General Motors Company · NYSE:GM
General Motors — Proxy Contest (March 2017)
34 slides from General Motors's proxy contest presentation, Mar 28, 2017
Slide 1: GM's Response to Greenlight's Proposal
GM’s Response to Greenlight’s Proposal March 28, 2017 Exhibit 99.2
Slide 2: GM Is Successfully Transforming its Business
Establishing a leadership position in technology that is reshaping the automotive landscape Making tough, strategic decisions to position GM’s business for long-term outperformance through the cycle (e.g., announced sale of Opel/Vauxhall) Building out a profitable and strategically important GM Fina
Slide 3: Substantial Risks with Greenlight's Dividend Shares Proposal
Substantial Risks with Greenlight’s Dividend Shares Proposal Fundamental factors driving GM’s valuation not addressed by Greenlight’s proposed financial engineering Loss of GM’s investment grade credit rating Market demand and liquidity for proposed securities are unknown and uncertain Valuation imp
Slide 4: GM Management Team Delivering Record Results
Management expects to improve upon record-setting performance in 2017E GM Management Team Delivering Record Results 24% CAGR + 86% $B, except where noted 1 Revenue in 2013 and 2016 was $155.4B and $166.4B, respectively Note: Does not consider the potential future impact of adjustments or the effects
Slide 5: GM Has Been Rewarded with Relative Market Outperformance
GM Has Been Rewarded with Relative Market Outperformance Total Shareholder Returns (%) 1 As of March 27, 2017 1 Year 1 Local currency returns as of March 27, 2017. Total Shareholder Return calculates return on stock prices adjusted for stock splits, cash dividends, rights offerings, and spin-offs. P
Slide 6: GM Has a Disciplined, Transparent Capital Allocation Framework
Return all available free cash flow to shareholders Reinvest in business to drive growth and 20+% ROIC-adj. $18B target cash1 Investment grade balance sheet GM Has a Disciplined, Transparent Capital Allocation Framework 1 Assumes completion of the Opel / Vauxhall sale 2 Based on total estimated divi
Slide 7: GM Does Not Believe in Greenlight's Value Creation Hypothesis
GM Does Not Believe in Greenlight’s Value Creation Hypothesis GM does not endorse Greenlight’s views on experiment in financial engineering Greenlight Assertions GM Views “Management has performed” P “Operations have been well managed” P “Capital has been allocated thoughtfully” P “Transparency has
Slide 8: GM Has Engaged Actively with Greenlight
GM Has Engaged Actively with Greenlight 15 direct interactions with Greenlight over 7-month period Active participation of GM CEO, CFO and Board of Directors 3 leading investment banking firms retained for financial advice Substantial evolution in Greenlight’s proposal during our discussions Proposa
Slide 9: Summary of Greenlight's Dividend Shares Proposal
Summary of Greenlight’s Dividend Shares Proposal Common Stock Dividend Shares Capital Appreciation Shares Dividend is eliminated initially Entitled to GM’s earnings in excess of dividends on Dividend Shares No return of capital if dividends on Dividend Shares are not current Full voting rights Board
Slide 10: Greenlight's Dividend Shares Proposal Carries Significant Risks
Greenlight’s Dividend Shares Proposal Carries Significant Risks Fundamental Factors Driving GM Valuation No impact GM Investment Grade Credit Rating Downgrade to sub-investment grade Market Demand and Liquidity Unknown and uncertain Valuation Impact Speculative and unproven Governance Material confl
Slide 11: No Impact on Fundamental Factors Driving GM's Valuation
No Impact on Fundamental Factors Driving GM’s Valuation 1 Addressed by Dividend Shares Proposal? Cyclical Peak NO Secular Headwinds / Industry Disruption NO Ability to Withstand a Downturn / Maximize Financial Flexibility NO Valuation issues are sector-wide, not GM-specific Dividend Shares will not
Slide 12: Dividend Shares Would Downgrade GM to Sub-Investment Grade
