SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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General Motors Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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The following form of letter will be used by General Motors in the solicitation
of proxies from stockholders in connection with GM's 2001 Annual Meeting.
[GM LOGO]
General Motors Corporation
Legal Staff
Facsimile Telephone
(313) 665-4978 (313) 665-4921
[Date]
Dear [Stockholder]:
This letter solicits your support of the position of the Board of Directors of
General Motors Corporation which favors a vote AGAINST the adoption of
Stockholder Proposal No. 8 at GM's 2001 Annual Meeting. That stockholder
proposal requests "a by-law for shareholder vote to be required to adopt or
maintain a poison pill." (Attachment A is the text of Stockholder Proposal No. 8
and the position of GM's Board of Directors opposing its adoption as they appear
in GM's 2001 Proxy Statement)
We recognize that many institutional stockholders regularly vote in support of
such proposals. Nevertheless, GM strongly believes that the reasons set forth in
its Proxy Statement (copy attached) and the additional reasons set forth in this
letter warrant your vote AGAINST Stockholder Proposal No. 8.
Reasons to Vote AGAINST Stockholder Proposal No. 8:
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1. GM's Board consists of a majority of independent directors and the
Corporation's By-Laws require that such a majority be maintained at all
times in accordance with published guidelines concerning the definition of
"independent director." Directors are all elected annually - GM does not
have a staggered board. The Corporation's commitment to independent
directors who are all elected annually demonstrates that entrenchment is
not something to be feared by stockholders.
2. GM's Board has demonstrated its commitment to sound corporate governance
principles through the adoption of governance guidelines widely respected
among institutional investors and in corporate governance circles.
3. GM's Board has demonstrated that entrenchment is not an objective of its
policies and practices and that its actions have been consistently in
favor of returning value to stockholders, -- witness the more than $35
billion which GM's Board has returned to stockholders in the last five
years in the form of dividends, spin-offs, exchange offers and stock
repurchases.
4. Management of GM would not recommend that the Board of Directors adopt a
Stockholder Rights Plan unless that plan included a TIDE's provision.
A TIDE's provision establishes a committee of independent directors of the board
who reviews the stockholder rights plan every three years and, if a majority of
the members of that committee deems it appropriate, recommend that the full
board modify or terminate the plan. Deliberations of such a committee would
require a tri-annual engagement of investment bankers and lawyers to evaluate
the company's performance, markets and developments in corporate law relating to
stockholder rights plans in order to provide a report and recommendations to the
committee for its consideration. Action to modify or terminate the plan would
require the vote of a majority of the full board of directors unless the terms
of the plan require greater than a majority of the directors to take such
action.
GM does not currently have a stockholder rights plan. We believe that periodic
review by independent directors is preferable to requiring that stockholders
approve any new rights plan or any continuation or extension of any rights plan
if one were to be adopted by General Motors.
A TIDE's provision featured in any General Motors Stockholder Rights Plan would
be similar to those employed by J.C. Penney and Applied Materials in their
Rights Plan. As you may know, a majority of the stockholders of both of these
companies voted to oppose stockholder proposals for the adoption of anti-pill
by-laws. Moreover, as a general principle, GM management would not recommend a
rights plan which contains provisions generally considered stockholder
"unfriendly" -- such as a dead hand provision, a low trigger or an
extraordinarily long life.
The General Motors Board has established a strong record of independence,
commitment to stockholder value and progressive corporate governance. We believe
this record and the assurance herein that if a Stockholder Rights Plan is
adopted by GM it will contain a TIDE's provision and not have the type of
"stockholder unfriendly" provision referred to above, warrants your support of
the Board's opposition to Stockholder Proposal No. 8.
Very truly yours,
Warren G. Andersen
Attachment
MC 482-C23-D24 300 Renaissance Center P.O. Box 300 Detroit, Michigan 48265-3000
Attachment A
Item No. 8
John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, CA 90278,
owner of 50 shares of Common Stock, has given notice that he intends to
present for action at the annual meeting the following resolution:
"RESOLVED:
"SHAREHOLDER VOTE ON POISON PILLS
ADOPT PROPOSAL TOPIC THAT WON 57% SHAREHOLDER APPROVAL
at 24 MAJOR COMPANIES in 2000
"General Motors Corporation shareholders request a bylaw for shareholder vote to
be required to adopt or maintain a poison pill.
"Currently the General Motors board can adopt a poison pill at any time
without a shareholder vote.
"Why require a shareholder vote to adopt or maintain a poison pill?
o "Pills give directors absolute veto power over any proposed business
combination, no matter how beneficial it might be for shareholders.
