GM won the best proxy statement (large cap) category for the second consecutive year at the 2019 awards. Its entry showed clear progression from the previous year’s award-winning proxy statement, and both publications emphasize the growing importance of communicating a cohesive theme through the proxy statement.
In 2017 GM faced a proxy contest with Greenlight Capital in which the investor questioned the company’s capital allocation and the makeup of the board. This meant the 2018 proxy statement had to clearly explain why GM felt it had the right mix of skills and experiences in its boardroom to deliver on its strategy, according to John Kim, lead securities counsel at GM.
This year the context was different, as GM entered proxy season uncontested. The charge for the 2019 proxy statement was to communicate the company’s transformation, which it feels is necessary to deliver on the vision of a future where electric vehicles are ubiquitous. ‘Mary [Barra, GM’s chair and chief executive] has been pushing a culture of winning with integrity, so this year we focused on key cultural and business actions, whereas last year we were much more focused on governance actions,’ Kim says.
The cover of the proxy statement is striking. The first thing the eye is drawn to, in the middle of the page, is GM’s vision for the future. ‘We see a future with zero crashes, zero emissions and zero congestion,’ the text reads. It’s larger than the company logo and the acknowledgment that the reader is looking at GM’s proxy statement. This message is immediately reinforced on page two, where the company’s mission and values are laid out.
For the second consecutive year, the GM proxy statement team chose to publish the welcome letter in the form of a Q&A between Barra and a board director – this time the company’s lead independent director Theodore Solso. ‘We continued that practice because we got very good feedback on it from our investors,’ Kim explains. ‘It presents an opportunity to have a slightly more informal dialogue.’ Given the company’s focus on transformation this year, it’s notable that the second question raised in this Q&A is about corporate culture – a burgeoning area of focus for investors.
Kim and the GM proxy statement team clearly know investors are looking for ESG information in proxy statements, having included sections on human capital management, sustainability and political lobbying, in addition to the strong corporate governance focus in the director re-election and CD&A sections. Kim says the proxy statement team benefited from using material that is published in GM’s annual sustainability report and adds that ESG topics – most specifically human capital management – will likely be a big focus for the team as it prepares the 2020 proxy statement.
Another area of the proxy where ESG factors make an appearance is the CD&A section. GM ensures certain components of its executives’ pay packages are based on ESG factors, and this year the team added green leaf icons next to each ESG line item, helping investors to navigate the section more efficiently. In general, the CD&A section is an excellent case study in how to use graphics and text in tandem to tell a clear story of how pay is linked to performance and the company strategy.
One final challenge the proxy team had to navigate this year was to clearly communicate to investors to tune in to the virtual proxy meeting, the first in the company’s history. The team included a statement from the governance chair on page three of the proxy, a bolstered FAQ section and a helpline for investors experiencing difficulties dialing in. And, Kim says, to their surprise and relief, the feedback was almost universally positive.
This article originally appeared in the latest Corporate Secretary special report.