Consulted with principal rating agencies, in addition to several external advisors We believe that Dividend Shares would result in loss of GM’s investment grade credit rating Critical factors affecting credit assessment: Signals aggressive shift in financial policy during period of industry transfor
Slide 13: Significant Negative Impact of Move to Sub-Investment Grade
Significant Negative Impact of Move to Sub-Investment Grade Strong investment grade balance sheet essential component of GM strategy, protecting shareholder value and capital allocation framework 2 GM/GMF debt stack (~$80B total debt, ~$40B bonds outstanding) would be among largest in high yield, an
Slide 14: There Is No Established Market for Dividend Shares
There Is No Established Market for Dividend Shares Earnings Upside Participation Downside Protection (Liquidation Preference) Rating Agency Debt Treatment (Partial or Full) % of S&P 500 Market Depth 2 Fixed Obligation P 93% ~$8.0T P 2% ~$250B P 0% $0 P 11% ~$180B 1 Excludes financial services compan
Slide 15: Uncertain Demand for Unconventional New Securities
Uncertain Demand for Unconventional New Securities Lack of natural investor base for either Capital Appreciation Shares or Dividend Shares 3 Proposed Security Investor Type Key Factors Limiting Investor Demand Dividend Shares Equity Investors Lack of upside participation in GM’s future earnings perf
Slide 16: Greenlight's Perspective on Value Creation Is Speculative
Greenlight’s Perspective on Value Creation Is Speculative Source: Greenlight Capital, “Value Creation Through a New Security: Presentation to GM”, September 15, 2016; Greenlight Capital, October 5, 2016, due diligence response Greenlight has acknowledged the value creation from Dividend Shares is un
Slide 17: Greenlight's Perspective on Value Creation Is Speculative
Greenlight’s Perspective on Value Creation Is Speculative Assumes market value as of March 27, 2017, EPS-diluted-adj. of $6.25, $1.52 common dividend per share and 1.5B common shares outstanding Greenlight’s value creation math assumes substantial multiple expansion, despite no change to GM’s financ
Slide 18: Dividend Shares Create Material Governance Conflicts
Dividend Shares Create Material Governance Conflicts The interests of holders of Capital Appreciation Shares and Dividend Shares would be at odds The Board and management, owing fiduciary duties to holders of both classes, would find itself conflicted on decisions where the interests of the two clas
Slide 19: Greenlight's Dividend Shares Proposal Is Not in Shareholders' Best Interests
Greenlight’s Dividend Shares Proposal Is Not in Shareholders’ Best Interests After due diligence and consideration, GM Board and management rejected Greenlight’s proposal, which is not based on fundamentals and is too risky GM’s Board and management continue to take bold, decisive actions that are t
Slide 20: GM's strategy and Board candidate selection
GM’s strategy is to earn customers for life – by leading in technology and innovation, investing in our brands, driving core efficiencies, and aligning the organization to relentlessly pursue our strategy The selection of qualified Board candidates is fundamental to the successful implementation of
Slide 21: GM's World-Class Board Has the Right Set of Skills
GM’s World-Class Board Has the Right Set of Skills to Drive Shareholder Value Independent Leadership and Oversight Complementary Mix of Skills 9 of 11 Directors are independent Average tenure of <5 years vs S&P Average of 8.4 3 new independent directors over last 2 years Annual election of all direc
Slide 22: General Motors World-Class Board of Directors (1 / 2)
General Motors World-Class Board of Directors (1 / 2) Board Member Biographies Director since 2014 / Chairman since 2016 Chief Executive Officer (since 2014) 36 years at GM and having served in various leadership roles, including: Executive Vice President, Global Product Development, Purchasing & Su
