconsiderationof climatechangerisks,healthandsafetymattersandemployeeresources 4 GeneralDynamics2018ProxyStatement Say-on-PayVotingandAnnualMeetingReviewSay-on-PayVotingMeetWithInvestorsReviewFeedbackandAdjustPlansFileAnnualProxyStatement EXECUTIVECOMPENSATION Shareholder Engagement Initiatives Weviewshareholderengagementasanimportantandcontinuous cycle.During2017,membersoftheBoardmetin-personwith shareholdersrepresentingapproximately25%ofouroutstandingcommonstock.Inaddition,during2017,oneormoremembersof management were involved in more than 75 in-person and telephonic meetings with investors representing more than 45% of sharesoutstanding.Thesediscussions,say-on-payvotingresults,andotherfactorsarekeydriversinassessingourcompensation programs. Say-on-Pay Votingand AnnualMeeting FileAnnualProxy Statement ReviewSay-on- PayVoting ReviewFeedback andAdjustPlans MeetWith Investors SHAREHOLDERSAY-ON-PAY The Compensation Committee seeks to align the Company’s executive compensation program with the interests of the Company’s shareholders. The Compensation Committee considers the results of the annualSay-On-Payvote,inputfrommanagement,input from its independent compensation consultant, and investor engagement initiatives when setting compensation for our executives. In 2017, 96.3% of our shareholders voted in favor of our compensation programs. Discussions with investors and shareholder Say-On-Pay voting are key drivers in our compensation designtocontinuealignmentbetweenourcompensation programsandtheinterestsofshareholders. TheCompanyvaluesinvestorfeedbackandwillcontinuetoseekfeedbackthroughengagementinitiativestoalignourexecutive compensationprogramswithshareholderexpectations.Wemadechangestoourcompensationplansthatcommencedatthestart of2017tofurtheraligntheinterestsofourseniorleaderswiththoseofourshareholders. WhatWeHeard HowWeResponded Maintainpayforperformance Wecontinuetoevolveourpaypracticestosupportourpay-for-performancephilosophy.For2017, we added an individual performance measure into our STIP while continuing Company focus on EBIT-adjusted and Adjusted AFCF. In our LTIP we now measure both ROIC-adjusted and TSR performancerelativetoourOEMpeerswhilereplacingRSUswithStockOptionstofurtheralignthe interestsofourmostseniorleaderswiththoseofourshareholders. Continuetoinvestinthefuture Our LTIP places a focus on investing in our future. By continuing to place a focus on ROIC and measuringperformancerelativetoOEMpeers,weareincentivizingourmostseniorleaderstomake investmentsin thefuture of GMwhiledeliveringa returnon investmentthat outperformsother OEMs. ConsiderESGperformancewhen makingpaydecisions The Company introduced our vision of a future with zero crashes, zero emissions, and zero congestion in 2017. Several key ESG results are discussed in the proxy statement summary on page 6 and in “Executive Compensation—Compensation Overview—Our Company Performance” onpage36.Inaddition,weintroducedanindividualperformancecomponentweightedat25%for ourSTIP.Pleaseseepages48–53wherewediscussindividualperformanceresults,includingresults thathadapositiveimpactonESGmeasures. Lookatperformancerelativeto automotiveindustrypeers OurPSUsmeasurebothRelativeROIC-adjustedandRelativeTSRagainsttheCompany’sOEMpeers tomotivateourleaderstoperformatthetopoftheindustryregardlessofbusinesscycles. Keepcompensationplanssimple We simplified our compensation plans in 2017 to focus our most senior leaders on both key operationalperformancemeasuresandindividualresultsintheSTIP.Thischangeaddedacomplete lineofsightintocompensationforeachseniorleader.WeadjustedtheLTIPtofocusseniorleaders onoutperformingourpeersandincreasingstockpricetocreatevalueforourshareholders. 38 G E N E R A L M O T O R S 2018 PROXYSTATEMENT INVESTORENGAGEMENT Wehavearobustinvestorengagementprogram.Ourintegratedoutreachteam,ledbyourInvestorRelationsgroup,Corporate Responsibilityoffice,andtheCorporateSecretary’soffice,engagesproactivelywithourstockholders,monitorsdevelopmentsin corporategovernanceandsocialresponsibility,and,inconsultationwithourBoard,thoughtfullyadoptsandappliesdeveloping practicesinamannerthatbestsupportsourbusinessandourculture.Asdiscussedfurtherunder“CorporateResponsibilityand InvestorEngagement”onpage29,weactivelyengagewithourstockholdersinanumberofforumsonayear-roundbasisand integratetheinformationwelearnthroughtheseactivitiesintoourgovernancecalendar,asreflectedbelow. SUMMER FALL WINTER SPRING ANNUAL STOCKHOLDER MEETING Post-annualmeeting stockholdermeetings Conduct pre-annualmeeting investormeetings toanswerquestions andobtain investor feedback Incorporate input from stockholder meetings intoannual meetingplanning