Power and Accountability
By Nell Minow and Robert Monks
o "Shareholder right to vote on poison pill proposals won an overall 57%
APPROVAL from shareholders at 24 major companies in 2000.
Investor Responsibility Research Center
o "According to the Investor Responsibility Research Center this proposal topic
by this same proponent, John Chevveden, Redondo Beach, Calif. won more than
60% shareholder approval at the Delphi Automotive Systems May 2000 annual
meeting.
o "The Council of Institutional Investors (www.cii.org) recommends: Shareholder
approval of all poison pills, General Motors is 41%-owned by institutional
investors. These institutional investors have a fiduciary duty to cast their
vote giving priority to their client's best interest ahead of GM management
recommendations.
"Negative Effects of Poison Pills on stock value
"A study by the Securities and Exchange Commission found evidence that the
negative effect of poison pills to deter profitable takeover bids outweigh
benefits.
"Source: Office of the Chief Economist, Securities and Exchange
Commission, The Effect of Poison Pills on the Wealth of Target Shareholders,
October 23, 1986.
"A study by Professor John Pound of Harvard's Corporate Research Project
found higher corporate performance when there was no poison pill.
"Source: Governance Matters: An Empirical Study of the Relationship
Between Corporate Governance and Corporate Performance (June 1991).
"Many institutional investors believe poison pills should be voted on by
shareholders. At a minimum, many institutional investors believe that
shareholders should have the right to vote on the need of such a powerful tool,
which can entrench existing management.
"A poison pill can insulate management at the expense of shareholders. A
poison pill is such a powerful tool that shareholders should be able to vote on
whether it is appropriate.
"I believe the right for a shareholder vote on poison pills will avoid an
unbalanced concentration of power in the directors who could restrict the rights
of shareholders.
"ADOPT PROPOSAL TOPIC THAT WON 57% SHAREHOLDER APPROVAL
at 24 MAJOR COMPANIES IN 2000
SHAREHOLDER VOTE ON POISON PILLS
YES ON 8"
The Board of Directors favors a vote AGAINST the adoption of this proposal
for the following reasons:
The Board of Directors believes that the action requested in this proposal
is unnecessary and ill-advised. The Board of Directors has not adopted a
shareholder rights plan (sometimes called a "poison pill") and has no present
intention to adopt one. Circumstances could arise in the future, however, where
the adoption of such a plan would be an important tool for protecting the
interests of the Corporation's stockholders in compliance with the fiduciary
duties of the Board of Directors. Requiring stockholder approval for the
adoption of a rights plan would impede the ability of the Board of Directors to
use such a plan for the benefit of stockholders when circumstances warrant.
Rights plans are designed to strengthen the ability of a board of
directors, in the exercise of its fiduciary duties, to maximize shareholder
value and protect stockholders from unfair and abusive takeover tactics. That is
why more than 2,000 companies, including more than half of the companies in the
S&P 500 Index, have adopted some type of rights plans.
Contrary to the proponent's suggestion, the ability to adopt a shareholder
rights plan does not give a board of directors absolute veto power over any
business combination. Rather, in upholding the legal validity of shareholder
rights plans, the Delaware Supreme Court has made it clear that a board is
required to act in accordance with its fiduciary duties in adopting and
maintaining a rights plan. As a result, rights plans neither prevent unsolicited
proposals from being made nor prevent companies from being acquired at prices
that are fair and adequate. In fact, a study of takeover data from 1992 through
1996 by Georgeson & Company, a nationally recognized proxy solicitation and
investor relations firm, found that the presence of a rights plan neither
increased the likelihood of defeat of an unsolicited takeover proposal nor
reduced the likelihood of a company becoming a takeover target. The same
Georgeson & Company study found that the premiums paid to acquire companies with
rights plans averaged eight percentage points higher than premiums for companies
without such plans.
In recommending a vote against the proposal, the Board of Directors has
not determined that a rights plan should be adopted by the Corporation. Any such
determination would be made only after careful deliberation, in light of all
circumstances then prevailing and in the exercise of the Board's fiduciary
duties. In this regard, it should be noted that the Board of Directors consists
of a majority of directors who are not employees of the Corporation, and that
the Board is not staggered but is elected in its entirety annually.
The recommendation against the proposal is based on the Board's belief
that it would not be wise to limit flexibility of the Board of Directors to act
in the best interests of GM stockholders if circumstances arise in the future
that would warrant the adoption of a rights plan.
The Board of Directors favor a vote AGAINST this stockholder proposal,
Item No. 8. Proxies solicited by the Board of Directors will be so voted unless
stockholders specify a different choice.