Slide 23: General Motors World-Class Board of Directors (2 / 2)
General Motors World-Class Board of Directors (2 / 2) Source: Company website, Public Sources Board Member Biographies Director since 2009 Chairman, Hewlett Packard Enterprise Company (since November 2015) Previously served as the Chief Executive Officer of Alcatel-Lucent from 2006 to 2008 She has d
Slide 24: Forward Looking Statements
Forward Looking Statements In this presentation and in reports we subsequently file and have previously filed with the SEC on Forms 10-K and 10-Q and file or furnish on Form 8-K, and in related comments by our management, we use words like “anticipate,” “appears,” “approximately,” “believe,” “contin
Slide 25: Important Additional Information Regarding Proxy Solicitation
Important Additional Information Regarding Proxy Solicitation General Motors Company (“GM”) intends to file a proxy statement and associated white proxy card with the Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies for GM’s 2017 Annual Meeting (the “Prox
Slide 26: Select Supplemental Financial Information
Select Supplemental Financial Information
Slide 27: Non-GAAP Measures
Non-GAAP Measures See our Form 10-K and Form 10-Q reports filed with the U.S. Securities and Exchange Commission for a description of certain non-GAAP measures used by GM, including EBIT-adjusted, EPS-diluted adjusted, ROIC-adjusted, and adjusted automotive free cash flow, along with a description o
Slide 28: Improving GAAP Results
Operating income EPS-diluted Net cash from operating activities - automotive $5.1B $2.38 $9.5B $6.00 $14.3B 2013 actual 2016 actual Net income to common stockholders $3.8B $9.4B $11.0B History of strong and improving results Improving GAAP Results $4.9B $5.91 2015 actual $9.7B $10.0B $1.5B $1.65 201
Slide 29: Track Record of Delivering Strong Results
2016 $6.00 - $6.50 ~$6B >25% >2016 2016 EBIT-adj. EPS-diluted-adj. Adj. auto FCF ROIC-adj. Cash returned to shareholders $8.6B $3.18 20% $0.0B $12.5B $6.12 $6.9B 29% $4.8B 2013 actual 2016 actual 2017 outlook EBIT-adj. margin 5.5% 7.5% $3.7B 1 Represents core operating performance (i.e., adjusted fo
Slide 30: Reconciliation of EBIT-adjusted and EPS-diluted-adjusted
Reconciliation of EBIT-adjusted and EPS-diluted-adjusted ($B, except Margin and EPS) 2013 2014 2015 2016 Net income attributable to stockholders 5.3 3.9 9.7 9.4 Subtract: Automotive Interest Expense (0.3) (0.4) (0.4) (0.6) Automotive Interest Income 0.2 0.2 0.2 0.2 Gain (loss) on extinguishment of d
Slide 31: Reconciliation of Adjusted Automotive Free Cash Flow
Reconciliation of Adjusted Automotive Free Cash Flow ($B) 2013 2014 2015 2016 Automotive Operating Cash Flow 11.0 10.1 10.0 14.3 Less: Capital Expenditures (7.5) (7.0) (7.8) (9.4) Adjustments¹ 0.2 — — 2.0 Adj. Automotive Free Cash Flow 3.7 3.1 2.2 6.9 Recall Related² — 1.6 2.5 — Adj. Automotive Free
Slide 32: Reconciliation of ROIC-adjusted
Reconciliation of ROIC-adjusted ($B) 2013 2014 2015 2016 Numerator: Net income attributable to stockholders 5.3 3.9 9.7 9.4 Subtract: Automotive Interest Expense (0.3) (0.4) (0.4) (0.6) Automotive Interest Income 0.2 0.2 0.2 0.2 Gain (loss) on extinguishment of debt (0.2) 0.2 0.4 — Income Tax Benefi
Slide 33: Guidance Reconciliation
Guidance Reconciliation Year Ending Dec. 31, 2017 Diluted Earnings Per Common Share $6.00-$6.50 Adjustments - Tax effect on adjustments - EPS-diluted-adj. $6.00-$6.50 ($B except where noted) Year Ending Dec. 31, 2017 Automotive net cash provided by operating activities ~15 Less: expected capital exp
Slide 34: For additional information please visit
For additional information please visit: https://www.gmfinancial.com/investors-information.aspx [email protected] http://www.gm.com/investors [email protected] GM’s Investor Relations website contains a significant amount of information about GM, including financial and other informat