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GOVERNANCE

Pension funds, proxy-voting firms against General Motors pay package

Mary T. Barra GM
Mary T. Barra

General Motors Co. faces opposition to the ratification of the pay of Mary T. Barra, chairman and CEO, and other top executives from the Ontario Teachers' Pension Plan, Texas Teacher Retirement System, Glass Lewis and Institutional Shareholder Services.

The C$171.4 billion ($132.4 billion) OTPP, Toronto, and the $126.6 billion TRS, Austin, both intend to vote against ratification, according to their proxy-voting disclosures. Glass Lewis and ISS recommend their asset owner clients vote against the compensation packages.

The shareholder vote on executive compensation is non-binding on the company.

Ms. Barra's total compensation in 2015 was $28.5 million, up 77% from 2014, according to GM's proxy statement. The total pay of the other four named executives in 2015 ranged from $8.1 million to $11.8 million.

OTPP said in its disclosure, “We are concerned that the board has chosen to make a number of awards to executives that are outside the compensation plan. We believe that these types of awards can bring into question the efficacy of the current compensation program, and therefore we expect the board to provide a convincing rationale as to why such awards are deemed necessary. In this case, we do not feel that the awards have been sufficiently justified, and as a result, we vote against this proposal.”

In a report on General Motors, Glass Lewis said, “The company has been deficient in linking executive pay to corporate performance, as indicated by the 'D' grade received by the company in Glass Lewis' pay-for-performance model. … The company's generous granting practices, reflected in the sizable one-time grants and the increases in fixed pay, have contributed to a misalignment between pay and performance. This result is perhaps unsurprising given the almost 49% growth in the aggregate compensation paid to the company's five highest paid (named executives officers) from 2014 to 2015.”

OTPP and Glass Lewis also oppose the re-election as director of Patricia F. Russo, chairwoman of the GM board's governance and corporate responsibility committee.

“Ontario Teachers believes that an inherent fundamental conflict of interest exists when the roles of chair and CEO are combined,” the OTPP disclosure said. ”During the past year, the board elected to recombine the roles of chair and CEO without, in our view, providing a compelling rationale to support this decision. We hold the chair of the governance committee responsible for the governance practices adopted by the board.”

Glass Lewis said “What concerns us most … is that the amendment to the company's bylaws was adopted without shareholder approval.”

General Motors' annual meeting is June 7 in Detroit.