GM strides forward on engagement and disclosure

Jan 30, 2019
General Motors won the governance team of the year (large cap) title at the recent Corporate Governance Awards

For the General Motors (GM) governance team, the company’s success against Greenlight Capital’s proxy campaign in June 2017 has led to a period of marked progress.

GM hired Rick Hansen as corporate secretary soon after its 2017 AGM, and he tasked his team – under the leadership of securities counsel John Kim, securities counsel Robert Boyle and manager for board operations Scott Cross – with developing more innovative proxy disclosure and continuing to improve GM’s shareholder engagement program with more creative efforts.

One lesson from the Greenlight experience is that you can always improve communications about board composition, Kim says. In GM’s case, that means showing investors it has the right board at the right time to help move the company toward a key constituent of its long-term strategy: zero crashes, zero emissions and zero congestion. The success of the governance team’s efforts in boosting the effectiveness of GM’s proxy statement is highlighted by the company also winning this year’s best proxy statement award in the large-cap category.

On the shareholder engagement side, an early step was to join the Council of Institutional Investors (CII) and launch the first ‘Pancakes with GM’ event with labor and union shareholders at a CII conference in San Diego, California. GM senior executives attended the breakfast event, discussing their visions for the future of the automobile industry.

The team has also worked to increase the frequency with which the company contacts its investors by sending GM’s top 100 shareholders regular ‘breaking news’ emails regarding ESG developments. These emails sometimes spark conversations with investors, and having regular outreach is helpful at a time when there has been a lot of turnover at the company, Cross says.

Investors’ wish lists for engagement usually include that directors be present. Thankfully for the GM governance team, that’s something it can deliver. ‘Our directors have become very receptive to being out on the road,’ Cross explains. GM now has a director shareholder policy that Cross believes to be unique and that spells out who will participate in which engagements and how management members will set engagement targets, among other things. 

The team has arranged roadshows featuring three directors: chair and chief executive Mary Barra, independent lead director Theodore Solso and one other, depending on the issue being discussed. Cross estimates that half of the board has taken part in such events.

In another governance step forward, GM has created a cyber-security committee that met for the first time in late 2017. The development is part of the board’s risk oversight regarding its vehicles, which are increasingly connected to the internet and driven by technology. The company estimates that there are more lines of code in a GM car than in an F-16 fighter jet – and that will only increase (with the accompanying risks) as cars become more and more autonomous.

This article originally appeared in the latest Corporate Secretary special report. Click here to view the full publication.

 

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