Reviewannual meeting results, determineanynext stepactions,andplan post-annualmeeting stockholder engagement EXECUTIVECOMPENSATIONHIGHLIGHTSFOR2017 Intelhasalong-standingcommitmenttopay-for-performance.Wecompensateexecutiveofficersthrougharrangementsthat aredesignedtoholdthoseofficersaccountableforbusinessresultsandrewardthemforconsistentlystrongcorporate performanceandcreationofvalueforourstockholders.Ourexecutivecompensationprogramsareperiodicallyreviewedand, whenappropriate,adjustedtoensurethattheycontinuetosupportIntel’sbusinessgoalsandpromotebothcurrent-yearand long-termprofitablegrowthofthecompany.Nosignificantchangesweremadetoourexecutivecompensationprogramsfor 2017. • Themajorityofcashcompensationforourexecutiveofficers,asagroup,ispaidunderourannualincentivecashplanwiththe annualpayoutsbasedonmeasuresofrelativefinancialperformance,absolutefinancialperformance,companyperformance relativetooperationalgoals,andindividualperformance. • Equityawards—consistingin2017ofvariableperformance-basedoutperformancerestrictedstockunits(OSUs)andrestricted stockunits(RSUs)—aligncompensationwiththelong-terminterestsofIntel’sstockholdersbyfocusingourexecutiveofficers onbothabsoluteandrelativetotalstockholderreturn(TSR).For2017,80%oftheannualequityawardvaluegrantedto executiveofficerswascomprisedofOSUs,upfrom60%in2016. • Insettingexecutiveofficercompensation,theCompensationCommitteeconsidersvariousfactorsincludingtheindividual performancereviewsofourexecutiveofficers,scopeoftheexecutiveofficer’sroleandresponsibilitiesandthecompensation levelsina“peergroup”;for2017thepeergroupconsistedof15technologycompaniesand10otherlargecompanies. • TotalcompensationforeachexecutiveofficervarieswithbothindividualperformanceandIntel’sperformanceinachieving financialandnon-financialobjectives.Eachexecutiveofficer’scompensationisdesignedtorewardhisorhercontributionto Intel’sresults. Reviewannualmeetingresults,determineanynextstepactions,andplanpost-annualmeetingstockholderengagementPost-annualmeetingstockholdermeetingsIncorporateinputfromstockholdermeetingsintoannualmeetingplanningConductpre-annualmeetinginvestormeetingstoanswerquestionsandobtaininvestorfeedbackSUMMERFALLWINTERSPRINGANNUALSTOCKHOLDERMEETING 10 ProxyStatementHighlights 2018PROXYSTATEMENT ExecutiveSummary |ShareholderEngagement Shareholder Engagement Commitment to Active Engagement with our Shareholders Constituents’viewsregardingmatters affectingourfirmareimportanttoourBoard.Weemployayear-round approachtoengagementthatincludesproactiveoutreachaswellasresponsivenesstotargetedareasoffocus. OUR APPROACH WHO WHEN&HOW APPROACH d Shareholders d ESG RatingFirms d Fixed-IncomeInvestors d ProxyAdvisoryFirms d Prospective Shareholders d ThoughtLeaders d Year-round d Additionaltargeted outreachaheadof annualmeetingsand asneeded d In-personmeetings d Teleconferencesand phonecalls d Conferences FirmEngagement d LedbyInvestor Relations(IR), including targetedoutreach andopenlinesof communicationfor inboundinquiries d Feedbackprovided toBoardthroughout theyearfromthese interactionsandon otherkeyareasoffocus BoardEngagement d LedbyourLead Director,whomeets regularlywith stakeholders d LeadDirectorprovides feedbacktofellow directorsabout engagements DEPTH OFENGAGEMENT Wecontinuedtoconductyear-round,proactiveengagementoncorporategovernancematters in2017: d Targetedoutreachtotop150shareholdersaheadof2017annualmeeting d IR metwithshareholdersrepresentingmorethan40%ofCommonStockoutstandingduring2017 d LeadDirectormetwith20investorsin2017,representingapproximately28%ofCommonStockoutstanding ThediverseviewsofourshareholderswererelayedtoourBoardontopicsincluding: EXECUTIVE COMPENSATION REPUTATIONAL RISK CORPORATE GOVERNANCE PRACTICES APPROACH TOESG IMPACTOF REGULATION BOARD COMPOSITION Compensation quantum& structure withinfirm'spay-for- performance culture LeadDirector duties, executive succession planning&director evaluations Business opportunities& riskmanagement considerations Continued focuson culture,business standards& reputational risk management Formore information please see the followingpage Director skill sets, independence &diversity Compensationquantum&structurewithinfirm’spay-for-performancecultureLeadDirectorduties,executivesuccessionplanning&directorevaluationsBusinessopportunities&riskmanagementconsiderationsEXECUTIVECOMPENSATIONREPUTATIONALRISKCORPORATEGOVERNANCEPRACTICESAPPROACHTOESGIMPACTOFREGULATIONBOARDCOMPOSITIONContinuedfocusonculture,businessstandards&reputationalriskmanagementFormoreinformationpleaseseethefollowingpageDirectorskillsets,independence&diversity ProxyStatementforthe2018AnnualMeetingofShareholders | GoldmanSachs 13